A ruling from the U.S. Court of Appeals for the Tenth Circuit might be a difficult pill to swallow for any company attempting to use their insurance policy to cover damages from a Telephone Consumer Protection Act lawsuit.
The ruling was first reported by Maurice Wutscher. A copy of the ruling in Ace American Insurance Company v. Dish Network can be viewed here.
Dish was sued by a handful of states for violating the Telemarketing Sales Rule and the TCPA. Dish inquired with the insurance company, Ace American Insurance, whether it was covered for any potential losses. The insurance company indicated that there might be a possibility that the losses could be covered under one of its liability policies. The insurance company later reversed its decision and decided that the insurance did not cover any potential damages awarded as part of the suit against Dish.
At that point, the insurance company and Dish sued each other. A trial court awarded summary judgment for the insurance company, and Dish appealed. The Appeals Court affirmed the summary judgment in favor of the insurance company.
In looking at the relevant state law — the original suit against Dish was filed in Colorado — the Appeals Court ruled:
We conclude the TCPA’s statutory damages are penal under Colorado law and, even if they were otherwise covered under the policies, Colorado’s public policy prohibits the insurability of such penalties and bars coverage.
