Consumer Finance Insights
January 20, 2022

Massachusetts Court Holds Notice of TCPA Exclusions Sufficient to Avoid TCPA Violation

On January 7, 2022, the Massachusetts Appeals Court issued a decision concerning whether two insurance companies provided sufficient and timely notice to its Insured regarding the exclusion of coverage for Telephone Consumer Protection Act (TCPA) violations.  In Addison Automatics, Inc. v. The Netherlands Insurance Co., Case No. 20-P-225, the Appeals Court held that the Insurers provided sufficient and timely notice to the Insured regarding the TCPA exclusion in it insurance policy and therefore were not liable for the Insured’s alleged TCPA violation.

In January 2008, the Insured, a New Jersey corporation, began a “faxing campaign” in which they sent over 31,000 advertising faxes to various entities.  Plaintiff brought a class action against the Insured alleging the Insured violated the TCPA during their “faxing campaign” by using the recipients’ fax machines, toner, and paper supplies without their consent.  Because the Insured’s insurance policy included exclusions for “all acts in violation of statutes that govern emails, fax phone calls, or other methods of sending materials or information,” the Insurers denied coverage and refused to defend the Insured in the class action.  Plaintiff and the Insured entered into a settlement agreement and in November 2011, Plaintiff filed suit against the Insurers seeking a declaration that the Insurers were required to indemnify and pay any judgment entered against the Insured pursuant to the Insured’s Insurance Policies.

In April 2005, the primary insurance company sent an agency bulletin to its commercial line agents that provided that the insurance company would “not cover liability arising out of any action or omission that violates the . . . TCPA.”  The bulletin also directed that these exclusions be attached to all new policies effective May 1, 2004, and all renewal policies effective July 1, 2005.  On March 2, 2007 – ten days prior to issuing the Insured’s renewal policies for the 2007-2008 term – the Insurers provided the Insured with the information concerning their 2007-2008 renewal policies, including the changes to the TCPA coverage.  The Insured’s premium due date was May 15, 2007.

The lower court held that these TCPA exclusions were unenforceable because “the insurers failed to provide [the Insured] with sufficient notice of the exclusions” and held that “the insurers were otherwise obligated to indemnify and pay the judgment against [the Insured].”  The Massachusetts Appeals Court disagreed and reversed, finding the Insurers provided the Insured (1) timely and (2) sufficient notice of the TCPA exclusions.

Firstly, New Jersey Law requires notice of any change in contract terms be given to the insured “in writing no more than 120 days nor less than 30 days prior to the due date of the premium.”  The Appeals Court held that because the Insurers provided the information concerning the change in TCPA coverage over 70 days prior to the premium due date, the Insurer’s notice was timely.

Secondly, New Jersey Law also requires that when an Insurer issues a renewal policy with terms altering the level of coverage, “the insurer has a duty to call the lessened coverage to the attention of the insureds. . .”  The Massachusetts Appeals Court found that the lessened coverage was “brought to the insured’s attention in bold and capital headings in several places throughout the packages,” “each slip notice addressing the TCPA exclusion was labeled as an important notice,” and the “exclusions were included on declarations pages.”  Therefore, the Appeals Court held that the Insurers provided the Insured with sufficient notice that any TCPA violations would not be covered by the renewal policies.  The Appeals Court further held that the Insured – a New Jersey corporation that purchased corporate insurance policies – was not an “average policyholder” such that a bulky package would not adequately notify it of the changes to its policy.

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