December 5, 2017
In a November 2017 decision out of the United States District Court for the Western District of North Carolina, the Court held that an insurer has no duty to defend or indemnify its insured when the policy’s statutory violation exclusions precluded coverage for the underlying actions. Hartford Casualty Insurance Co. v. Ted A. Greve & Associates, P.A., et al., No. 17-183, 2017 WL 5557669.
The two underlying actions, Hatch, et al. v. DeMayo, et. al., No. 1:16-cv-925 and Garey, et al. v. James S. Farrin, P.C., et al., No. 1:16-cv-542, are putative class actions asserting a single cause of action against Greve for violation of the federal Driver’s Privacy Protection Act (DPPA). Plaintiffs in the underlying actions were involved in motor vehicle accidents. Upon receipt of advertisements for legal services, the underlying plaintiffs learned that Greve had obtained the publicly available accident reports and disclosed their personal information in generating the ads. Plaintiffs sued Greve claiming that the disclosure of the information was an invasion of their privacy.
The insurer filed a declaratory judgment action seeking a declaration it had no duty to defend or indemnify Greve. The coverage at issue, “personal and advertising injury,” contains an exclusion for statutory violations. The Greve Court found that it was “abundantly clear” that plaintiffs in the underlying actions seek relief under a federal statute, the DPPA. Even though the policy exclusion provided an exception for “liability for damages that the insured would have in the absence of such state or federal act,” the Court held “the right to privacy at issue in the underlying actions was solely a creature of federal law, which defeats coverage under the plain language of this exclusion.” Because the statutory violation exclusion precluded any coverage under the policy, the insurer had no duty to defend or indemnify.
Sam Lloyd is a Business Litigation Associate in the Charlotte office, with experience managing cases through arbitration and has tried numerous matters to jury verdict. She works with clients on matters relating to Civil litigation: defense, Civil: Racketeer Influenced and Corrupt Organizations Act (RICO), Auto liability, Insurer bad faith, and Products liability.