Submitted April 13, 2015
Appeals from United States District Court for the Western District of Missouri - Kansas City.
For Western Heritage Insurance Company (14-2587, 14-2697), Plaintiff - Appellee: Rachel E. Hobbs, Alan B. Yuter, Selman & Breitman, Los Angeles, CA; Meagan Laine Patterson, Waldeck & Patterson, Prairie Village, KS.
For Fun Services of Kansas City (14-2587, 14-2697), Defendant - Appellant: Jeffrey A. Berman, Ryan M. Kelly, David Max Oppenheim, Anderson & Wanca, Rolling Meadows, IL; Phillip Andrew Bock, Bock & Hatch, Chicago, IL; Barbara Frankland, Rex Sharp, Gunderson & Sharp, Prairie Village, KS; Max G. Margulis, Margulis Law Group, Chesterfield, MO.
For Asphalt Wizards, doing business as: Parrish Love, Defendant - Appellee (14-2697): John Sommer, Independence, MO.
Before WOLLMAN and GRUENDER, Circuit Judges, and DOTY, District Judge.
GRUENDER, Circuit Judge.
This is a declaratory judgment action brought by an insurer concerning its duties with respect to a " junk fax" lawsuit brought against its insured. The district court dismissed counterclaims brought against the insurer and found that it had no duty to indemnify. We affirm.
Asphalt Wizards, a parking-lot repair business, hired a company to fax advertisements to potential customers. From 2005 until 2008, more than 44,000 faxes were sent on Asphalt Wizards's behalf. Fun Services of Kansas City (" Fun Services" ), which received some of these faxes, filed a class-action petition in Missouri state court alleging that (1) Asphalt Wizards violated the Telephone Consumer Protection Act (" TCPA" ), 47 U.S.C. § 227, by sending these faxes, and (2) that Asphalt Wizards committed conversion by commandeering the recipients' fax machines. For the alleged TCPA violations, Fun Services and the class are seeking statutory damages of $500 for each fax. See id. § 227(b)(3)(B).
Shortly after the lawsuit was filed, Asphalt Wizards notified its insurer, Western Heritage Insurance Company (" Western Heritage" ), about it. Western Heritage had insured Asphalt Wizards through three sequential, year-long policies from May 18, 2004 until May 18, 2007, the time frame when roughly 33,000 of the faxes were sent. The policies covered property damage and personal and advertising injury. Each of the policies also contained a deductible endorsement that provided for a $1,000 " per claim" deductible amount for property damage and for personal and advertising injury. This deductible amount applied to " all damages sustained by one person or organization as the result of any one claim" as well as to " legal expenses incurred in the handling and investigation of each claim."
In a letter dated June 26, 2008, Western Heritage responded to Asphalt Wizards's request for coverage. Western Heritage reminded Asphalt Wizards of its policy limits, including the $1,000 deductible amount, and stated that Western Heritage had hired a law firm to represent Asphalt Wizards. Western Heritage's letter did not say that this legal defense was being provided under a reservation of rights. Thereafter, the law firm hired by Western Heritage began defending Asphalt Wizards, and this legal defense continued for the next four years. However, on October 29, 2012, Western Heritage sent a second letter to Asphalt Wizards. This letter, styled a " supplement" to the prior one, stated that Western Heritage now intended to defend Asphalt Wizards subject to a reservation of rights.
Western Heritage filed this action against Asphalt Wizards and Fun Services seeking a declaration that it owed no duty to defend and no duty to indemnify in connection with the class-action lawsuit. Fun Services then pleaded counterclaims for declaratory relief against Western Heritage, one of which the district court dismissed for lack of standing under Federal Rule of Civil Procedure 12(b)(1). Western Heritage and Fun Services moved for summary judgment. The district court determined that Fun Services lacked standing to bring its remaining counterclaims, and the court determined that Western Heritage had a duty to defend but did not have a duty to indemnify. With respect to the duty-to-indemnify issue, the court found that Western Heritage had waived its defenses to coverage by waiting four years to issue a reservation-of-rights letter. However, the court concluded that Western Heritage did not waive the deductible endorsements. The $1,000 ...