The liability insurer brought an action against the insured and telephone call recipients for a declaratory judgment that it had no duty to defend or indemnify the insured in litigation to recover for the insured placing telephone calls to play pre-recorded message to solicit business. This case is Old Dominion Insurance Company v. Stellar Concepts & Design, 189 S0.3d 293 (2016).

The underlying lawsuit arose from a previously-settled class action lawsuit wherein the plaintiffs alleged that they were the recipients of phone calls with a pre-recorded message soliciting the plaintiffs to use Stellar for their business needs. The plaintiffs alleged that the calls caused damages because there was a loss of use of their telephones due to the phones being inundated with robotic telephone solicitations. In that trial, the court ruled in favor of the plaintiffs.

In response to that judgment, Old Dominion filed a declaratory judgment action that it had no duty to defend or indemnify its insured, Stellar Concepts & Designs. The Circuit Court ruled in favor of the insured and this appeal followed.

The District Court of Appeal of Florida, Fourth District, noted the argument of the insurer that there was no occurrence to trigger coverage and in the alternative, if there was an occurrence, the expected or intended injury exclusion applied to prevent any coverage. The insured countered that the calls qualify as an occurrence because the undisputed evidence showed that Stellar lacked specific intent to cause harm to a third party The insured also claimed that the exclusion did not apply because, while the calls were intentionally placed, the damages were not intentionally caused.

The court reviewed various Florida rulings on the matter and said that reading the coverage provision of the policy together with the exclusionary clause could support a conclusion that coverage is provided for occurrences where the insured did not intend or expect to cause harm to third parties. In this case, the court found that there was no evidence to suggest that Stellar intended to cause an injury. Indeed, the testimony from Stellar's former owner revealed that he believed that he had the right to contact businesses and he had a good faith belief that the automated calls were lawful. The evidence demonstrated to the court that Stellar was not aware that it was acting in violation of any law and Old Dominion did not point to any evidence disputing Stellar's lack of intent to injure.

Therefore, because Stellar did not intend to cause an injury or break the law by placing the phone calls, the appeals court ruled that the trial court did not err in determining that the calls constituted an occurrence under the terms of the policy.

As for the expected or intended injury exclusion, the court said that the exclusion is limited to the express terms of the policy and does not exclude coverage for injuries more broadly deemed under tort law principles to be consequences flowing from the insured's intentional acts. In other words, injury or damage is caused intentionally within the meaning of an intentional injury exclusion clause if the insured has acted with the specific intent to cause harm to a third party. In this instance, the court noted, the damages at issue, loss of use of the phone lines, were consequences flowing from Stellar's intentional acts of placing the phone calls. Evidence showed that Stellar did not intend to harm the plaintiffs by placing the phone calls, but rather believed that it was in compliance with the law. Because the loss of use of the phone lines was not an intentional injury, the expected or intended injury exclusion does not apply.

The ruling of the trial court was affirmed. The phone calls involved an occurrence and the intentional injury exclusion did not apply.

Editor's Note: The District Court of Appeal of Florida rules that liability policies covering accidents apply to injury or damage caused by the insured's intentional acts as long as the insured did not intend to cause any harm.