An insurer was not obligated to defend a debt collection law firm that was sued after it mistakenly pursued the wrong person under an exclusion in its coverage, a federal appeals court ruled Wednesday. 

Rodenburg LLP, a Fargo, North Dakota law firm, whose primary business is debt collection, obtained a default judgment on a debt owed by a “Charlene Williams,” according to the ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in Rodenburg LLP v. Certain Underwriters at Lloyd’s of London, The Cincinnati Insurance Co. 

In early November 2016, Rodenburg served a notice of intent to garnish Ms. Williams’ wages at the residential address associated with the debt, but when it did not receive an answer, it then served Ms. Williams’ employer with a garnishment notice. 

Ms. Williams allegedly informed Rodenburg in December she was not the debtor against whom it had a default judgment, but the law firm allegedly ignored this information and garnished her wages for six weeks. After a lawyer informed the firm it had the wrong Charlene Williams, it stopped the garnishment and returned the garnished funds. 

Ms. Williams then sued the law firm, citing in part violations of the Fair Debt Collection Practices Act, alleging its actions had caused her to suffer emotional distress, among other impacts. The case was settled, according to the ruling, which did not disclose the settlement amount. 

Rodenburg’s insurer, Cincinnati Financial, refused to defend or indemnify Rodenburg, and the law firm filed suit against it in U.S. District Court in Fargo, which granted the insurer summary judgment dismissing the case. 

The ruling was affirmed by a unanimous three-judge appeals court panel, which cited a policy exclusion for violation of any statute, other than the Telephone Consumer Protection Act or the CAN-SPAM Act of 2003, “that prohibits or limits the sending, transmitting, communicating or distribution of material or information.” 

The panel agreed with Cincinnati that this included the FDCPA. “Cincinnati therefore did not breach its contractual duty to defend Rodenburg, and so we need not reach the question whether Cincinnati had a duty to indemnify Rodenburg for the Williams lawsuit,” the ruling said, in affirming the lower court’s judgment.