Chubb not obligated to defend dental lab in TCPA case
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A federal appeals court agreed with a lower court Tuesday that a Chubb Ltd. unit was not obligated to defend a dental lab in a case involving claims arising out of the Telephone Consumer Protection Act.
Dental lab Mesa Laboratories Inc. sent faxes promoting its services but some, if not all, of the recipients had not consented to receive them, and the faxed materials did not include an opt-out notice as required by the TCPA, according to the ruling by the 7th U.S. Circuit Court of Appeals in Chicago in Mesa Laboratories Inc. v. Federal Insurance Co.
In 2018, a Chicago-area dentist filed a class-action lawsuit against Mesa for sending unsolicited fax advertisements in violation of the TCPA and state law, according to the ruling.
He also alleged that Mesa’s conduct violated common law, which is law derived from custom and judicial precedent rather than statutes.
Its insurer, Chubb Ltd. unit Federal, refused to provide a defense because it contended the litigation fell outside its policy’s coverage.
After Mesa and the dentist reached a settlement, Mesa filed suit against Federal in U.S. District Court in Chicago, alleging breach of contract, bad faith and improper delay and denial of claims.
The district court ruled in the insurer’s favor and was affirmed by a three-judge appeals court panel. The question, it said, is whether an “information laws exclusion” that excludes laws “arising out of” the TCPA extends to common law claims arising from the TCPA-violating conduct.
The common law claims in this case included a nuisance claim, and a “conversion” claim, that by sending the faxes, Mesa had converted the recipient’s ink, toner and paper for its own use, according to the complaint.
Citing an earlier ruling by the court, the appeals court ruling said, “The answer is now clear…the ‘arising out of’ language subjects the common-law claims to the exclusion as well.”
Attorneys in the case did not respond to requests for comment.
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