March 5, 2019
Kent Bevan
In American Family Mutual Insurance Company v. Vein Centers for Excellence, Inc., et al, St. Louis Heart Center, Inc. filed a class action petition against Vein Centers for Excellence, Inc. claiming a violation of the Telephone Consumer Protection Act (TCPA). American Family Mutual Insurance Company filed a complaint for declaratory judgment against its insured, Vein Centers, disputing American Family’s duty under various policy provisions to defend and indemnify Vein Centers in that class action suit. The issue on appeal is whether the insurance policies issued to Vein Centers obligated American Family to defend and indemnify its insured.
Vein Centers tendered the lawsuit to American Family for defense and indemnity under two separate insurance policies: a business owner’s policy and a commercial liability umbrella policy. American Family agreed to provide a defense to Vein Centers, under a full reservation of rights. Both policies contained an exclusion for the “distribution of material in violation of statutes”. The pertinent portion of the exclusion barred coverage for “. . . personal and advertising injury arising directly or indirectly out of any action or omission that violates or is alleged to violate the Telephone Consumer Protection Act.”
American Family filed a complaint for declaratory judgment asking the Court to determine that coverage did not exist for the alleged claims set out in the underlying lawsuit. St. Louis Heart was added in an amended complaint as an additional defendant. The parties filed cross motions for summary judgment. St. Louis Heart alleged that the exclusion in the business owner’s policy never took effect because American Family failed to properly notify Vein Centers of the provision’s addition when the policy was renewed. The trial court granted summary judgment to American Family and St. Louis Heart appealed.
The 8th Circuit initially dealt with issues involving subject matter jurisdiction concerning the amount in controversy and the anti-aggregation rule in the class action.
St. Louis Heart argued that the “distribution of materials in violation of statutes” exclusion in the policy constituted a constructive non-renewal of the business owner’s policy and that American Family had failed to provide adequate notice to its insured of the non-renewal. American Family did not dispute their obligation to provide notice of a constructive non-renewal but maintained that they sufficiently demonstrated compliance with the notice obligation.
Missouri law acknowledges a presumption as to the receipt of mailed materials, though that is a rebuttable presumption. The Court determined that American Family is entitled to the presumption that Vein Centers received notice of the policy exclusion. American Family offered deposition testimony of one of its corporate representatives who testified that American Family mailed a coverage summary letter (CSL) to Vein Centers more than sixty days prior to the business owner’s policy renewal date and that American Family’s standard business practice was to include with the CSL a policyholder communication (PLC) which is a notification of changes made to an insurance policy. The American Family witness deposition went on to identify an internal communication sent to American Family agents and staff indicating that current holders of business owner’s policies would be sent a PLC notification setting forth a newly instituted “distribution of material in violation of statutes” exclusion. Though the witness could not produce an actual copy of the PLC addressed to Vein Centers, her testimony established that it was likely mailed to Vein Centers as part of American Family’s custom and practice. The Court found that this evidence creates a presumption that Vein Centers received notice of the exclusion.
When a sender presents evidence that a letter was mailed, the presumption of receipt can be rebutted by evidence that it was not in fact received. If the presumption is rebutted with evidence of non-receipt, then it is a jury question under all the facts and circumstances of the case as to whether or not the letter was received. St. Louis Heart made no such rebuttal. St. Louis Heart failed to submit any evidence indicating that Vein Centers did not in fact receive the CSL and the PLC. Instead, they argued that the American Family witness testimony was insufficient to establish the presumption of receipt in the first place. Missouri law however does not require direct proof or personal knowledge of mailing; only “evidence of the settled custom and usage of the sender in the regular and systematic transaction of its business.” Speculation that American Family’s normal business procedures were not followed is not the same as affirmative evidence that Vein Centers did not receive the documents. Therefore, there was no sufficient evidentiary basis to rebut the presumption of receipt. The 8th Circuit Court of Appeals affirmed the trial court’s finding of jurisdiction and summary judgment in favor of American Family.