Rodenburg LLP v. Certain Underwriters at Lloyd's of London

9 F.4th 1033

RODENBURG LLP, doing business as Rodenburg Law Firm, Plaintiff - Appellant

v.CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON, SYNDICATE NO. 4020, SUBSCRIBING TO POLICY NUMBER DCLPLA 00574-00, Defendant

The Cincinnati Insurance Company, Defendant - Appellee

No. 20-2521

United States Court of Appeals, Eighth Circuit.

Submitted: May 11, 2021

Filed: August 25, 2021

Rehearing and Rehearing En Banc Denied September 30, 2021

Counsel who presented argument on behalf of the appellant was Clifton Rodenburg, of Fargo, ND. The following attorney(s) appeared on the appellant brief; Eeva Wendorf, of Fargo, ND.

Counsel who presented argument on behalf of the appellee was Elizabeth Ann Jenson Prouty, of Minneapolis, MN.

Before COLLOTON, WOLLMAN, and KOBES, Circuit Judges.

WOLLMAN, Circuit Judge.

Rodenburg Law Firm (Rodenburg) appeals from the district court's¹ adverse grant of summary judgment, arguing that The Cincinnati Insurance Company (Cincinnati) breached its contractual duty to defend Rodenburg against a lawsuit filed by Charlene Williams (Williams). We affirm.

I. Background

Rodenburg purchased a Commercial Umbrella Liability Policy from Cincinnati. The policy is governed by North Dakota law and obligates Cincinnati to indemnify Rodenburg for liability to third parties for certain defined injuries, namely "bodily injury," "property damage," and "personal and advertising injury," if such injury was "caused by an ‘occurrence.’ " "Bodily injury" includes "humiliation, shock, fright, mental anguish or mental injury." "Personal and advertising injury" means "injury, including ‘bodily injury’, arising out of one or more of the following offenses: ... Malicious prosecution; [or] ... Defamation of character; [or] ... publication ... of material that violates a person's right of privacy." The policy excludes coverage for "bodily injury" that was "expected or intended from [Rodenburg's] standpoint," and for liability arising out of conduct alleged to violate certain statutes. Cincinnati has a "duty to defend [Rodenburg] against any ‘suit’ seeking damages because of ‘bodily injury’, ‘personal and advertising injury’, or ‘property damage’ to which [the policy] applies."

Rodenburg, whose primary business is debt collection, obtained a default judgment on a debt owed by a "Charlene Williams." In early November 2016, Rodenburg served a notice of intent to garnish "Charlene Williams's" wages at the residential address associated with the debt. Receiving no answer, Rodenburg then served US Foods, Williams's employer, with a garnishment notice. Williams contacted Rodenburg on December 21, 2016, and allegedly informed it that she was not the debtor against whom it had a default judgment. Rodenburg allegedly ignored this information and proceeded to garnish Williams's paychecks for six weeks beginning on December 29, 2016. After a lawyer informed Rodenburg in February 2017 that it indeed had the wrong "Charlene Williams," Rodenburg ceased garnishment and returned the wrongfully garnished funds to Williams.

Williams thereupon sued Rodenburg, asserting several theories including wrongful garnishment, tort-based claims, and violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C § 1692 et seq. The complaint alleged that Rodenburg violated the FDCPA by: communicating with third parties, including her employer, about the alleged debt, see id. § 1692c(b); garnishing her wages even after learning that it had identified the wrong person, see id. § 1692d (prohibiting conduct in connection with a debt collection that harasses, oppresses, or abuses); representing that Williams owed a debt, representing that it had a right to collect the debt, attempting to induce Williams to pay the debt, and implying that Williams had committed other disgraceful conduct, see id. § 1692e (prohibiting the use of "false, deceptive, or misleading representation or means in connection with" debt collection); and collecting or attempting to collect the debt without legal authority to do so, see id. § 1692f (prohibiting the use of "unfair or unconscionable means" to collect a debt). Citing the FDCPA's recognition of "a person's inherent right to privacy in collection matters," see id. § 1692(a) ("Abusive debt collection practices contribute ... to invasions of individual privacy."), the complaint also alleged that Rodenburg's actions—communicating to Williams's employer about the debt, garnishing her wages without legal authority, and willfully continuing to collect the debt after having been told about its potential mistake—amounted to common law invasion of privacy. Williams also alleged that Rodenburg had converted her wages and that its actions caused her to suffer emotional distress, humiliation, and temporary interference with the use and enjoyment of her property.

Rodenburg filed a claim under the policy for coverage of the Williams lawsuit. Cincinnati denied coverage, and Rodenburg later settled with Williams. Rodenburg then brought this action seeking a declaratory judgment that Cincinnati had breached its policy-created contractual duties to defend and indemnify Rodenburg. The district court found that the policy did not provide coverage for any alleged interference with Williams's use and enjoyment of her wages. It concluded that the alleged emotional distress was "bodily injury" under the policy, but that it either was not "caused by an ‘occurrence’ " or was excluded from coverage by the policy's "Expected or Intended Injury" exclusion. Although the district court then found that the Williams complaint's factual allegations implicated injury that was "personal and advertising injury" under the policy, it held that the policy's "Distribution of Materials in Violation of Statutes" exclusion (Violation of Statutes Exclusion) excluded coverage for that injury. Concluding that the policy did not provide coverage for the Williams lawsuit, the district court held that Cincinnati had no duty to defend Rodenburg under the policy and granted summary judgment in Cincinnati's favor.

Rodenburg appeals, arguing that the alleged emotional distress was covered by the policy because it was "caused by an ‘occurrence’ " and was not expected or intended. Rodenburg also argues that the policy's Violation of Statutes Exclusion did not apply.²

II. Discussion

We review the district court's grant of summary judgment de novo . Landers Auto Grp. No. One, Inc. v. Cont'l W. Ins. Co., 621 F.3d 810, 812 (8th Cir. 2010). We will affirm the grant of summary judgment only if there is no genuine issue of material fact that Cincinnati did not breach its contractual duties to defend and indemnify Rodenburg under North Dakota law and thus is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a) ; Hiatt v. Mazda Motor Corp., 75 F.3d 1252, 1255 (8th Cir. 1996) (we apply state substantive law and federal procedural law in diversity cases). Because "[a]n insurer's duty to defend is broader than its duty to indemnify," Forsman v. Blues, Brews & Bar-B-Ques, Inc., 903 N.W.2d 524, 535 (N.D. 2017), Cincinnati's duty to indemnify arises under the policy only if it first had a duty to defend. We thus focus our analysis on whether Cincinnati had a duty to defend Rodenburg in the Williams lawsuit.

Cincinnati had a duty to defend the entire lawsuit if there was a possibility of policy coverage for any one of Williams's claims against Rodenburg. See Tibert v. Nodak Mut. Ins. Co., 816 N.W.2d 31, 42 (N.D. 2012). The language of the contract determines the scope of the policy's coverage. K & L Homes, Inc. v. Am. Fam. Mut. Ins. Co., 829 N.W.2d 724, 728 (N.D. 2013). We "resolve any doubt ... in favor of the duty to defend." First Nat'l Bank & Trust Co. of Williston v. St. Paul Fire & Marine Ins. Co., 971 F.2d 142, 144 (8th Cir. 1992) (citation omitted) (applying and interpreting North Dakota law). "[I]f the policy language is clear on its face, there is no room for construction," however, and if the policy unambiguously precludes coverage, "we will not rewrite a contract to impose liability on an insurer." K & L Homes, 829 N.W.2d at 728 (citation omitted). After determining the scope of the policy's coverage, we determine whether Williams's claims were possibly covered based on the allegations in the complaint. See First Nat'l Bank, 971 F.2d at 144. "[T]he duty to defend does not depend on the nomenclature of the claim. Rather, the focus is on the basis for the injury." Nodak Mut. Ins. Co. v. Heim, 559 N.W.2d 846, 852 (N.D. 1997) (citation omitted).

A. Covered Injuries

Cincinnati had a duty to defend Rodenburg if Williams alleged either "bodily injury" or "personal and advertising injury" that was "caused by an ‘occurrence.’ " Williams's alleged emotional distress meets the policy's definition of "bodily injury." Any injury allegedly caused by certain enumerated offenses meets the policy's definition of "personal and advertising injury." Neither party disputes that Williams's complaint alleged both "bodily injury" and "personal and advertising injury." The question then is whether those injuries were "caused by an ‘occurrence.’ "

The policy first defines "occurrence" as "[a]n accident ... that results in ‘bodily injury.’ " Rodenburg contends that Williams's alleged "bodily injury" was the result of an accident—its mistaking Williams for its judgment debtor. Williams's complaint does not allege that she suffered emotional distress as a result of Rodenburg's mistake about Williams's identity, however. It instead alleges that she suffered emotional distress as a result of Rodenburg's contacting her employer and co-workers about her alleged debt, ignoring her when she informed Rodenburg of its mistake, and subsequently garnishing her wages for six weeks. See Landers Auto Grp., 621 F.3d at 815 (applying Arkansas law and concluding that the claims against the insured did not arise from the accident—mistakes in accounting—but from the subsequent intentional acts—repossessing the vehicle and failing...