Valley Forge Insurance v. Swiderski Electronics

Docket No. 101261.
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
VALLEY FORGE INSURANCE COMPANY et al., Appellants, v.
SWIDERSKI ELECTRONICS, INC., et al., Appellees.
Opinion filed November 30, 2006.
JUSTICE GARMAN delivered the judgment of the court, with
opinion.
Chief Justice Thomas and Justices Freeman, Fitzgerald, Kilbride,
Karmeier, and Burke concurred in the judgment and opinion.
OPINION
Ernie Rizzo, doing business as Illinois Special Investigations, filed
suit individually and on behalf of a class of those similarly situated
against Swiderski Electronics, Inc., based on Swiderski’s alleged
sending of unsolicited facsimile advertisements. Swiderski tendered
the defense of the suit to Valley Forge Insurance Company and
Continental Casualty Corporation pursuant to insurance policies
Swiderski had purchased from them. Subsequently, the insurers
sought a declaratory judgment that they had no duty to defend
Swiderski against Rizzo’s lawsuit (735 ILCS 5/2–701 (West 2002)).
The parties filed cross-motions for summary judgment regarding the
insurers’ duty to defend (735 ILCS 5/2–1005 (West 2002)), and the
circuit court of McHenry County granted summary judgment in favor
of Swiderski. The appellate court affirmed. 359 Ill. App. 3d 872. The
issue before us is whether the insurers have a duty to defend Swiderski
against Rizzo’s lawsuit under the insurance policies. We hold that they
do and affirm the judgment of the appellate court.
BACKGROUND
Ernie Rizzo operates a private investigation business known as
Illinois Special Investigations. On June 19, 2003, Rizzo filed a three-
count complaint in the McHenry County circuit court against
Swiderski Electronics, Inc. According to the complaint, Swiderski
sent Rizzo and numerous other individuals a fax advertisement with
information on the sale, rental, and service of various types of
electronic equipment. The complaint alleges that, by faxing copies of
the advertisement without first obtaining the recipients’ permission to
do so, Swiderski (1) violated section 227 of the Telephone Consumer
Protection Act (TCPA) (47 U.S.C. §227 (2000)), (2) unlawfully
converted the fax machine toner and paper of those who received the
faxes, and (3) violated section 2 of the Illinois Consumer Fraud and
Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS
505/2 (West 2002)).1 The complaint seeks damages, attorney fees, and
injunctive relief on behalf of all individuals who received an unsolicited
fax advertisement from Swiderski within the four-year period
preceding the filing of the complaint. As yet, no class has been
certified.
Swiderski tendered the defense of Rizzo’s lawsuit to its primary
insurer, Valley Forge Insurance Company, and its excess insurer,
Continental Casualty Corporation. Under the Valley Forge policy,
Valley Forge has a duty to defend Swiderski against any suit seeking
damages caused by “personal and advertising injury.” “Personal and
advertising injury” includes injury that arises out of one or more of the
following offenses:
“a. False arrest, detention or imprisonment;
b. Malicious prosecution;
1
On January 22, 2004, the circuit court dismissed Rizzo’s Consumer
Fraud Act claim without prejudice. That claim is not at issue in this appeal.
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c. The wrongful eviction from, wrongful entry into, or
invasion of the right of private occupancy of a room, dwelling
or premises that a person occupies, committed by or on behalf
of its owner, landlord or lessor;
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;
f. The use of another’s advertising idea in your
‘advertisement’; or
g. Infringing upon another’s copyright, trade dress or
slogan in your ‘advertisement.” (Emphasis added.)
The policy defines “advertisement” as “a notice that is broadcast or
published to the general public or specific market segments about your
goods, products or services for the purpose of attracting customers or
supporters.” It does not define “publication,” “material,” or “privacy.”
The policy excludes coverage for “ ‘[p]ersonal and advertising injury’
caused by or at the direction of the insured with the knowledge that
the act would violate the rights of another and would inflict ‘personal
and advertising injury.’ ”
The Valley Forge policy also obligates Valley Forge to defend
Swiderski against any suit seeking damages caused by “property
damage.” The policy defines “property damage” as:
“a. Physical injury to tangible property, including all
resulting loss of use of that property. All such loss of use shall
be deemed to occur at the time of the physical injury that
caused it; or
b. Loss of use of tangible property that is not physically
injured. All such loss of use shall be deemed to occur at the
time of the ‘occurrence’ that caused it.”
The policy applies to “property damage” only if the damage is caused
by an “occurrence,” which is defined as “an accident, including
continuous or repeated exposure to substantially the same general
harmful conditions.” The policy does not define “accident.” Coverage
for “property damage” does not apply to “ ‘property damage’
expected or intended from the standpoint of the insured.’ ”
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The relevant provisions of the policy Continental issued to
Swiderski are essentially the same as the provisions of the Valley
Forge policy discussed above.2 Like the Valley Forge policy, the
Continental policy covers “advertising injury,” which is defined as:
“a. Oral, written, televised or videotaped publication of
material that slanders or libels a person or organization or
disparages a person’s or organization’s goods, products or
services;
b. Oral, written, televised or videotaped publication of
material that violates a person’s right of privacy;
c. The use of another’s advertising idea in your
advertisement; or
d. Infringement upon another’s copyright, trade dress or
slogan in your advertisement.” (Emphasis added.)
The Continental policy also covers “property damage” with provisions
nearly identical to those contained in the Valley Forge policy.
On October 29, 2003, Valley Forge and Continental informed
Swiderski that the claims set forth in Rizzo’s complaint were not
covered by the policies they issued to Swiderski. Subsequently, on
January 9, 2004, the insurers sought a declaration from the McHenry
County circuit court that they had no duty to defend or indemnify
Swiderski with regard to Rizzo’s lawsuit. Thereafter, Swiderski filed
a counterclaim against the insurers and a third-party claim against
Rizzo, asserting that Rizzo’s TCPA claim and conversion claim were
covered by the policies.
The parties filed cross-motions for partial summary judgment on
the issue of the insurers’ duty to defend. On July 23, 2004, after oral
argument, the circuit court granted Swiderski’s motion on the ground
that the insurers had a duty to defend Swiderski under the policies’
“advertising injury” provision. Because the court found a duty to
defend under the “advertising injury” provision, the court did not rule
on whether a duty to defend existed on the basis of the policies’
2
Given the policies’ similarity, the insurers have simply referred to the
language of the Valley Forge policy as representative of both policies in the
briefs submitted to this court.
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“property damage” provision. The court was not asked to rule on
whether the insurers had a duty to indemnify Swiderski.
Subsequently, in an order dated September 9, 2004, the circuit
court entered judgment in favor of Swiderski. The order required the
insurers to pay the defense costs already incurred in the underlying
action, which amounted to $25,222.22. The order also required the
insurers to advance future defense costs to Swiderski pending
resolution of any appeal. In addition, the circuit court certified the
duty-to-defend issue for immediate appeal pursuant to Supreme Court
Rule 304(a) (210 Ill. 2d R. 304(a)).
The appellate court affirmed the judgment of the circuit court. 359
Ill. App. 3d at 891. The court observed that almost all prior litigation
regarding insurance coverage for TCPA claims has proceeded in
federal court, and that the federal courts are divided as to whether
insurance provisions like the provision at issue in this case provide
coverage for fax advertising claims under the Act. 359 Ill. App. 3d at
879-80. After evaluating the federal case law, the appellate court
concluded that, pursuant to Illinois’ rules of insurance-policy
construction, the insurers had a duty to defend Swiderski against
Rizzo’s lawsuit. 359 Ill. App. 3d at 883. Specifically, the court held
that the insurers owed Swiderski a duty to defend pursuant to the
“advertising injury” provision of their policies. 359 Ill. App. 3d at 889.
Comparing the allegations in Rizzo’s complaint with the language
of the “advertising injury” provision, the appellate court determined
that an average person would reasonably interpret that provision as
affording coverage. 359 Ill. App. 3d at 885. The court rejected the
insurers’ argument that, in the context of the insurance policies,
“publication” requires injurious communication to a third party. 359
Ill. App. 3d at 885-86. The court reasoned that, given its plain and
ordinary meaning, the term “publication” does not convey to a
reasonable person an intention to cover only communications sent to
third parties. 359 Ill. App. 3d at 886. The court also rejected the
insurers’ argument that the “advertising injury” provision covers only
violations of secrecy interests, not intrusions upon seclusion. 359 Ill.
App. 3d at 886-87. The court opined that a reasonable person would
understand the term “privacy” to encompass the right to be left alone.
359 Ill. App. 3d at 887. In light of these considerations, the court
concluded that sending unsolicited fax advertisements falls potentially
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within the coverage of the policies’ “advertising injury” provision. 359
Ill. App. 3d at 887. Because the court determined that the insurers had
a duty to defend Swiderski pursuant to that provision, it did not
consider whether the insurers owed Swiderski a duty to defend under
the “property damage” provision. 359 Ill. App. 3d at 889.
The insurers filed a petition for leave to appeal (210 Ill. 2d R.
315), which we allowed. We granted the American Economy
Insurance Company and American States Insurance Company leave
to file an amicus curiae brief. 210 Ill. 2d R. 345.
ANALYSIS
I
Summary judgment is appropriate when there is no genuine issue
of material fact and the moving party is entitled to judgment as a
matter of law. Outboard Marine Corp. v. Liberty Mutual Insurance
Co., 154 Ill. 2d 90, 102 (1992); 735 ILCS 5/2–1005(c) (West 2002).
A circuit court’s entry of summary judgment is subject to de novo
review (General Agents Insurance Co. of America, Inc. v. Midwest
Sporting Goods Co., 215 Ill. 2d 146, 153 (2005)), and the
construction of an insurance policy, which presents a question of law,
is likewise reviewed de novo (Central Illinois Light Co. v. Home
Insurance Co., 213 Ill. 2d 141, 153 (2004)).
II
The issue we must decide is whether the insurers have a duty to
defend Swiderski against Rizzo’s lawsuit. The insurers argue they do
not. Initially, they claim that the “advertising injury” provision in the
policies, which affords coverage for liability resulting from an
insured’s “written *** publication *** of material that violates a
person’s right of privacy,” is applicable only where the content of the
published material reveals private information about a person that
violates the person’s right of privacy. According to the insurers, the
basis of the TCPA liability alleged in Rizzo’s complaint is the mere
sending of an unsolicited fax containing no private information. This
type of claim, they argue, does not give rise to the “content-based
privacy” coverage provided by the policies. As further support for
their position, the insurers emphasize that the TCPA’s fax-ad
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prohibitions make no reference to “publication” or “right of privacy,”
suggesting that the policies, which refer both to “publication” and
“right of privacy,” were not intended to cover TCPA claims.
The insurers also argue that they have no duty to defend Swiderski
under the “property damage” provision of the policies. They point out
that the policies expressly exclude coverage for any property damage
that is “expected or intended from the standpoint of the insured.”
According to the insurers, the property damage alleged in Rizzo’s
complaint, the loss of fax paper and toner, is the expected outcome of
sending any fax, which renders the exclusion applicable. In addition,
the insurers argue that the damage that occurs when a fax is sent does
not constitute “property damage” within the meaning of the policies.
They point out that, under the policies, “property damage” must be
caused by an “occurrence,” which is defined as an “accident.”
According to the insurers, under Illinois law, the natural and ordinary
consequences of an act do not constitute an accident, and the loss of
fax paper and toner are the natural and ordinary consequences of
sending a fax.
In response, defendants Swiderski and Rizzo argue that Rizzo’s
complaint alleges facts potentially within the coverage of the policies,
and that, as a result, the insurers have a duty to defend Swiderski
against Rizzo’s lawsuit. Defendants initially urge us to focus on the
plain and ordinary meaning of the language used in the “advertising
injury” provision of the policies. They assert that “publication”
includes the communication of information to the public, “material”
has a broad meaning that encompasses fax advertisements, and one’s
“right of privacy” includes one’s interest in “seclusion,” or being left
alone. Defendants contend that, based on the plain meaning of the
policies’ language, a reasonable person would understand that an
injury “arising out of *** written publication, in any manner, of
material that violates a person’s right of privacy” potentially occurs
when one sends fax advertisements to thousands of recipients without
first obtaining their permission to do so.
Alternatively, defendants argue that the insurers have a duty to
defend Swiderski based on the “property damage” provision of the
policies. Defendants contend that injury that occurs to the recipient of
a fax when a party sends the fax with the mistaken belief that the fax
is welcome qualifies as accidental injury, and thus potentially falls
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within the policies’ definition of “property damage.” Relatedly,
defendants argue that the policies’ exclusion for property damage that
is “expected or intended from the standpoint of the insured” is
inapplicable, because when a party sends a fax with the mistaken belief
the fax is welcome, the party neither intends nor reasonably expects
that injury will result.
III
A court’s primary objective in construing the language of an
insurance policy is to ascertain and give effect to the intentions of the
parties as expressed by the language of the policy. Crum & Forster
Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 391
(1993). Like any contract, an insurance policy is to be construed as a
whole, giving effect to every provision, if possible, because it must be
assumed that every provision was intended to serve a purpose.
Central Illinois Light, 213 Ill. 2d at 153. If the words used in the
policy, given their plain and ordinary meaning, are unambiguous, they
must be applied as written. Crum & Forster, 156 Ill. 2d at 391.
However, if the words used in the policy are ambiguous, they will be
strictly construed against the drafter. Central Illinois Light, 213 Ill. 2d
at 153. Words are ambiguous if they are reasonably susceptible to
more than one interpretation (Outboard Marine, 154 Ill. 2d at 108),
not simply if the parties can suggest creative possibilities for their
meaning (Laphman-Hickey Steel Corp. v. Protection Mutual
Insurance Co., 166 Ill. 2d 520, 529 (1995)), and a court will not
search for ambiguity where there is none (Crum & Forster, 156 Ill. 2d
at 391).
To determine whether an insurer has a duty to defend its insured
from a lawsuit, a court must compare the facts alleged in the
underlying complaint to the relevant provisions of the insurance
policy. Outboard Marine, 154 Ill. 2d at 107-08. The allegations must
be liberally construed in favor of the insured. United States Fidelity &
Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 73 (1991). If
the facts alleged fall within, or potentially within, the policy’s
coverage, the insurer is obligated to defend its insured. General
Agents Insurance, 215 Ill. 2d at 155. This is true even if the
allegations are groundless, false, or fraudulent, and even if only one of
several theories of recovery alleged in the complaint falls within the
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potential coverage of the policy. United States Fidelity, 144 Ill. 2d at
73. Thus, an insurer may not justifiably refuse to defend a lawsuit
against its insured unless it is clear from the face of the underlying
complaint that the allegations set forth in the complaint fail to state
facts that bring the case within, or potentially within, the coverage of
the policy. General Agents Insurance, 215 Ill. 2d at 154.
IV
We turn first to a comparison of the allegations in Rizzo’s
complaint regarding the TCPA and the insurance policies’ “advertising
injury” provision. The complaint alleges that Swiderski violated the
TCPA by sending unsolicited fax advertisements to fax machines
throughout Illinois. The TCPA makes it “unlawful for any person
within the United States *** to use any telephone facsimile machine,
computer, or other device to send an unsolicited advertisement to a
telephone facsimile machine.” 47 U.S.C. §227(b)(1)(C) (2000). An
“unsolicited advertisement” includes “any material advertising the
commercial availability or quality of any property, goods, or services
which is transmitted to any person without the person’s prior express
invitation or permission.” 47 U.S.C. §227(a)(4) (2000). The Act
creates a private right of action that permits recipients of unwanted
fax advertisements to seek injunctive relief and damages, and treble
damages may be awarded if a court finds that the sender of a fax acted
“willfully and knowingly.” 47 U.S.C. §227(b)(3) (2000).
As mentioned, the “advertising injury” provision relevant to
Rizzo’s TCPA claim is nearly identical in the Valley Forge policy and
the Continental policy. The Valley Forge policy provides, in pertinent
part, that “advertising injury” includes injury from “[o]ral or written
publication, in any manner, of material that violates a person’s right of
privacy.” The Continental policy provides that “advertising injury”
includes “[o]ral, written, televised or videotaped publication of
material that violates a person’s right of privacy.” For present
purposes, we need not distinguish between the Valley Forge policy
and the Continental policy, as the phrase “written *** publication ***
of material that violates a person’s right of privacy,” which appears in
both, is central to our inquiry into whether the allegations in Rizzo’s
complaint fall potentially within the policies’ coverage.
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The essence of a TCPA fax-ad claim is that one party sends
another an unsolicited fax advertisement. See 47 U.S.C.
§227(b)(1)(C) (2000). The receipt of an unsolicited fax advertisement
implicates a person’s right of privacy insofar as it violates a person’s
seclusion, and such a violation is one of the injuries that a TCPA fax-
ad claim is intended to vindicate. The cases cited to us by both sides
overwhelmingly confirm as much. See, e.g., Park University
Enterprises, Inc. v. American Casualty Co. of Reading, Pennsylvania,
442 F.3d 1239, 1249 (10th Cir. 2006) (“Courts have consistently held
the TCPA protects a species of privacy interests in the sense of
seclusion”); Resource Bankshares Corp. v. St. Paul Mercury
Insurance Co., 407 F.3d 631, 639-40 (4th Cir. 2005) (“[T]he harm
occasioned by unsolicited faxes involves protection of some sort of
‘privacy.’ Junk faxes cause some economic damage *** and what
might be called some kind of harm to privacy ***. The TCPA’s
private right of action obviously meant to remedy and prevent these
twin harms” (emphasis in original)); American States Insurance Co.
v. Capital Associates of Jackson County, Inc., 392 F.3d 939, 942 (7th
Cir. 2004) (“[A]n unexpected fax, like a jangling telephone or a knock
on the door, can disrupt a householder’s peace and quiet ***. Section
227(b)(1)(C) doubtless promotes this (slight) interest in seclusion, as
it also keeps telephone lines from being tied up and avoids
consumption of the recipients’ ink and paper”); Melrose Hotel Co. v.
St. Paul Fire & Marine Insurance Co., 432 F. Supp. 2d 488, 500-01
(E.D. Pa. 2006) (“It is clear that the TCPA aims in part to protect
privacy. *** Congress took aim at the intrusive nature of unsolicited
faxes. Much the same way a telemarketing call invades one’s right to
be left alone, an unsolicited fax intrudes upon the right to be free from
nuisance” (emphasis in original)); Western Rim Investment Advisors,
Inc. v. Gulf Insurance Co., 269 F. Supp. 2d 836, 847 (N.D. Tex.
2003) (“The stated purpose of the TCPA *** is to protect the privacy
of individuals from receiving unsolicited faxed advertisements”). Thus,
the TCPA can fairly be described as protecting a privacy interest in
seclusion.
Turning to the TCPA claim set forth in Rizzo’s complaint, we note
that it makes no mention of the right of privacy. This, however, is
unproblematic, as a violation of privacy in the sense of a violation of
seclusion is implicit in a TCPA fax-ad claim, and the complaint clearly
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alleges that Swiderski “violated 47 U.S.C. §227 et seq. by transmitting
[the attached fax advertisement] to [Rizzo] and the other members of
the class without obtaining their prior express consent.”
Given that the TCPA protects a fax recipient’s privacy interest in
seclusion, and that Rizzo’s complaint implicitly alleges a violation of
that interest on behalf of Rizzo and the members of the proposed
class, the question we must ask is whether the words in the
“advertising injury” provision of the policies issued to Swiderski
indicate that Swiderski and the insurers intended the policies to cover
the type of injury to privacy that is the subject of Rizzo’s TCPA fax-
ad claim. Based on the plain, ordinary, and popular meaning of those
words, we believe this type of injury falls potentially within the
coverage of the policies’ “advertising injury” provision.
The policies do not define the terms “publication,” “material,” or
“right of privacy,” which is why we must afford them their plain,
ordinary, and popular meanings. Outboard Marine, 154 Ill. 2d at 115.
To do so, we look to their dictionary definitions. See, e.g., Outboard
Marine, 154 Ill. 2d at 115-17; Crum & Forster, 156 Ill. 2d at 393.
Webster’s Third New International Dictionary defines
“publication” as “communication (as of news or information) to the
public,” and alternatively, as “the act or process of issuing copies ***
for general distribution to the public.” Webster’s Third New
International Dictionary 1836 (2002). Likewise, Black’s Law
Dictionary defines “publication” as “[g]enerally, the act of declaring
or announcing to the public” and, alternatively, as “[t]he offering or
distribution of copies of a work to the public.” Black’s Law
Dictionary 1264 (8th ed. 2004).
The insurers have abandoned the argument they made before the
appellate court that the conduct alleged in Rizzo’s complaint did not
constitute “publication.” See 359 Ill. App. 3d at 885-86. However, in
the interest of coherently interpreting all the relevant terms of the
“advertising injury” provision, we observe that Rizzo’s complaint
alleges conduct by Swiderski that amounted to “publication” in the
plain and ordinary sense of the word. By faxing advertisements to the
proposed class of fax recipients as alleged in Rizzo’s complaint,
Swiderski published the advertisements both in the general sense of
communicating information to the public and in the sense of
distributing copies of the advertisements to the public.
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The definition of “material” is “something (as data, observations,
perceptions, ideas) that may through intellectual operation be
synthesized or further elaborated or otherwise reworked into a more
finished form or a new form or that may serve as the basis for arriving
at fresh interpretations or judgments or conclusions.” Webster’s Third
New International Dictionary 1392 (2002). This definition is quite
broad and clearly encompasses advertisements, as the information
contained in an advertisement is intended to serve as the basis for
arriving at a judgment regarding the items advertised. Examining the
definition of “material” in isolation, however, is unhelpful. We must
consider the connotation of “material that violates a person’s right of
privacy.”
Black’s Law Dictionary defines “right of privacy” as “[t]he right
to personal autonomy” and, alternatively, as “[t]he right of a person
and the person’s property to be free from unwarranted public scrutiny
or exposure.” Black’s Law Dictionary 1350 (8th ed. 2004). The
definition also refers the reader to the entry for “invasion of privacy,”
which is defined as “[a]n unjustified exploitation of one’s personality
or intrusion into one’s personal activities” and includes “invasion of
privacy by intrusion” and “invasion of privacy by disclosure of private
facts.” Black’s Law Dictionary 843 (8th ed. 2004). The former is
defined as “[a]n offensive, intentional interference with a person’s
seclusion or private affairs,” and the latter as “[t]he public revelation
of private information about another in an objectionable manner.”
Black’s Law Dictionary 843 (8th ed. 2004). In addition, Webster’s
defines “privacy” as “the quality or state of being apart from the
company or observation of others: seclusion.” Webster’s Third New
International Dictionary 1804 (2004).
These definitions confirm that “right of privacy” connotes both an
interest in seclusion and an interest in the secrecy of personal
information. Accordingly, the policy language “material that violates
a person’s right of privacy” can reasonably be understood to refer to
material that violates a person’s seclusion. Unsolicited fax
advertisements, the subject of a TCPA fax-ad claim, fall within this
category.
Considering these definitions in conjunction with one another, we
believe Rizzo’s TCPA fax-ad claim potentially falls within the
coverage of the policies’ “advertising injury” provision. By faxing
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advertisements to the proposed class of fax recipients as alleged in
Rizzo’s complaint, Swiderski engaged in the “written *** publication”
of the advertisements. Furthermore, the “material” that Swiderski
allegedly published, advertisements, qualifies as “material that violates
a person’s right of privacy,” because, according to the complaint, the
advertisements were sent without first obtaining the recipients’
permission, and therefore violated their privacy interest in seclusion.
The language of the “advertising injury” provision is sufficiently broad
to encompass the conduct alleged in the complaint. To adopt the
insurers’ proposed interpretation of it–i.e., that it is only applicable
where the content of the published material reveals private information
about a person that violates the person’s right of privacy–would
essentially require us to rewrite the phrase “material that violates a
person’s right of privacy” to read “material the content of which
violates a person other than the recipient’s right of privacy.” This we
will not do.
The insurers’ argument, seconded by amici, that the context in
which the clause “written *** publication *** of material that violates
a person’s right of privacy” appears should control our interpretation
of it is similarly unavailing. As the insurers note, the Valley Forge
policy’s “advertising injury” provision encompasses injuries that arise
out of “[o]ral 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; *** [t]he use of another’s
advertising idea in your ‘advertisement’; [and] [i]nfringing upon
another’s copyright, trade dress or slogan in your ‘advertisement.’ ”
The Continental policy contains similar language. However, just
because these types of “advertising injury” appear to involve harm
caused by the content of the advertisement involved does not compel
us to conclude that injury that arises out of “written *** publication
*** of material that violates a person’s right of privacy” includes only
injury that stems from the disclosure of private information. As
mentioned, an insurance policy must be construed as a whole such
that, if possible, every provision is given effect, because the operative
assumption in interpreting a policy must be that every provision was
intended to serve a purpose. Central Illinois Light, 213 Ill. 2d at 153.
Interpreting the clause “written *** publication *** of material that
violates a person’s right of privacy” to encompass Rizzo’s TCPA fax-
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ad claim, as we have done above, does not, in any way, prevent the
policies’ alternative definitions of “advertising injury” from being
given effect or thwart their respective purposes. Accordingly, we will
not limit the clause’s application based on a comparison of the
surrounding clauses.
We note that it is difficult, due in part to the differences in the
policy language at issue, to discern a clear majority approach in cases
that have interpreted “advertising injury” provisions. Compare
Resource Bankshares, 407 F.3d at 641 (insurer had no duty to defend
under “advertising injury” provision that covered damages arising
from “[m]aking known to any person or organization written or
spoken material that violates a person’s right to privacy”); American
States, 392 F.3d at 943 (insurer had no duty to defend under
“advertising injury” provision that covered injury arising out of “[o]ral
or written publication of material that violates a person’s right of
privacy”); New Century Mortgage Corp. v. Great Northern Insurance
Co., No. 05 C 2370 (N.D. Ill. June 25, 2006) (unpublished opinion)
(insured’s action of sending unsolicited faxes in violation of TCPA did
not constitute “advertising injury” under provision covering injury
arising out of “oral or written publication of material that violates a
person’s right of privacy”); American Home Assurance Co. v.
McLeod USA, Inc., No. 05 C 5713 (N.D. Ill. June 5, 2006)
(unpublished opinion) (insurer had no duty to defend under
“advertising injury” provision that covered damages resulting from
“oral or written publication of material that violates a person’s right
to privacy”); Erie Insurance Exchange v. Watts, No.
1:05–CV–867–JDT–TAB (S.D. Ind. May 30, 2006) (unpublished
opinion) (insurer had no duty to defend under “advertising provision”
that covered injury arising out of “oral or written publication of
material that violates a person’s right of privacy”); Melrose Hotel, 432
F. Supp. 2d at 503 (insurer had no duty to defend under “advertising
injury” provision that covered “making known to any person or
organization covered material that violates a person’s right of
privacy”); St. Paul Fire & Marine Insurance Co. v. Brunswick Corp.,
405 F. Supp. 2d 890, 895 (N.D. Ill. 2005) (insurer had no duty to
defend under “advertising injury” provision that covered injury caused
by “oral, written or electronic publication of material in your
Advertisement that violates a person’s right of privacy” (emphasis
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omitted)), with Park University, 442 F.3d at 1251 (insurer had duty
to defend under “advertising injury” provision that covered injury
arising out of “[o]ral or written publication of material that violates a
person’s right of privacy”); Hooters of Augusta, Inc. v. American
Global Insurance Co., 157 Fed. Appx. 201, 208 (11th Cir. 2005)
(unpublished opinion) (insured’s action of sending unsolicited faxes in
violation of TCPA constituted “advertising injury” under provision
covering harm from “[o]ral or written publication of material that
violates a person’s right of privacy”), aff’g 272 F. Supp. 2d 1365
(S.D. Ga. 2003); Western Rim Investment Advisors, Inc. v. Gulf
Insurance Co., 96 Fed. Appx. 960 (5th Cir. 2004) (unpublished
opinion), aff’g 269 F. Supp. 2d 836, 846-47 (N.D. Tex. 2003)
(insurer had duty to defend under “advertising injury” provision that
covered “[o]ral or written publication of material that a violates a
person’s right of privacy”); Nutmeg Insurance Co. v. Employers
Insurance Co. of Wasau, No. Civ.A. 3:04–CV–1762B (N.D. Tex.
August 24, 2006) (unpublished opinion) (insurer had duty to defend
under “advertising injury” provision that covered injury arising out of
“[o]ral or written publication of material that violates a person’s right
of privacy”); Registry Dallas Associates, L.P. v. Wasau Business
Insurance Co., No. Civ.A. 3:02–CV–2662L (N.D. Tex. February 26,
2004) (unpublished opinion) (insurer had duty to defend under
“advertising injury” provision that covered injury arising out of “[o]ral
or written publication of material that violates a person’s right of
privacy”); Prime TV, LLC v. Travelers Insurance Co., 223 F. Supp.
2d 744, 752-53 (M.D.N.C. 2002) (insurer had duty to defend under
“advertising injury” provision that covered “oral or written publication
of material that violates a person’s right of privacy”); TIG Insurance
Co. v. Dallas Basketball, Ltd., 129 S.W.3d 232, 238-39 (Tex. App.
2004) (insured’s action of sending unsolicited faxes in violation of
TCPA constituted “advertising injury” under provision covering
damages from “[o]ral or written publication of material that violates
a person’s right of privacy”).
We observe, however, that our conclusion in this case that the
insurers owe Swiderski a duty to defend pursuant to the policies’
“advertising injury” provision is consistent with the conclusion
reached by the majority of federal courts of appeals that have
considered the applicability of “advertising injury” coverage to TCPA
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fax-ad claims. Compare Resource Bankshares, 407 F.3d at 642
(fourth circuit); American States, 392 F.3d at 943 (seventh circuit),
with Park University, 442 F.3d at 1251 (tenth circuit); Hooters of
Augusta, 157 Fed. Appx. at 208 (eleventh circuit); Western Rim, 96
Fed. Appx. 960 (fifth circuit). See also Universal Underwriters
Insurance Co. v. Lou Fusz Auto Network, 401 F.3d 876, 881, 883
(8th Cir. 2005) (insurer had duty to defend TCPA claim under policy
that covered “private nuisance” and “invasion of rights of privacy”).
In addition, our conclusion is consistent with that reached by the
majority of courts that have examined policy language identical to the
language at issue here. Compare American States, 392 F.3d at 943;
New Century Mortgage, No. 05 C 2370 (N.D. Ill. June 25, 2006);
American Home Assurance, No. 05 C 5713 (N.D. Ill. June 5, 2006);
Erie Insurance Exchange, No. 1:05–CV–867–JDT–TAB (S.D. Ind.
May 30, 2006), with Park University, 442 F.3d at 1251; Hooters of
Augusta, 157 Fed. Appx. at 208; Western Rim, 96 Fed. Appx. 960;
Nutmeg Insurance, No. Civ.A. 3:04–CV–1762B (N.D. Tex. August
24, 2006); Registry Dallas Associates, No. Civ.A. 3:02–CV–2662L
(N.D. Tex. February 26, 2004); Prime TV, 223 F. Supp. 2d at 752-53;
TIG Insurance, 129 S.W.3d at 238-39.
We are unpersuaded by the insurers’ reliance on American States,
392 F.3d 939, Resource Bankshares, 407 F.3d 631, Brunswick, 405
F. Supp. 2d 890, Melrose Hotel, 432 F. Supp. 2d 488, and Erie, No.
1:05–CV–867–JDT–TAB. American States was the first federal
appellate decision to address whether an “advertising injury” provision
covered the sending of unsolicited fax advertisements. American
States, 392 F.3d at 943. In American States, the insurance policy, like
the policies at issue here, defined “advertising injury” to include
“[o]ral or written publication of material that violates a person’s right
of privacy.” American States, 392 F.3d at 940. The district court held
that American States had a duty to defend its insured pursuant to the
“advertising injury” provision, because an unsolicited fax invades the
recipient’s “privacy.” American States, 392 F.3d at 940. On appeal,
the Seventh Circuit reversed. American States, 392 F.3d at 943.
According to the court, the word “privacy” has many
connotations, the two principal meanings being “secrecy and
seclusion.” American States, 392 F.3d at 941. The court criticized the
district court for not recognizing the difference between secrecy and
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seclusion and for not addressing which type of privacy interest the
policy covered. American States, 392 F.3d at 942. Section 227 of the
TCPA, the court explained, “doubtless promotes” a “slight” interest
in seclusion, as “an unexpected fax, like a jangling telephone or a
knock on the door, can disrupt a householder’s peace and quiet, even
though it is easy to throw a junk fax, like a piece of junk mail, in the
trash without any risk that someone will observe activities that occur
inside one’s home.” American States, 393 F.3d at 942. The court
went on to clarify, however, that the relevant question in the case was
whether the insurance policy covered the sort of seclusion interest
affected by fax advertisements. American States, 393 F.3d at 942.
In answering this question in the negative, the court relied, in part,
on the fact that the plaintiff in the underlying action was a corporation.
American States, 393 F.3d at 942. According to the court, while
businesses have interests protected by section 227 of the Act, those
interests cannot accurately be called “privacy” interests, as businesses
lack interests in seclusion. American States, 392 F.3d at 942. The
court also relied on the policy’s use of the word “publication.”
American States, 392 F.3d at 942. “Publication,” the court reasoned,
matters in a “secrecy situation” but is irrelevant in a “seclusion
situation.” American States, 392 F.3d at 942 (“A late-night knock on
the door or other interruption can impinge on seclusion without any
need for publication”). The court summarized this rationale by
explaining that section 227 of the Act “condemns a particular means
of communicating an advertisement, rather than the contents of that
advertisement,” while the “advertising injury” provision of the
insurance policy, which referred to “publication,” dealt with
informational content. American States, 392 F.3d at 943.
The Fourth Circuit relied on American States in Resource
Bankshares. There, the “advertising injury” provision at issue included
coverage for damages arising from “[m]aking known to any person or
organization written or spoken material that violates a person’s right
of privacy.” Resource Bankshares, 407 F.3d at 634. The court
acknowledged that “the harm occasioned by unsolicited faxes involves
protection of some sort of ‘privacy.’ ” Resource Bankshares, 407
F.3d at 639. Then, as in American States, the court defined the
relevant question as “whether, when read in context, a reasonable
purchaser of insurance would believe that the sort of privacy interests
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protected by the policies overlap with the sort of privacy with which
the TCPA is concerned.” (Emphasis in original.) Resource
Bankshares, 407 F.3d at 640.
Noting its approval of American States, the court held that the
policies in question did “not cover the sorts of privacy invasions
envisioned by the TCPA’s unsolicited fax prohibition.” Resource
Bankshares, 407 F.3d at 640. American States, the court reasoned,
“put words to the gut instinct” felt when comparing the complaint in
the underlying action with the policies. Resource Bankshares, 407
F.3d at 641. According to the court, if the complaint alleged any
violation of privacy, it was “seclusion” privacy, as the complaint was
concerned with the manner of the insured’s advertisement. Resource
Bankshares, 407 F.3d at 641. In contrast, the court reasoned, the
policies’ “advertising injury” provision was “exclusively concerned
with those types of privacy [citation] which, like secrecy, are
implicated by content of the advertisements.” (Emphasis in original.)
Resource Bankshares, 407 F.3d at 641.
The court stated that “the plainest and most common reading of
the phrase [‘Making known to any person or organization written or
spoken material that violates a person’s right of privacy’] indicates
that ‘making known’ implies telling, sharing, or otherwise divulging,
such that the injured party is the one whose private material is made
known, not the one to whom the material is made known.” (Emphases
in original.) Resource Bankshares, 407 F.3d at 641. The court also
concluded that the context in which the clause at issue appeared
supported this interpretation of it. Resource Bankshares, 407 F.3d at
641-42. Another clause of the “advertising injury” provision, the court
pointed out, provided coverage for damages arising from “making
known” disparaging material. Resource Bankshares, 407 F.3d at 641.
According to the court, because it was difficult to imagine how
“making known” disparaging material could harm the recipient of the
material, it followed that both clauses containing “making known”
focused on harm to third parties. Resource Bankshares, 407 F.3d at
641. The court added that, under this interpretation of the clause at
issue, all four of the offenses set forth in the policies’ “advertising
injury” provision shared the common thread of assuming that the
victim of the advertising injury was harmed by the sharing of the
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content of the advertisement, not by the mere receipt of the
advertisement. Resource Bankshares, 407 F.3d at 641-42.
American States and Resource Bankshares served as the basis for
the three federal district court decisions on which the insurers rely,
Brunswick, 405 F. Supp. 2d 890, Melrose Hotel, 432 F. Supp. 2d 488,
and Erie Insurance Exchange v. Watts, No. 1:05–CV–867–JDT–TAB
(S.D. Ind. May 30, 2006). The “advertising injury” provision at issue
in Brunswick applied to injury caused by “oral, written or electronic
publication of material in your Advertisement that violates a person’s
right of privacy.” Brunswick, 405 F. Supp. 2d at 893. Relying on
American States, the court held that this provision did not give rise to
a duty to defend the insured from the TCPA claim brought against it.
Brunswick, 405 F. Supp. 2d at 895 (“[T]his court concludes that on
this point American States is the better reasoned opinion and more
likely to be followed by the Illinois Supreme Court [than the appellate
court’s opinion in the instant case]”).
In Melrose Hotel, the “advertising injury” provision in question
defined “advertising injury offense” to include “ ‘making known to any
person or organization covered material that violates a person’s right
to privacy.’ ” Melrose Hotel, 432 F. Supp. 2d at 496. There, the court
held, based on Resource Bankshares, that the insurer had no duty to
defend the insured pursuant to the “advertising injury” provision.
Melrose Hotel, 432 F. Supp. 2d at 501-03 (“The Court finds
persuasive the reasoning in Resource Bankshares, which examined
language virtually identical to the Policy language”).
Finally, in Erie, the “advertising injury” provision before the court
applied to “injury arising out of oral or written publication of material
that violates a person’s right of privacy.” Erie, slip op. at 5. Relying
on American States, the court held that the insurer had no duty to
defend the insured under the “advertising injury” provision. Erie, slip
op. at 11-12 (“This court finds the analysis in the American States
case to be on point in this case”).
Of the cases discussed above, Resource Bankshares, Brunswick,
and Melrose Hotel are distinguishable from the instant case in one
particularly significant respect: they involved the interpretation of
different policy language. As mentioned, the “advertising injury”
provision at issue in Resource Bankshares covered damages arising
from “[m]aking known to any person or organization written or
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spoken material that violates a person’s right of privacy.” (Emphasis
in original and omitted.) Resource Bankshares, 407 F.3d at 634. This
wording seems to have been an important factor in the court’s
decision. See Resource Bankshares, 407 F.3d at 641-42. Brunswick
dealt with an “advertising injury” provision applicable to injury caused
by “oral, written or electronic publication of material in your
Advertisement that violates a person’s right of privacy.” (Emphasis
added.) Brunswick, 405 F. Supp. 2d at 893. Notably, while the court
in Brunswick focused most of its analysis on the phrase “violates a
person’s right of privacy” (Brunswick, 405 F. Supp. 2d at 894-95), it
ultimately observed that, as compared to the policies in this case and
American States, the addition of the words “in your Advertisement”
to the policy at issue “unambiguously demonstrate[d] that to be
covered the injury must be a result of the content of the material”
(Brunswick, 405 F. Supp. 2d at 895). Finally, in Melrose Hotel, the
“advertising injury” provision covered “ ‘making known to any person
or organization covered material that violates a person’s right to
privacy.’ ” (Emphasis added.) Melrose Hotel, 432 F. Supp. 2d at 496.
There, the court went so far as to note that courts that had found a
duty to defend for TCPA violations under other “advertising injury”
provisions had “considered broader language, which could arguably
be read to include violations of the right to be left alone, the privacy
right protected by the TCPA.” Melrose Hotel, 432 F. Supp. 2d at 503.
The “broader language” to which the court referred was identical to
the language at issue here: “ ‘oral or written publication of material
that violates a person’s right of privacy.’ ” Melrose Hotel, 432 F.
Supp. 2d at 503-04, quoting Western Rim, 269 F. Supp. 2d at 840.
This leaves the insurers with American States and Erie, which
addressed policy language identical to the language at issue here.
American States, 392 F.3d at 940; Erie, slip op. at 5. Erie, of course,
relied on American States, which hinged considerably on the
proposition that “publication” matters in a “secrecy situation,” but not
in a “seclusion situation.” See American States, 392 F.3d at 942. This
may very well hold true as a general matter in the realm of privacy
law. We believe, however, that relying on this proposition as a basis
for interpreting the insurance policy language “publication of material
that violates a person’s right of privacy” is inconsistent with this
court’s approach to interpreting insurance policy provisions.
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Affording undefined policy terms their plain, ordinary, and popularly
understood meanings is of central importance to this approach (see,
e.g., Outboard Marine, 154 Ill. 2d at 115; Central Illinois Light, 213
Ill. 2d at 155-56, 165), and doing so here yields the conclusion, as set
forth above, that Rizzo’s TCPA fax-ad claim potentially falls within
the coverage of the policies’ “advertising injury” provisions.
Accordingly, we decline to follow American States and Erie.
V
Having determined that the allegations in Rizzo’s complaint set
forth facts that bring Rizzo’s lawsuit potentially within the coverage
of the policies’ “advertising injury” provision, we need not consider
whether the insurers have a duty to defend Swiderski pursuant to the
policies “property damage” provision. See United States Fidelity, 144
Ill. 2d at 73 (where underlying complaint alleges several theories of
recovery against insured, duty to defend arises even if only one such
theory falls potentially within coverage of policy).
CONCLUSION
For the reasons expressed above, we hold that the insurers have
a duty to defend Swiderski against Rizzo’s lawsuit. Accordingly, we
affirm the judgment of the appellate court, which upheld the circuit
court’s partial grant of summary judgment in favor of Swiderski.
Affirmed.
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