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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT ________________________
No. 17-14247 ________________________
D.C. Docket No. 1:14-cv-02977-ELR
G.M. SIGN, INC., as Judgment Creditor; and assignee of MFG.com,
Plaintiff - Counter Defendant - Appellant,
versus
ST. PAUL FIRE & MARINE INS.CO.,
Defendant - Counter Claimant - Appellee.
________________________
Appeal from the United States District Court for the Northern District of Georgia ________________________
(April 12, 2019) Case: 17-14247 Date Filed: 04/12/2019 Page: 2 of 17
Before MARTIN, JILL PRYOR and JULIE CARNES, Circuit Judges.
PER CURIAM:
This appeal is the second in a dispute between an insurer and its insured’s
judgment creditor and assignee concerning the insured’s right to indemnification
under its insurance policy. G.M. Sign, Inc. brought this action seeking a
declaratory judgment that St. Paul Fire & Marine Insurance Company was required
to indemnify its insured, MFG.com, for liability MFG incurred for faxing
advertisements to recipients it mistakenly thought had consented to receipt. The
district court concluded that St. Paul had no duty to indemnify MFG because,
under Georgia law, no accident occurred when MFG sent the junk faxes with the
mistaken belief that the recipients had agreed to receive them. Accordingly, the
district court granted St. Paul summary judgment.
In ruling, the district court relied on our decision in Mindis Metals, Inc. v.
Transportation Insurance Co., which held that under Georgia law intentional
conduct premised on erroneous information is not an “accident” for general
liability insurance purposes. 209 F.3d 1296, 1297 (11th Cir. 2000). On appeal,
G.M. Sign argues that the district court erred in granting St. Paul summary
judgment because under Georgia law the term “accident” covers injuries resulting
from negligent acts. We conclude that G.M. Sign’s argument is foreclosed by
Mindis Metals. We therefore affirm the district court.
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I. BACKGROUND
Because we write for the parties, we recite only the facts necessary to
understand our ruling. For a fuller account, see our previous opinion, G.M. Sign,
Inc. v. St. Paul Fire & Marine Insurance Co., 677 F. App’x 639 (11th Cir. 2016)
(unpublished).
A. Facts
MFG began a fax advertising program by purchasing lists of people who
MFG believed had consented to receive marketing materials by fax. MFG’s belief
that the recipients had agreed to receive the faxes turned out to be mistaken.
Between September 18, 2005, and November 15, 2008, MFG sent approximately
494,212 fax advertisements to the people included on the purchased lists. At the
time it sent the faxes, MFG thought that its advertising program complied with all
applicable laws.
MFG purchased from St. Paul a series of commercial general liability
insurance policies from 2003 to 2009 (the “Policies”). The Policies covered
“property damage” caused by “an event.” Doc. 51-21 at 64. 1 They defined
property damage as “physical damage to tangible property of others, including all
resulting use of that property” or “loss of use of tangible property of others that
isn’t physically damaged.” Id. The Policies defined an “event” as “an accident,
1 “Doc. #” refers to the numbered entry on the district court’s docket.
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including continuous or repeated exposure to substantially the same general
harmful conditions.” Id. at 65. The Policies did not define the term “accident.”
B. Procedural History
G.M. Sign brought a putative class action against MFG in Illinois state court,
alleging among other things violations of the Telephone Consumer Protection Act
(“TCPA”), 47 U.S.C. § 227. The complaint alleged that MFG had on several
occasions sent fax advertisements to G.M. Sign and the other members of the
putative class, without the recipients’ permission. After MFG notified St. Paul of
the lawsuit and demanded a defense and coverage, St. Paul notified MFG that it
was denying MFG’s demands. MFG removed G.M. Sign’s action to federal court
and moved to dismiss. After the district court denied the motion, the parties jointly
stipulated to dismissal without prejudice of all the claims, which the court
accepted. G.M. Sign then brought another action in state court, asserting the same
claims against MFG on behalf of the same class of plaintiffs.
MFG and G.M. Sign eventually settled, agreeing that MFG was liable to the
class in the total amount of $22,536,500. As part of the settlement agreement,
MFG agreed to pay $460,000 of this amount. The parties further stipulated that the
remaining amount MFG owed the class could only be satisfied from the Policies.
MFG assigned to the class its claims against and rights to payment from St. Paul
under the Policies.
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G.M. Sign, on behalf of itself and the other class members, brought this
action in Georgia state court, requesting a declaratory judgment that the Policies
covered the settled claims. St. Paul removed the case to federal district court and
filed a counterclaim requesting a declaratory judgment that it owed no coverage.
The parties filed cross-motions for summary judgment; the district court concluded
that MFG had failed to notify St. Paul of G.M. Sign’s second suit, which was a
condition precedent for coverage. The district court thus granted St. Paul’s
summary judgment motion, denied G.M. Sign’s motion, and entered judgment
in St. Paul’s favor. G.M. Sign appealed, and we vacated the district court’s order
granting St. Paul summary judgment on the notice issue and remanded for further
consideration.
On remand, the parties again filed cross-motions for summary judgment.
The district court again granted summary judgment to St. Paul, this time on the
ground that the Policies did not cover the property damage MFG caused.
Specifically, the district court ruled that under Mindis Metals, “the intentional
delivery of fax advertisements does not qualify as an ‘accident’ under Georgia law,
even if the sender erroneously believed that it had consent to send the fax
advertisements.” Doc. 81 at 12, 18.
G.M. Sign again appeals.
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II. STANDARD OF REVIEW
“We review an order granting summary judgment de novo and apply the
same legal standards that governed the district court’s decision.” Hegel v. First
Liberty Ins. Corp., 778 F.3d 1214, 1219 (11th Cir. 2015). To prevail on summary
judgment, the movant must show “that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a).
III. DISCUSSION
In this appeal, G.M. Sign argues that St. Paul is required to indemnify MFG
for its TCPA liability because the term “accident” under Georgia law covers
injuries resulting from negligence. According to G.M. Sign, MFG sent the faxes
negligently because it never intended to send any faxes without the recipients’
consent. Thus, according to G.M. Sign, MFG had no intent to injure the recipients.
St. Paul responds that no accident occurred when MFG sent the faxes because by
sending the faxes, MFG intended to cause the relevant property damage: the use of
the recipients’ fax machines and the depletion of their ink and paper. According to
St. Paul, MFG’s mistaken belief that the recipients agreed to receive the faxes is
immaterial. We agree with St. Paul. G.M. Sign also argues that St. Paul is
estopped from contesting coverage because it wrongfully breached its duty to
defend, but we reject this argument as well.
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A. No Accident Occurred Because in Sending the Faxes MFG Engaged in Intentional Conduct Premised on Erroneous Information.
Under Georgia law, “an insurance policy is simply a contract, the provisions
of which should be construed as any other type of contract.” Taylor Morrison
Servs., Inc. v. HDI-Gerling Am. Ins. Co., 746 S.E.2d 587, 590 (Ga. 2013)
(alteration adopted) (internal quotation marks omitted). 2 This appeal presents a
question of contract interpretation: whether, under the Policies, an “accident”
occurred when MFG intentionally sent faxes that caused the recipients’ fax
machines to suffer property damage 3 given that MFG mistakenly thought the
recipients had consented to receive the faxes. The Policies provide no definition
for the term “accident.” But when an insurance policy fails to define a term or
otherwise indicate that the term “is used in an unusual sense, [Georgia courts]
attribute to that term its usual and common meaning.” Id. at 590-91. The usual
and common meaning of “accident,” according to the Supreme Court of Georgia,
is “an unexpected happening without intention or design.” Id. at 591 (internal
2 As we explained in our earlier opinion, “[t]he insurance policies at issue here were issued in Georgia.” G.M. Sign, Inc., 677 F. App’x at 642. The parties agree that Georgia law governs whether the Policies provided coverage for MFG’s TCPA liability.
3 Neither party disputes that property damage occurred when MFG sent the faxes at issue. Courts have concluded that the use of a fax machine to print a fax, including the depletion of the machine’s ink and paper, constitutes property damage. See, e.g., Resource Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d 631, 639 (4th Cir. 2005) (agreeing with the Seventh Circuit in American States Insurance Co. v. Capital Associates of Jackson County, Inc., 392 F.3d 939, 943 (7th Cir. 2004)).
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quotation marks omitted). Prior published precedent of this Court requires us to
conclude that no accident occurred when MFG sent the faxes at issue here.
Applying Georgia law, in Mindis Metals, we considered whether
“intentional conduct premised on erroneous information” constitutes an accident.
209 F.3d at 1297. We acknowledged that other jurisdictions were divided on the
issue, but we nonetheless concluded that under Georgia law such conduct was not
an accident. Id. We adopted the reasoning of the district court opinion in Macon
Iron & Paper Stock Co. v. Transcontinental Insurance Co., 93 F. Supp. 2d 1370
(M.D. Ga. 1999), and attached that decision to our opinion. Mindis Metals, 209
F.3d at 1297-1302.
In Macon Iron, the district court addressed whether negligent conduct
constituted an accident under Georgia law. There, a scrap metal recycler
purchased railcars from the general manager of a railroad. Mindis Metals, 209
F.3d at 1297. The recycler paid the general manager personally for the railcars.
Id. When the railroad learned of these transactions, it reported the general manager
to the police and sued the recycler for the unauthorized transactions. Id. at 1298.
The railroad and the recycler settled the railroad’s claims. Id. Although the
recycler had two insurance policies that covered “property damage” caused by an
“accident,” the insurance companies refused to defend the recycler or indemnify it
for the settlement amount. Id. at 1298-99. The recycler then sued the insurers,
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claiming the policies provided coverage. Id. at 1298. The district court disagreed
based on its conclusion that no accident occurred when the recycler purchased the
railcars and scrapped them. Id. at 1301. Even if the recycler mistakenly believed
that the general manager personally owned the railcars, the court concluded, no
accident occurred because the recycler intended to damage the railcars by “cutting
them up for use as scrap metal.” Id.
Macon Iron relied on two decisions from the Court of Appeals of Georgia
addressing whether an accident occurred for general liability insurance purposes,
Glens Falls Insurance Co. v. Donmac Golf Shaping Co., 417 S.E.2d 197 (Ga. Ct.
App. 1992), and Georgia Farm Bureau Mutual Insurance Co. v. Meriwether, 312
S.E.2d 823 (Ga. Ct. App. 1983). In Glens Falls, a construction company built a
golf course on a site without realizing that much of the new course sat on federally
protected wetlands. Glens Falls, 417 S.E.2d at 198. When the company was sued,
it filed an action against its insurer seeking a declaratory judgment that the insurer
was required to provide a defense and coverage under a commercial general
liability insurance policy. Id. The insurance company denied coverage under an
exclusion that applied to property damage “expected or intended from the
standpoint of the insured.” Id. at 198-99. The Court of Appeals ruled that the
exclusion was inapplicable because the developer did not intend to build on federal
wetlands. Id. at 199. The court reasoned that in determining whether the
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construction of the course on wetlands was expected or intended, “[t]he issue is not
whether [the construction company] intended to build the project in its present
location . . . but whether [the company] had the specific intent called for by the
policy to cause the alleged damages.” Id.
In Meriwether, a property owner was sued after he placed a gate across a
road that he believed to be on his property but may have been on public property.
Meriwether, 312 S.E.2d at 823-24. The property owner had an insurance policy
that covered property damage caused by an occurrence, which the policy defined
as “an accident which results in . . . property damage neither expected nor intended
from the standpoint of the insured.” Id. (alteration adopted) (emphasis omitted).
After the property owner demanded that his insurer provide him a defense to the
plaintiffs’ action, the property owner’s insurer sought a judgment declaring that it
had no duty to defend. Id. at 823. The Court of Appeals concluded that the insurer
had no duty to defend because no “accident” occurred when the property owner
closed the gate. Id. at 824. The court reasoned that the property owner’s conduct
could not be accidental because he “intentionally blocked the disputed way.” Id.
Acknowledging its duty to avoid interpreting decisions of the Georgia
appellate court as conflicting, the district court in Macon Iron followed Meriwether
and distinguished Glens Falls, the later-decided case, on the ground that Glens
Falls, unlike Meriwether, interpreted an exclusion to insurance coverage, which
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Georgia law requires courts to construe narrowly. Mindis Metals, 209 F.3d at 1300
(“Glens Falls can be read without contradicting [Meriwether]. In contrast to
Meriwether, the court in Glens Falls was interpreting an exclusion to insurance
coverage. . . . [E]xclusions to insuring agreements require a narrow construction.”
(internal quotation marks omitted)). Macon Iron read Meriwether as standing for
the proposition that under Georgia law “an ‘accident’ does not include damage to
persons or property when that damage is intentionally inflicted, even where that
intentional conduct is caused by erroneous information.” Id. Because Mindis
Metals agreed with Macon Iron and adopted its reasoning, we are bound here by
this statement of Georgia law unless state law has since changed or been clarified.
See World Harvest Church, Inc. v. GuideOne Mut. Ins. Co., 586 F.3d 950, 957
(11th Cir. 2009), certified question answered, 695 S.E.2d 6 (Ga. 2010).
Applying the rule we adopted in Mindis Metals to the facts of this case
yields the conclusion that under Georgia law, no accident occurred when MFG sent
faxes with the mistaken belief that the recipients had consented to receive them.
MFG intended to send the faxes and thus intended to cause the resulting property
damage, the use of the fax machines and the depletion of the machines’ ink and
paper. The fact that MFG mistakenly thought the recipients had consented to
receive the faxes is insufficient under Mindis Metals to render the property damage
an accident under Georgia law. Therefore, the Policies’ property damage
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provisions provided no coverage for the TCPA liability arising from MFG’s
conduct. The district court correctly granted St. Paul summary judgment.
G.M. Sign contends that Mindis Metals no longer controls because a
subsequent decision of the Supreme Court of Georgia clarified state law. See Am.
Empire Surplus Lines Ins. Co. v. Hathaway Dev. Co., 707 S.E.2d 369 (Ga. 2011).
As earlier stated, our prior precedent rule requires us to follow Mindis Metals
unless state law has since been “change[d] or . . . clarified in a way that is
inconsistent with the state law premise” of Mindis Metals. World Harvest Church,
586 F.3d at 957 (internal quotation marks omitted). Thus, we would be free to
accept G.M. Sign’s invitation to reinterpret Georgia law in light of Hathaway if
that case changed or clarified the state law premise of Mindis Metals. But in our
view it did neither.
In Hathaway, a general contractor sued its plumbing subcontractor after the
plumber’s work damaged surrounding property. Hathaway, 707 S.E.2d at 370.
After entry of a default judgment against the subcontractor, the general contractor
filed an action against the subcontractor’s insurer. Id. The general contractor
sought coverage under the subcontractor’s commercial general liability insurance
policy, which provided coverage for property damage resulting from an
“occurrence,” defined as an “accident.” Id. The Supreme Court of Georgia held
that the property damage resulting from the negligent work was an occurrence
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under the policy. Id. at 372. It reasoned that “[a] deliberate act, performed
negligently, is an accident if the effect is not the intended or expected result; that
is, the result would have been different had the deliberate act been performed
correctly.” Id. (internal quotation marks omitted).
Hathaway does not change or clarify the state law premise of Mindis Metals.
The state law premise of Mindis Metals is that “an ‘accident’ does not include
damage to persons or property when that damage is intentionally inflicted, even
where that intentional conduct is caused by erroneous information.” Mindis
Metals, 209 F.3d at 1300. Because the effect of the subcontractor’s negligence on
the neighboring property was neither intended nor expected, Hathaway does not at
all address the question whether an accident occurs when an insured intentionally
inflicts property damage based on erroneous information.4
G.M. Sign relies on Hathaway to argue that, in the instant case, “had the act
of faxing been performed correctly and faxes only been sent to consenting
recipients, there would have been no injury.” Appellant’s Br. at 24; see id. at 18,
20. This argument is misplaced for two reasons. First, as we have explained,
Hathaway did not change the premise of Mindis Metals, by which we are bound.
See World Harvest Church, Inc., 586 F.3d at 957. Second, contrary to G.M. Sign’s
4 Because we are bound by Mindis Metals and required to apply Georgia law, we decline to address the cases from other jurisdictions that G.M. Sign cites in support of its argument that an accident occurred here.
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argument, the same property damage—the use of the recipients’ fax machines and
the corresponding depletion of the machines’ ink and paper—would have resulted
had the faxes been sent only to consenting recipients. MFG plainly intended to
occupy the machines; whether it intended to violate the TCPA by sending the faxes
without the recipients’ consent is immaterial.
G.M. Sign urges the Court to follow a line of Georgia cases supporting the
proposition that “the term ‘accident’ for purposes of property damage coverage . . .
include[s] injuries resulting from negligence.” Appellant’s Br. at 21. 5 Assuming
for purposes of this opinion that this is an accurate statement of Georgia law, it is
not inconsistent with Mindis Metals. The term “accident” may at once include
injuries resulting from negligence but exclude injuries resulting from intentional
conduct premised on erroneous information. In determining whether an accident
occurred, Georgia law asks whether a happening was expected or intended. See
Taylor Morrison, 746 S.E.2d at 590-91 (defining the term “accident” as “an
unexpected happening without intention or design” (internal quotation marks
omitted)). Whether the act that caused the happening was intentional, negligent,
or both is of no moment. See Hathaway, 707 S.E.2d at 372 (“A deliberate act,
5 These cases include: Maxum Indem. Co. v. Jimenez, 734 S.E.2d 499 (Ga. Ct. App. 2012); Cincinnati Ins. Co. v. Magnolia Estates, Inc., 648 S.E.2d 498 (Ga. Ct. App. 2007); Allstate Ins. Co. v. Justice, 493 S.E.2d 532 (Ga. Ct. App. 1997); and Crook v. Ga. Farm Bureau Mut. Ins. Co., 428 S.E.2d 802 (Ga. Ct. App. 1993).
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performed negligently, is an accident if the effect is not the intended or expected
result; that is, the result would have been different had the deliberate act been
performed correctly.” (internal quotation marks omitted)). 6 In this case, the result
would not have been different had the deliberate act been performed correctly (i.e.,
if the faxes had been sent to consenting recipients).
Because we decide that the Policies do not cover the property damage for
which G.M. Sign seeks coverage, we do not address the applicability of any
exclusions that might bar coverage.
B. St. Paul Is Not Estopped from Denying Coverage.
G.M. Sign argues that St. Paul is estopped under Illinois law from denying
coverage because St. Paul breached its duty to defend MFG in the Illinois state
court action brought by G.M. Sign. St. Paul responds that Illinois law is
inapplicable and that under Georgia law the wrongful denial of a duty to defend
does not estop an insurer from contesting coverage. St. Paul has the better side of
this argument under the law of either state.7
6 At oral argument, G.M. Sign’s counsel relied on the Supreme Court of Georgia’s decision in Taylor Morrison to argue that an accident occurred and coverage was triggered because the TCPA claims, as strict liability claims, could have been established without proving intent. But G.M. Sign failed to raise this argument in its briefing, and we therefore decline to consider it. See McFarlin v. Conseco Servs., LLC, 381 F.3d 1251, 1263 (11th Cir. 2004) (“A party is not allowed to raise at oral argument a new issue for review.”).
7 Although the parties agree that Georgia law governs the question whether the Policies provided coverage for MFG’s TCPA liability, see supra note 2, the parties disagree as to whether Georgia or Illinois law controls the estoppel analysis. G.M. Sign argues that Illinois law applies 15 Case: 17-14247 Date Filed: 04/12/2019 Page: 16 of 17
St. Paul is correct that under Georgia law, an insurer that wrongfully denies
a duty to defend is not estopped from later contesting coverage. See Henning v.
Cont’l Cas. Co., 254 F.3d 1291, 1295 (11th Cir. 2001) (concluding that under
Georgia law, “an insurer is not estopped from asserting the defense of lack of
coverage or other policy defenses even if it wrongfully fails to defend”). In
contrast, under Illinois law, an insurer that fails to defend its insured under a
reservation of rights or seek a declaratory judgment that no coverage exists “and is
later found to have wrongfully denied coverage . . . is estopped from raising policy
defenses to coverage.” Emp’rs Ins. of Wausau v. Ehlco Liquidating Tr., 708
N.E.2d 1122, 1134-35 (Ill. 1999). Nevertheless, “[a]pplication of the estoppel
doctrine is not appropriate if the insurer had no duty to defend.” Id. at 1135. And
an insurer has no duty to defend under Illinois law when a comparison of the
policy and the complaint indicates that “there clearly was no coverage or potential
for coverage.” Id. We need not decide whether Illinois law applies because even
assuming it does, the result is the same. Here, G.M. Sign’s complaint in the
Illinois state court action failed to allege facts that would have triggered coverage
because the complaint failed to allege that MFG caused unexpected or unintended
property damage by sending junk faxes to G.M. Sign and others. Therefore, St.
because G.M. Sign filed the action against MFG, for which St. Paul refused to defend or indemnify MFG, in Illinois state court.
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Paul is not estopped from contesting coverage under the law of either Georgia or
Illinois.
IV. CONCLUSION
We conclude that the Policies provided MFG with no coverage here because
no accident occurred when MFG intentionally sent faxes with the mistaken belief
that the recipients had consented to receive them. We further conclude that St.
Paul is not estopped from denying coverage. We therefore affirm the district
court’s grant of summary judgment to St. Paul.
AFFIRMED.