Appeals Court Affirms Ruling That Insurance Company Does Not Have to Defend Customer in FDCPA, TCPA Suit

The Court of Appeals for the Seventh Circuit has upheld a lower court’s ruling that an insurer did not have a duty to defend a mortgage servicing company that was sued for violating the Fair Debt Collection Practices Act and the Telephone Consumer Protection Act, ruling that the assertions made by the plaintiff in her complaint were subject to the exclusions listed in the defendant’s insurance policy.

A copy of the ruling in the case of Zurich American Insurance Company v. Ocwen Financial Corp. can be accessed by clicking here.

The defendant appealed one of the five counts of the plaintiff’s lawsuit — that it invaded the consumer’s privacy when it attempted to contact her in order to collect on an unpaid mortgage debt. The consumer alleged that the defendant made 58 calls to her cell phone using an automated telephone dialing system. The consumer claimed that she picked up the phone on two of those occasions and told the defendant to stop calling. A District Court judge granted the plaintiff’s motion for summary judgment, ruling that the allegations made by the consumer in her lawsuit against the defendant fell within the exclusions in the defendant’s insurance policy with the plaintiff.

In appealing the invasion of privacy claim, the defendant argued that the consumer’s complaint included the possibility that some of the calls were made to the consumer’s home phone using a live operator and that some calls were not made with the intent to annoy, abuse, or harass.

Unfortunately for the defendant, the Appeals Court did not read the insurance policy nor the consumer’s complaint against the defendant the same way that the defendant did. It rejected each of the three arguments raised by the defendant in its Appeal and affirmed the lower court’s summary judgment ruling in favor of the plaintiff.

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