The insurer is not obliged to defend the law firm in debt collection
An insurer was not required to defend a debt collection law firm that was sued after pursued by mistake the wrong person under an exclusion in its coverage, a federal appeals court ruled Wednesday.
Rodenburg LLP, a Fargo, North Dakota law firm primarily engaged in debt collection, has obtained a default judgment on a debt owed by a “Charlene Williams,” according to the ruling. 8th United States Court of Appeals in St. Louis in Rodenburg LLP v. Certain Underwriters at Lloyd’s of London, The Cincinnati Insurance Co.
In early November 2016, Rodenburg served a notice of intent to garnish Ms Williams’ salary at the residential address associated with the debt, but not receiving a response, he then served on Ms employer. Williams a notice of garnishment.
Ms Williams reportedly informed Rodenburg in December that she was not the debtor he had a default judgment against, but the law firm allegedly ignored that information and garnished her salary for six weeks. After a lawyer informed the firm that he was wrong about Charlene Williams, the latter stopped the garnishment and returned the seized funds.
Ms Williams then sued the law firm, citing in part violations of the Fair Debt Collection Practices Act, alleging that her actions caused her emotional distress, among other impacts. The case has been settled, according to the decision, which did not disclose the amount of the settlement.
Rodenburg’s insurer Cincinnati Financial refused to defend or indemnify Rodenburg, and the law firm sued him in Fargo U.S. District Court, which granted the insurer summary judgment dismissing the case.
The decision was upheld by a unanimous three-judge appeals court, which cited a policy exclusion for violating any law, other than the Consumer Telephone Protection Act or the CAN-SPAM Act of 2003, ” that prohibits or restricts the sending, transmission, communication or distribution of material or information.
The panel agreed with Cincinnati that this included the FDCPA. “Cincinnati therefore did not breach its contractual obligation to defend Rodenburg, and so we do not need to consider whether Cincinnati had a duty to compensate Rodenburg for the Williams lawsuit,” said the ruling, upholding the judgment. of the lower court.