Creative Hospitality Ventures, Inc. v. United States Liability Insurance , 444 F. App'x 370 ( 2011 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 11-11781 ELEVENTH CIRCUIT
SEPTEMBER 30, 2011
Non-Argument Calendar
JOHN LEY
________________________
CLERK
D.C. Docket No. 1:08-cv-22302-WJZ
CREATIVE HOSPITALITY VENTURES, INC.,
Plaintiffs, et al.,
E.T. LIMITED, INC.,
Plaintiff-Appellant,
versus
UNITED STATES LIABILITY INSURANCE COMPANY,
d.b.a. United States Liability Insurance Group, et al.,
Defendants,
ESSEX INSURANCE COMPANY,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(September 30, 2011)
Before HULL, WILSON, and BLACK, Circuit Judges.
PER CURIAM:
Plaintiff–appellant E.T. Limited, Inc., (“ETL”) appeals the district court’s
grant of summary judgment to Defendant–appellee Essex Insurance Company
(“Essex”). The district court concluded that Defendant Essex’s commercial
general liability policy (the “Policy”) imposed no duty to defend Plaintiff ETL in
the underlying litigation in state court. In the state court litigation, several
consumers filed a class action against ETL and others for violating the Fair and
Accurate Credit Card Transaction Act (“FACTA”), 15 U.S.C. § 1681c(g)(1), by
issuing receipts revealing more than five digits of the consumer’s credit card
number or the card’s expiration date.1
More specifically, the district court concluded that Defendant Essex owed
no duty to defend Plaintiff ETL under the Policy because ETL’s issuance of a
credit card receipt does not constitute a “publication” as required under the
Policy’s coverage for personal and advertising injury. We agree with the district
court that “publication” as used in the Policy is unambiguous and that the
1
Enacted as an amendment to the Fair Credit Reporting Act, 15 U.S.C. § 1681, FACTA
requires a merchant to truncate the credit or debit card number on a customer’s receipt. FACTA
provides, “Except as otherwise provided in this subsection, no person that accepts credit cards or
debit cards for the transaction of business shall print more than the last 5 digits of the card
number or the expiration date upon any receipt provided to the cardholder at the point of the sale
or transaction.” 15 U.S.C. § 1681c(g)(1).
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provision of a receipt to a customer involves no “publication” within the meaning
of the Policy. Accordingly, we affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. The Policy
Plaintiff ETL operates a restaurant in Miami, Florida. During 2008, ETL
was the named insured on the Policy issued by Defendant Essex. The Policy
covers sums ETL must pay because of “advertising injury,” defined as follows:
COVERAGE B PERSONAL AND ADVERTISING INJURY
LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally
obligated to pay as damages because of “personal and
advertising injury” to which this insurance applies. We will
have the right to defend the insured against any “suit” seeking
those damages. . . .
....
2. Exclusions
This insurance does not apply to:
a. Knowing Violation Of Rights Of Another
“Personal and advertising injury” caused by or at the direction
of the insured with knowledge that the act would violate the
rights of another and would inflict “personal and advertising
injury”.
3
....
SECTION V - DEFINITIONS
....
14. “Personal and advertising injury” means injury, including
consequential “bodily injury,” arising out of one or more of the
following offenses:
....
d. Oral or written publication, in any manner, of material that
slanders or libels a person or organization or disparages a
person’s or organization’s goods, products or services;
e. Oral or written publication, in any manner, of material that
violates a person’s right of privacy . . . .
B. Underlying State Court Litigation
In February 2008, ETL was sued in state court in Florida. In state court, the
class action complaint alleges violations of FACTA and seeks to recover on behalf
of “all persons who . . . had more than the last five digits of their payment card’s
account number or expiration date printed on the receipt provided to the
Cardholder.” The complaint alleges that ETL “willfully violated [FACTA] and
failed to protect the Cardholder and the purported class against identity theft and
credit and debit card fraud by printing more than the last five digits of the card
number and/or the expiration date on the consumer receipts it provided to the
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Cardholder and the purported class.” The complaint seeks actual damages or
statutory damages,2 and punitive damages, costs, and attorney’s fees.
ETL requested that Essex defend and indemnify ETL in this state court
litigation, but Essex denied coverage. Although our record contains no evidence
of the disposition of the state court litigation, the parties apparently agree that the
state court case was dismissed in April 2009.
B. Federal Court Litigation
Initially, this federal court case was brought by another insured party, as a
prospective class action, on behalf of all persons and entities that have been sued
under FACTA and were denied insurance coverage by United States Liability
Insurance Company (“USLI”) “or other insurance companies.” The complaint
sought declaratory judgments that the insurers were obligated to defend and
indemnify their insureds against lawsuits asserting violations of FACTA.
An October 2008 amended complaint added ETL as a prospective class
plaintiff and added Essex as a defendant. Moving to dismiss the complaint, Essex
argued, among other things, that it owed no duty to defend ETL because the
2
The statute permits a consumer injured by a person who “willfully fails to comply” with
FACTA to recover “any actual damages sustained by the consumer as a result of the failure or
damages of not less than $100 and not more than $1,000.” See 15 U.S.C. § 1681n(a). A
consumer injured by “negligent noncompliance” with FACTA may recover only actual damages.
See 15 U.S.C. § 1681o.
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printing of a credit card receipt involved no “publication” within the meaning of
the Policy. USLI also moved to dismiss on similar grounds. After ordering
supplemental briefing on the defendants’ motions to dismiss, the district court
referred the motions to the magistrate judge.
In a lengthy report and recommendation, the magistrate judge concluded
that the underlying state court complaint against Essex “can fairly be read to
include both negligent and willful noncompliance” with FACTA, but that the
underlying complaint against USLI alleged only willful noncompliance with
FACTA. Turning to interpretation of the insurance policies at issue here, the
magistrate judge concluded that the phrase “publication, in any manner” was
broad enough to include the provision to a customer of a credit card receipt
containing more than five digits of the credit card number or the card’s expiration
date. The magistrate judge further concluded that FACTA created a “right to
privacy” within the meaning of the insurance policies and that the underlying
complaints therefore alleged “injury” as defined by the policies.
Addressing the pertinent exclusions, the magistrate judge concluded that,
because the underlying state court complaint against USLI sought damages only
for willful violations of FACTA, the exclusion for “knowing violations of rights of
another” precluded coverage. However, because the underlying state court
6
complaint against Essex fairly included allegations of both willful and negligent
violations of FACTA, this exclusion did not justify Essex’s denial of coverage.
Accordingly, the magistrate judge recommended dismissal of the claims against
USLI but recommended denial of Essex’s motion to dismiss.
Timely objecting to the magistrate judge’s report, Essex argued that the
magistrate judge erred by concluding that the underlying state court complaint
against ETL alleged both negligent and willful violations of FACTA and by
concluding that the provision of a receipt constituted a “publication” within the
meaning of the Policy. Neither the plaintiffs nor USLI objected to the magistrate
judge’s report. Accordingly, the district court adopted the report with respect to
the claims against USLI and granted USLI’s motion to dismiss. However, the
district court reserved ruling on Essex’s motion to dismiss and Essex’s objections
to the magistrate judge’s report.
At a subsequent status conference, the parties informed the district court
that the underlying state court case against ETL had been dismissed, and the
parties agreed to convert Essex’s motion to dismiss into a motion for summary
judgment. The district court ordered further briefing and subsequently denied
Essex’s motion to dismiss and converted the motion to dismiss into a motion for
summary judgment.
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Following further briefing, the district court granted summary judgment to
Essex. The district court concluded that “publication” as used in the Policy was
not ambiguous and that the term did not cover the FACTA violations alleged in
the underlying state court complaint. The district court noted that the Florida
Supreme Court recently defined “publication” as “communication (as of news or
information) to the public: public announcement.” See Penzer v. Transp. Ins. Co.,
29 So. 3d 1000, 1005 (Fla. 2010) (internal quotation marks omitted). Relying on
this definition, the district court concluded that “[p]rinting a non-truncated credit
card receipt and providing it to the cardholder does not constitute publication
because there is no dissemination of information to the public.” The district court
acknowledged that the Policy included the phrase “publication, in any manner,”
but concluded that the modifying phrase merely clarified the categories of
publication covered by the Policy. Because the underlying state court complaint
alleged no “publication” at all, Essex properly denied coverage and had no duty to
defend ETL in the underlying state court case. ETL3 timely appealed the district
court’s order.
3
The notice of appeal is from the district court’s March 23, 2011 order, which addresses
only ETL’s claims against Essex. Although the notice of appeal references Creative Hospitality
Ventures, Inc. as the appellant, it is clear that the intent of the notice of appeal is to appeal the
claims in the district court’s March 23, 2011 order. Thus, we construe the notice of appeal to
include ETL as the plaintiff–appellant. See Fed. R. App. P. 3(c)(4).
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II. DISCUSSION
On appeal, Plaintiff ETL argues that the district court erred by granting
summary judgment based on a narrow construction of “publication, in any
manner” as used in the Policy. Although acknowledging the Florida Supreme
Court’s definition of “publication” in Penzer, ETL notes that the policy at issue in
Penzer did not include the modifying phrase “in any manner.” ETL contends that
this modifying phrase broadens the scope of “publication” to include a written
credit card receipt. ETL further argues that “publication” is not defined in the
Policy and is ambiguous, as evidenced by the fact that the magistrate judge and the
district court reached differing conclusions about the scope of the term. Because
the term is ambiguous, ETL asserts that the Policy must be construed against
Essex and that Essex therefore breached the Policy by denying a defense to ETL in
the underlying state court case.
A. Insurance Policy Interpretation Under Florida4 Law
“Under Florida law, insurance contracts are construed according to their
plain meaning.” Garcia v. Fed. Ins. Co., 969 So. 2d 288, 291 (Fla. 2007)
4
In this diversity case, we apply the substantive law, including the choice-of-law rules, of
the forum state, in this case Florida. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S. Ct.
817, 822 (1938); Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 1021
(1941). The parties agree that Florida’s choice-of-law rules require the application of Florida law
to this insurance dispute.
9
(quotation marks omitted). Nevertheless, if the relevant policy language is
susceptible to more than one reasonable interpretation, one providing coverage
and another limiting coverage, the insurance policy is ambiguous. Auto-Owners
Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000). An ambiguity in an insurance
contract is interpreted against the insurer and in favor of the insured. Swire Pac.
Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 165 (Fla. 2003). Before
construing a provision against the insurer, however, the provision must actually be
ambiguous. Garcia, 969 So. 2d at 291.
In determining the plain meaning of provisions in an insurance policy,
Florida courts may consult references commonly relied upon to supply the
accepted meaning of words. Id. at 292. A provision is not rendered ambiguous
merely because it is complex or requires analysis. Swire Pac. Holdings, 845 So.
2d at 165. The “mere failure to provide a definition for a term involving coverage
does not necessarily render the term ambiguous.” Cont’l Cas. Co. v. Wendt, 205
F.3d 1258, 1262 (11th Cir. 2000) (quotation marks omitted). “[I]f a policy
provision is clear and unambiguous, it should be enforced according to its terms
whether it is a basic policy provision or an exclusionary provision.” Garcia, 969
So. 2d at 291 (quotation marks omitted).
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B. Defining “Publication”
In this appeal, we must decide whether “publication” as used in the Policy
includes a merchant’s provision of a receipt to a customer during a retail
transaction. Fortunately, our review is aided by the Florida Supreme Court’s
recent decision in Penzer.
In Penzer, an insured sued his commercial general liability (“CGL”) insurer
in federal district court, seeking a declaratory judgment that the insurer was
obligated to defend an action against the insured for violating the Telephone
Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, by sending unsolicited
facsimile advertisements.5 29 So. 3d at 1003. In Penzer, the policy provided
coverage for personal or advertising injury, which included injury arising out of
“[o]ral or written publication of material that violates a person’s right to privacy.”
Id. The district court concluded that this provision was unambiguous and that the
insurer owed no duty to defend the TCPA claims because coverage arose only if
the content of the published material (in this case, the faxed advertisements)
5
The TCPA prohibits the use of “any telephone facsimile machine . . . to send, to a
telephone facsimile machine, an unsolicited advertisement.” 47 U.S.C. § 227(b)(1)(C).
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violated a person’s right to privacy. Id. at 1004. The insured appealed, and we
certified the following question to the Florida Supreme Court:
DOES A COMMERCIAL LIABILITY POLICY WHICH PROVIDES
COVERAGE FOR “ADVERTISING INJURY,” DEFINED AS
“INJURY ARISING OUT OF . . . ORAL OR WRITTEN
PUBLICATION OF MATERIAL THAT VIOLATES A PERSON’S
RIGHT OF PRIVACY,” SUCH AS THE POLICY DESCRIBED HERE,
PROVIDE COVERAGE FOR DAMAGES FOR VIOLATION OF A
LAW PROHIBITING USING ANY TELEPHONE FACSIMILE
MACHINE TO SEND UNSOLICITED ADVERTISEMENT TO A
TELEPHONE FACSIMILE MACHINE WHEN NO PRIVATE
INFORMATION IS REVEALED IN THE FACSIMILE?
See Penzer v. Transp. Ins. Co., 545 F.3d 1303, 1312 (11th Cir. 2008) (alteration in
original).
Responding in the affirmative to the certified question, the Florida Supreme
Court (in a five-justice majority) held that the policy language was unambiguous
and provided coverage “for blast-faxing in violation of the TCPA.” Penzer, 29 So.
3d at 1008. Importantly, for our purposes, the Florida Supreme Court majority
adopted a plain-meaning, dictionary definition of “publication” as used in the CGL
policy in Penzer:
The . . . term[] “publication” is defined as “communication (as of
news or information) to the public: public announcement” or as “the act
or process of issuing copies (as a book, photograph, or musical score)
for general distribution to the public.” WEBSTER’S THIRD NEW
INTERNATIONAL DICTIONARY 1836 (1981). The definition also refers the
reader to the definition of “publish.” Id. To publish is “to place before
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the public (as through a mass medium): DISSEMINATE.” Id. at 1837.
Here, sending 24,000 unsolicited blast-facsimile advertisements to Mr.
Penzer and others is included in the broad definition of “publication”
because it constitutes a communication of information disseminated to
the public and it is “the act or process of issuing copies . . . for general
distribution to the public.”
Id. at 1005-06.6
C. Is Providing a Receipt to a Customer “Publication, in Any Manner”?
We agree with the district court that the provision of a receipt to a customer
fails to constitute a “publication” within the meaning of Essex’s Policy. In
particular, we reject ETL’s argument that the language of “publication, in any
manner” is ambiguous, and we apply the dictionary definition of “publication” as
used by the Florida Supreme Court in Penzer. Specifically, “publication” means
6
Although two of the seven Florida justices wrote separate concurrences and would have
decided that the policy provision was ambiguous, only one concurring justice concluded that
“publication” was ambiguous. See Penzer, 29 So. 3d at 1008-10 (Pariente and Canady, J.J.,
concurring only in the result). However, Justice Canady—who concluded that “publication”
might be ambiguous—found that the “right to privacy” language in the policy was ambiguous
because it reasonably could be construed to cover either an invasion of privacy caused by the
content of the published material or an invasion of privacy caused by the act of sending the
facsimile (in other words, a violation of the right to seclusion, or to be left alone). Justice
Canady argued that “publication” may refer to either dissemination of information or to the
“process of producing and issuing printed or reproduced matter, a definition which focuses on the
physical object disseminated.” Id. at 1010 (emphasis added). But in defining the scope of the
right to privacy under the policy language, even Justice Canady assumed that “publication”
required some dissemination—a matter that was not in dispute in Penzer because the insured had
“disseminated” 24,000 unsolicited advertisements by facsimile. See id. at 1007 (majority
opinion). In any event, Justice Canady’s distinction between content-based and seclusion-based
violations is irrelevant to this particular case because the district court concluded that the FACTA
violations at issue constituted a violation of a person’s right to privacy.
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“communication (as of news or information) to the public: public announcement”
or “the act or process of issuing copies . . . for general distribution to the public.”
Penzer, 29 So. 3d at 1005-06 (quoting WEBSTER’S THIRD NEW INTERNATIONAL
DICTIONARY 1836 (1981)).
In this case, ETL allegedly violated FACTA by issuing a credit card receipt
to a customer that contained more than five digits of the consumer’s credit card
number or the card’s expiration date. The receipt is a contemporaneous record of
a private transaction between ETL and the customer, and ETL neither broadcasted
nor disseminated the receipt or the credit card information to the general public.
Indeed, ETL provided the receipt only to the customer (who already knows the
credit card number and its expiration date). Additionally, unlike the unsolicited
“blast-faxes” at issue in Penzer, the aggrieved customer initiated the transaction by
paying for his meal with a credit card. In sum, providing a customer a
contemporaneous record of a retail transaction involves no dissemination of
information to the general public and does not constitute publication within the
meaning of Essex’s Policy. See Whole Enchilada, Inc. v. Travelers Prop. Cas. Co.
of Am., 581 F. Supp. 2d 677, 697, 706 (W.D. Pa. 2008) (concluding, under
Pennsylvania law, that FACTA violations were not covered under a CGL policy
covering advertising injury; the issuance of a receipt involved no “publication”
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because “the printed receipts are not made generally known, publicly announced,
nor dissminated to the public”).
Although ETL argues that “publication” must be ambiguous because the
magistrate judge and the district court reached differing conclusions on the scope
of the term, we note that the magistrate judge issued her report before the Florida
Supreme Court’s decision in Penzer and therefore lacked the benefit of the Florida
Supreme Court’s binding, plain-meaning definition of the term. We likewise
reject ETL’s argument that the phrase “in any manner” expands the definition of
“publication” to include the provision of a written receipt. As the district court
noted, the phrase “in any manner” merely expands the categories of publication
(such as e-mail, handwritten letters, and, perhaps, “blast-faxes”) covered by the
Policy. But the phrase cannot change the plain meaning of the underlying term
“publication.”
AFFIRMED.7
7
ETL’s request for oral argument is DENIED.
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