Insurance
— General liability — Duty to defend and indemnify — Damages arising from
automated solicitation calls placed by insured to plaintiffs in underlying
litigation — Trial court did not err in finding that calls placed by insured
constituted an “occurrence” under the policy where, although calls were
intentionally placed, evidence demonstrated that insured was not aware that it
was acting in violation of law or that it had intent to injure — Exclusions —
“Expected or intended injury” exclusion did not apply, although calls were
placed intentionally, where there was no evidence that insured expected or
intended to cause harm by placing phone calls

OLD DOMINION INSURANCE COMPANY, Appellant, v. STELLAR
CONCEPTS & DESIGN, INC., RICHARD MACLEAN and GLOBAL EDUCATION SERVICES,
INC., Appellees. 4th District. Case No. 4D14-4601. April 13, 2016. Appeal from
the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Mily
Rodriguez Powell, Judge; L.T. Case No. 11-16302 (03). Counsel: Christy Brigman
and Jake Tover of Kelley Kronenberg, P.A., Fort Lauderdale, for appellant.
Steven J. Wisotsky of The Reyes Law Firm, P.A., Coral Gables, and Phillip
Holden of The Alvarez Law Firm, Coral Gables, for appellees.

(CIKLIN, C.J.) In this insurance coverage dispute, Old
Dominion Insurance Company (“Old Dominion”) appeals the final summary judgment
entered in favor of the plaintiffs below, Richard Maclean, Global Education
Services (collectively, “Plaintiffs”), and the actual insured, Stellar Concepts
and Design, Inc. (“Stellar”). Because Stellar was sued by the Plaintiffs,
Stellar sought insurance coverage from Old Dominion. Old Dominion contends the
trial court erred in determining that the subject insurance policy covered
damages arising from automated solicitation calls placed by Stellar to the
Plaintiffs, in violation of Washington state law. We affirm, finding that Old
Dominion had a responsibility to defend its insured in the suit brought against
Stellar by the Plaintiffs.

The underlying lawsuit arose from a previously-settled class
action lawsuit in the state of Washington. In that litigation, 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 were in violation of the Washington Consumer
Protection Act and the basis of the Plaintiffs’ damages was found to be loss of
use of their telephones because of being inundated with Stellar’s robotic
telephone solicitations. The Washington litigation resulted in a settlement and
judgment in favor of the Plaintiffs.

At all times relevant, Stellar was insured under a general
liability insurance policy and an umbrella policy issued by Old Dominion. In
pertinent part, the general liability policy provides that Old Dominion “will
pay those sums that the insured becomes legally obligated to pay as damages
because of ‘bodily injury’ or ‘property damage’ ” that is caused by an
“occurrence.”

Following the judgment in the Washington litigation, Old
Dominion filed the underlying action, seeking a declaratory judgment that it
had no duty to indemnify or defend Stellar for the claims in the Washington
litigation. The parties each moved for summary judgment. The trial court
determined that coverage existed under the policy and entered judgment in favor
of the Plaintiffs in their suit against Stellar.

On appeal, Old Dominion argues that there was no
“occurrence” to trigger coverage under the policy. Alternatively, it contends
that, if there was an occurrence, then the “expected or intended injury”
exclusion applies because the calls were placed intentionally, not
accidentally, and Stellar knew the calls would necessarily result in loss of
use of the phone lines.

The Plaintiffs argue that the calls qualify as an “occurrence”
because the undisputed evidence showed that Stellar lacked specific intent to
cause harm to a third party. They further argue that the trial court correctly
found that the expected or intended injury exclusion does not apply because,
while the calls were intentionally placed, the damages were not intentionally
caused.

Under the subject policy, “ ‘[o]ccurrence’ means an
accident, including continuous or repeated exposure to substantially the same
general harmful conditions.” “Accident” is not defined.

In making its determination that the calls were an
“occurrence,” the trial court relied on State Farm Fire & Casualty Co.
v. CTC Development Corp., 720 So. 2d 1072 (Fla. 1998). CTC explains:

[W]here
policy language is subject to differing interpretations, the term should be
construed liberally in favor of the insured and strictly against the insurer. Container
Corp. [of America v. Maryland Cas. Co., 707 So. 2d 733, 736 (Fla.
1998)]; Berkshire Life Ins. Co. v. Adelberg, 698 So. 2d 828, 830 (Fla.
1997). In addition, “when an insurer fails to define a term in a policy, . . .
the insurer cannot take the position that there should be a ‘narrow,
restrictive interpretation of the coverage provided.’ ” State Comprehensive
Health Ass’n v. Carmichael, 706 So. 2d 319, 320 (Fla. 4th DCA 1997)[.]

Id. at 1076 (second alteration in
original).

“[W]hen the term ‘accident’ is undefined in a liability
policy, the term includes not only ‘accidental events,’ but also damages or
injuries that are neither expected nor intended from the viewpoint of the
insured.” Id. at 1072. In so holding, the Florida Supreme Court further
explained:

Although
exclusionary clauses cannot be relied upon to create coverage, principles
governing the construction of insurance contracts dictate that when construing
an insurance policy to determine coverage the pertinent provisions should be
read in pari materia. Reading the coverage provision of the policy
together with the exclusionary clause could support a conclusion that coverage
is provided in the State Farm policy for occurrences where the insured did not
intend or expect to cause harm to the third party.

Id. at 1074-75 (Fla. 1998)
(alterations and internal citations omitted).

Other cases have similarly found an “accident” to include
circumstances where unintended damages result from the insured’s intentional
acts. See, e.g., FCCI Ins. Co. v. Horne, 890 So. 2d 1141, 1144 (Fla. 5th
DCA 2004) (finding coverage of “accident” in absence of allegation of intent to
harm, even where conduct was substantially certain to result in injury, and
noting “that liability policies covering ‘accidents’ apply to injury or damage
caused by the insured’s intentional acts so long as the insured did not
intend to cause any harm” (emphasis in original)); McCreary v. Fla. Residential
Prop. & Cas. Joint Underwriting Ass’n, 758 So. 2d 692, 694 (Fla. 4th
DCA 1999) (finding that despite insured’s intentional act of allowing dogs to
roam through neighborhood, act alleged was still an “occurrence” because
resulting damage to neighbors was unintended).

The policy at issue in CTC contained very similar
language to that in the instant policy; it covered accidents, but lacked a
definition for the word “accident,” and included an exclusionary clause for
damage “expected or intended from the standpoint of the insured.” See CTC,
720 So. 2d at 1073-74. There, a builder built a home in violation of
restrictive covenants requiring a fifteen-foot setback from each side lot line.
Id. at 1073. The builder admitted that he built the home with knowledge
that it was beyond the setbacks, but asserted that he was under the impression
that a variance had been granted for the construction. Id. The court
concluded, “[T]he fact that he intentionally constructed the house knowing that
it was outside of the setback line does not preclude a finding of coverage
under his liability policy for this ‘occurrence.’ ” Id. at 1076.

Similarly, here, despite the completion of pre-trial
discovery, there was no evidence to suggest that Stellar intended to cause an
injury. The deposition testimony of Anthony Guidice, Stellar’s former owner,
revealed that he believed he had the right to contact businesses and he had a
good faith belief that the automated calls were lawful. Guidice testified that
he had been directed to “a website to a federal law that stated that it was
legal.” Stellar admitted that it made the calls in question, and those calls
necessarily resulted in a loss of use of the Plaintiffs’ phone lines while the
calls were being placed. However, the evidence demonstrated that Stellar was
not aware that it was acting in violation of a state law. Old Dominion does not
point to any evidence disputing Stellar’s lack of intent to injure.

Because Stellar did not intend to cause an injury or break
Washington state law by placing the phone calls, the trial court did not err in
determining that the calls constituted an “occurrence” under the policy.

We further conclude that the expected or intended injury
exclusion does not apply. The exclusion provides:

This
insurance does not apply to:

a.
Expected or Intended Injury

“Bodily
injury” or “property damage” expected or intended from the standpoint of the
insured.

The trial court relied on Prudential Property &
Casualty Insurance Co. v. Swindal, 622 So. 2d 467 (Fla. 1993), in determining
that the expected or intended injury exclusion did not apply:

Florida
law has long followed the general rule that tort law principles do not control
judicial construction of insurance contracts. Insurance contracts are construed
in accordance with the plain language of the policies as bargained for by the
parties. Ambiguities are interpreted liberally in favor of the insured and
strictly against the insurer who prepared the policy. Gulf Life Ins. Co. v.
Nash, 97 So. 2d 4, 9-10 (Fla. 1957); see also, e.g., Stuyvesant
Ins. Co. v. Butler, 314 So. 2d 567, 570 (Fla. 1975); Poole v. Travelers
Ins. Co., 130 Fla. 806, 814, 179 So. 138, 141 (1937). Thus, intentional act
exclusions are limited to the express terms of the policies and do not exclude
coverage for injuries more broadly deemed under tort law principles to be
consequences flowing from the insured’s intentional acts.

Id. at 470. The Swindal court
reaffirmed its earlier holding in Nash and explained that “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.” Swindal, 622 So. 2d at 471 (quoting Cloud v.
Shelby Mut. Ins. Co. of Shelby, Ohio, 248 So. 2d 217, 218 (Fla. 3d DCA 1971)).

Here, when read in pari materia with the “occurrence”
provision, the policy language supports a conclusion that coverage is provided
where the insured did not expect or intend to cause harm. See CTC, 720
So. 2d at 1075. The damages at issue, loss of use of the phone lines, were
consequences flowing from Stellar’s intentional acts of placing the phone
calls. Plaintiffs brought forth evidence demonstrating that Stellar did not
intend to harm the Plaintiffs by placing the phone calls, but rather it believed
it was in compliance with federal laws. Because the loss of use of the phone
lines was not an intentional injury, the expected or intended injury exclusion
does not apply.

Because the trial court properly found that the incident at
issue is covered under Coverage A of the policy, it is unnecessary to address
Old Dominion’s remaining two arguments, as they pertain to Coverage B.

Affirmed. (WARNER and KLINGENSMITH, JJ.,
concur.)

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