Hartford Cas. Ins. v. Swapp Law, PLLC

Counsel

*1211Christopher C. Frost, John A. Little, Jr., Maynard Cooper & Gale PC, Birmingham, AL, Gary L. Johnson, Jennifer H. Mastrorocco, Richards Brandt Miller Nelson, Salt Lake City, UT, for Plaintiff., Justin W. Starr, Kirton McConkie, L. Rich Humpherys, Humpherys Law PLLC, Salt Lake City, UT, for Defendants., Jill N. Parrish, United States District Judge *1212Plaintiff Hartford Casualty Insurance Company ("Hartford") moves for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c). Hartford argues that it has no duty to defend or indemnify Swapp Law, PLLC and James Craig Swapp (collectively "Swapp Law") in connection with the civil action Wilcox, et al. v. Swapp Law PLLC, et al. , Case No. 2:17-cv-275, 2017 WL 6541514 (E.D. Wash. 2017) (the "Underlying Action"). The court heard oral argument on the motion on December 5, 2018 and took the matter under advisement. The court now GRANTS the motion., Hartford argues that the claims in the Underlying Action are not covered by the Policy because they fall under two separate exclusions. The first excludes coverage for claims arising solely from federal or state statute (the "Statutory Exclusion"). The second excludes coverage for claims arising from materials distributed in violation of a statute (the "Distribution Exclusion"). Hartford seeks a declaratory judgment that it is neither required to defend nor indemnify Swapp Law. Swapp Law asks the court to decide whether there is a duty to defend but requests the court defer ruling on the duty to indemnify., "After the pleadings are closed ... a party may move for judgment on the *1213pleadings." Fed. R. Civ. P. 12(c). The court evaluates a Fed. R. Civ. P. 12(c) motion using the same standard as a Fed. R. Civ. P. 12(b) motion. Colony Ins. Co. v. Burke , 698 F.3d 1222, 1228 (10th Cir. 2012) (citing Park Univ. Enters. v. Am. Cas. Co. , 442 F.3d 1239, 1244 (10th Cir. 2006) ). The court must "accept all facts pleaded by the non-moving party as true and grant all reasonable inferences from the pleadings in favor of the same." Id. (internal quotation marks omitted). "A motion for judgment on the pleadings should not be granted unless the moving party has clearly established that no material issue of fact remains to be resolved and the party is entitled to judgment as a matter of law." Id. (internal quotation marks omitted)., In deciding a motion for judgment on the pleadings, the court may consider documents that are attached to the complaint or that are referred to in the complaint if the authenticity of the documents is not in question and the "documents are central to the plaintiff's claim." BV Jordanelle, L.L.C. v. Old Republic Nat'l Title Ins. Co. , 830 F.3d 1195, 1201 n.3 (10th Cir. 2016). In this case, the court will consider the complaint in the Underlying Action and the Policy itself. These documents are central to the case, their authenticity is not contested, and the documents were either attached or referenced in the complaint., Under Utah Law,3 the duty to defend and the duty to indemnify are contractual and "hinge[ ] on the particular contractual terms of the insurance policy defining the scope of the duty to defend and the duty to indemnify." Fire Ins. Exch. v. Estate of Therkelsen , 27 P.3d 555, 561, 559 (Utah 2001). Under the plain language *1214of the Policy, Hartford's duty to defend turns on whether Hartford is potentially liable for a damage award against Swapp Law. "We will have the right and duty to defend the insured against any 'suit' seeking [covered] damages. However, we will have no duty to defend the insured against any 'suit' seeking damages for ... 'personal and advertising injury' to which this insurance does not apply." See Policy, Business Liability Form § A (1)(a)., To determine whether Hartford is potentially liable for the claimed damages, the court applies the "eight corners" rule and compares the language found in the four corners of the Policy to the allegations made in the four corners of the underlying complaint. Basic Research, LLC v. Admiral Ins. Co. , 297 P.3d 578, 580 (Utah 2013) (citing Equine Assisted Growth & Learning Ass'n v. Carolina Cas. Ins. Co. , 266 P.3d 733 (Utah 2011) ).4 "When those allegations, if proved, could result in liability under the policy, then the insurer has a duty to defend." Sharon Steel Corp. v. Aetna Cas. & Sur. Co. , 931 P.2d 127, 133 (Utah 1997) (citing Deseret Fed. Sav. & Loan Assoc. v. United States Fidelity & Guar. Co. , 714 P.2d 1143, 1146-47 (Utah 1986) ). But "[w]here the allegations [in the complaint], if proved, show 'there is no potential liability [under the policy], there is no duty to defend.' " Basic Research, 297 P.3d at 580 (Utah 2013) (quoting Deseret Fed. Sav. & Loan , 714 P.2d at 1147 )., Hartford argues that it has no potential liability for any damages in the Underlying Action because the class action plaintiffs in the Underlying Action only allege violations of the DPPA. According to Hartford, those claims are excluded from coverage under the Policy by two exclusions: the Statutory Exclusion and the Distribution Exclusion. The court agrees with Hartford that there is no duty to defend because the damages claimed in the Underlying Action are excluded under the Statutory Exclusion. Because the duty to defend is broader than the duty to indemnify, Hartford also has no duty to indemnify Swapp Law for its alleged violations of the DPPA. In light of the court's holding that the Statutory Exclusion applies, the court need not and does not consider the applicability of the Distribution Exclusion., Hartford argues that the damages claimed in the Underlying Action are not covered by the Policy because they arise from violations of a federal statute and thus are excluded by the Policy's Statutory Exclusion. The Statutory Exclusion excludes from the Policy coverage for claims for personal and advertising injury "arising out of the violation of a person's right of privacy created by any state or federal act." Policy, Business Liability Form § B (1)(p)(11). There is, however, an exception to the Statutory Exclusion that states "this exclusion does not apply to liability for damages that the insured would have in the absence of such state or federal act." Id. While Swapp Law does not contest the applicability of the exclusion itself, it argues that the claims at issue in the Underlying Action fall under the exception to the exclusion., Here, the only claim for relief asserted in the Underlying Action is a claim for relief alleging violations of the DPPA. Compl. at 21, Wilcox et al. v Swapp Law PLLC et al. , No. 2:17-cv-275, 2017 WL 6541514 (E.D. Wash. 2017). The DPPA explicitly prohibits the release of "personal information" and "highly restricted personal information." By definition, the statute creates a right to recover damages for violation of a privacy right. See Maracich v. Spears , 570 U.S. 48, 51-52, 133 S.Ct. 2191, 186 L.Ed.2d 275 (2013) (Congress "enacted the Driver's Privacy Protection Act of 1994" because it was "[c]oncerned that personal information collected by States in the licensing of motor vehicle drivers was being released-even sold-with resulting loss of privacy for many persons."); see also Collier v. Dickinson , 477 F.3d 1306, 1309-10 (11th Cir. 2007) ("We find that the plain language of the DPPA clearly, unambiguously, and expressly creates a statutory right which may be enforced by enabling aggrieved individuals to sue persons who disclose their personal information in violation of the DPPA."). When a party asserts a claim under the DPPA, the party alleges a violation of the privacy right protected by the statute. Thus, the claim brought against Swapp Law in the Underlying Action is a claim for a "personal and advertising injury" that "aris[es] out of the violation of a person's right of privacy created by any state or federal act." The damages claimed in the Underlying Action therefore fall under the Statutory Exclusion., Having concluded that the Statutory Exclusion applies, the court turns its attention to the applicability of the exception to the exclusion. The Policy states that the Statutory "[E]xclusion does not apply to liability for damages that the insured would have in the absence of such state or federal act." Policy, Business Liability Form § B (1)(p)(11). The meaning of this exception is disputed by the parties. Hartford alleges that the exception requires the insured to establish the existence of a separate cause of action for damages under Washington law that plaintiffs could have included in the Underlying Action. Because no such cause of action exists under Washington common law, Hartford maintains that the exception does not apply. In contrast Swapp Law asserts that because the DPPA protects privacy rights, the only issue is whether a "right of privacy" has been invaded, not whether the invasion is actionable under Washington common law., The burden is on Swapp Law to establish that the exception applies, thus any ambiguity should be resolved in Hartford's *1216favor. See St. Paul Fire & Marine Ins. Co. v. Warwick Dyeing Corp. , 26 F.3d 1195, 1200 (1st Cir. 1994) ; see also cases collected, supra note 2 at 1213. But the language of the exception is unambiguous. It explicitly requires that there be "liability for damages" absent the statute, not just a violation of some amorphous right. The court must therefore decide whether Swapp Law would be liable for the alleged damages in the absence of the DPPA., Because the contractual duty to defend is conditioned on potential liability for damages, the court must look beyond the four corners of the complaint. See Fire Ins. Exch. v. Estate of Therkelsen , 27 P.3d 555, 561 (Utah 2001) (If "the parties make the duty to defend dependent on whether there is actually a 'covered claim or suit,' extrinsic evidence would be relevant to a determination of whether a duty to defend exists."). In this case, the court must look to the facts as alleged to determine if they could sustain a potential claim for damages arising from personal and advertising injury. See Big 5 Sporting Goods Corp. v. Zurich Am. Ins. Co. , 957 F.Supp.2d 1135, 1153 (C.D. Cal. 2013), aff'd , 635 F. App'x 351 (9th Cir. 2015) (looking to the facts of the complaint, not just the pleadings). And as the conduct at issue in the Underlying Action occurred in Washington, the court finds that Washington state law should apply to the underlying claims.5 Therefore, the court must look to Washington law to determine if the class action plaintiffs in the Underlying Action could have asserted a claim for damages against Swapp Law in the absence of a state or federal statute., Washington tort law protects an "individual's interest in leading a secluded and private life, free from the prying eyes, ears and publications of others." Grinenko v. Olympic Panel Prod. , 2008 WL 5204743, at *7 (W.D. Wash. 2008) (citing Eastwood v. Cascade Broadcasting Co. , 106 Wash.2d 466, 722 P.2d 1295 (1986) ). Specifically, Washington law recognizes "four types of invasion of privacy claims: (1) intrusion upon seclusion,6 (2) appropriation or exploitation of a plaintiff's name,7 (3) public disclosure of private facts,8 and (4) placing another in false light.9 " Id. Of the four, only the intrusion *1217upon seclusion claim could possibly give rise to the claims for damages asserted in the Underlying Action., To assert a claim for "intrusion upon seclusion" under Washington Law in accordance with the Restatement (Second) of Torts § 652B (1977), the plaintiff must establish: