In Western Heritage Insurance v. Asphalt Wizards, Asphalt Wizards was sued by Fun Services of Kansas City for sending junk faxes per the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227). Fun Services wanted statutory damages of $500 per fax and damages for conversion resulting from the use of its fax machine. Western Heritage is Asphalt Wizard’s insurer, and filed a declaratory judgment action against Asphalt and Fun Services for a determination it had no duty to pay any claim because, inter alia, of its $1,000 deductible per claim. Fun Services tried to counterclaim against Western Heritage, but it was dismissed for lack of standing. The finding that Western Heritage had no duty to pay the claims was also affirmed.
The Eighth Circuit, relied upon precedent in deciding a third party claimant has no standing to counterclaim against an insurance company, even though the insurance company has sued the third party claimant for a declaratory judgment. (Glover v. State Farm Fire & Cas. Co., 984 F.2d 259, 260 (8th Cir. 1993) (per curiam)). The Eighth Circuit noted this created an odd result where the insurer can sue the claimant, but the claimant cannot sue the insurer.
Further, while Western Heritage had a duty to defend Asphalt Wizards, there was no duty to indemnify. While the late reservation of rights by Western was ineffective, this did not waive Western’s ability to enforce the deductible endorsements in the policy. The deductible endorsements applied to add damages by one person or organization as a result of any one claim, and also applied towards investigation and legal expenses. The district court determined that the term “claim” unambiguously connotes that the $1,000 deductible amount applies separately to each fax. The district court reasoned that damages and legal expenses from one fax could not exceed $1,000 and since there was nothing in the record to dispute this finding, it was affirmed.