Auto Owners wins declaratory judgment action avoiding coverage for junk faxing
A Michigan company, GM Sign, Inc., filed a class action against an Illinois company that was engaged in bulk faxing contrary to law. Auto Owners insured the company, 400 Freight, but declined coverage. It represented the company under a "reservation of rights" and although GM Sign prevailed in the lawsuit, Auto Owners refused to pay any judgment. The trial judge ruled that an exclusion in the Auto Owners policy applied and that 400 Freight's policy did not protect against claims of violation of the Telephone Consumer Protection Act. The Court of Appeals affirmed.
One judge, Mark T. Boonstra, filed a separate opinion and would have denied the plaintiff standing to litigate the coverage issue, referring to the Republican Michigan Supreme Court's revised "standing" rules and suggesting that the injured party has no legitimate right to confirm whether the at-fault has insurance coverage. That approach represents a wide departure from the long-standing public policy and Court Rules of the State of Michigan.