Gambling Belongs in Casinos not Courts

Assignment Gamble Fails When Court Finds Intentional Act Defeats Coverage

April seems to be the month where creditors who gambled on recovering from an insurer rather than the tortfeasor, failed. Litigation is, and should always be, a place to resolve disputes not a place to gamble on a court detesting an insurer defendant.

In G.M. Sign, Inc., as Judgment Creditor; and assignee of v. St. Paul Fire & Marine Ins. Co., No. 17-14247, United States Court of Appeals for the Eleventh Circuit (April 12, 2019) a dispute between an insurer and its insured’s judgment creditor and assignee concerning the insured’s right to indemnification under its insurance policy.

G.M. Sign, Inc. sued seeking a declaratory judgment that St. Paul Fire & Marine Insurance Company was required to indemnify its insured,, for liability MFG incurred for faxing advertisements to recipients it mistakenly thought had consented to receipt. The district court concluded that St. Paul had no duty to indemnify MFG because, under Georgia law, no accident occurred when MFG sent the junk faxes with the mistaken belief that the recipients had agreed to receive them. Accordingly, the district court granted St. Paul summary judgment.

In ruling, the district court relied on our decision in Mindis Metals, Inc. v. Transportation Insurance Co., 209 F.3d 1296, 1297 (11th Cir. 2000) which held that under Georgia law intentional conduct premised on erroneous information is not an “accident” for general liability insurance purposes.


MFG began a fax advertising program by purchasing lists of people who MFG believed had consented to receive marketing materials by fax. MFG’s belief that the recipients had agreed to receive the faxes turned out to be mistaken. Between September 18, 2005, and November 15, 2008, MFG sent approximately 494,212 fax advertisements to the people included on the purchased lists. At the time it sent the faxes, MFG thought that its advertising program complied with all applicable laws.

MFG purchased from St. Paul a series of commercial general liability insurance policies (the “Policies”) that  covered “property damage” caused by “an event.” The Policies defined an “event” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The Policies did not define the term “accident.”

G.M. Sign brought a putative class action against MFG in Illinois state court, alleging among other things violations of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. MFG notified St. Paul of the lawsuit and demanded a defense and coverage, St. Paul notified MFG that it was denying MFG’s demands.

MFG and G.M. Sign eventually settled, agreeing that MFG was liable to the class in the total amount of $22,536,500. As part of the settlement agreement, MFG agreed to pay $460,000 of this amount (about $1 per recipient) and stipulated that the remaining amount MFG owed the class could only be satisfied from the Policies. MFG assigned to the class its claims against and rights to payment from St. Paul under the Policies seeking the more than $22 million plus tort damages.

Eventually, the district court granted St. Paul’s summary judgment motion, denied G.M. Sign’s motion, and entered judgment in St. Paul’s favor. Specifically, the district court ruled that under Mindis Metals, “the intentional delivery of fax advertisements does not qualify as an ‘accident’ under Georgia law, even if the sender erroneously believed that it had consent to send the fax advertisements.”


In this appeal, G.M. Sign argues that St. Paul is required to indemnify MFG for its TCPA liability because the term “accident” under Georgia law covers injuries resulting from negligence. According to G.M. Sign, MFG sent the faxes negligently because it never intended to send any faxes without the recipients’ consent. According to St. Paul, MFG’s mistaken belief that the recipients agreed to receive the faxes is immaterial.

No Accident Occurred Because in Sending the Faxes MFG Engaged in Intentional Conduct Premised on Erroneous Information.

Under Georgia law, an insurance policy is simply a contract, the provisions of which should be construed as any other type of contract. The Policies provide no definition for the term “accident.” When an insurance policy fails to define a term or otherwise indicate that the term is used in an unusual sense, Georgia courts attribute to that term its usual and common meaning. The usual and common meaning of “accident,” according to the Supreme Court of Georgia, is an unexpected happening without intention or design.

Applying Georgia law, in Mindis Metals, the Eleventh Circuit considered whether intentional conduct premised on erroneous information constitutes an accident and it concluded, under Georgia law, such conduct was not an accident.

Applying the rule adopted in Mindis Metals to the facts of this case yields the conclusion that under Georgia law, no accident occurred when MFG sent faxes with the mistaken belief that the recipients had consented to receive them. MFG intended to send the faxes and thus intended to cause the resulting property damage, the use of the fax machines and the depletion of the machines’ ink and paper. The fact that MFG mistakenly thought the recipients had consented to receive the faxes is insufficient under Mindis Metals to render the property damage an accident under Georgia law. Therefore, the Policies’ property damage provisions provided no coverage for the TCPA liability arising from MFG’s conduct.

The state law premise of Mindis Metals is that “an ‘accident’ does not include damage to persons or property when that damage is intentionally inflicted, even where that intentional conduct is caused by erroneous information.” Mindis Metals, 209 F.3d at 1300.

Because the Eleventh Circuit decided that the Policies do not cover the property damage for which G.M. Sign seeks coverage, there was no reason to decide the applicability of any exclusions that might bar coverage.

The Policies provided MFG with no coverage here because no accident occurred when MFG intentionally sent faxes with the mistaken belief that the recipients had consented to receive them.


Another gamble fails. Insurance, by definition, must result from a fortuitous, contingent or unknown event. Intentional acts, since they cannot be fortuitous, can never obtain defense or indemnity from a liability insurance policy regardless of parsing the word “accident” to fit within the clear intent of the party to send the faxes and thereby violate the TCPA. The gamble for more than $22 million was lost and the class members recovered $1 dollar for each fax received less attorneys fees. Not even enough for a cup of coffee.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Passover Seder for Americans

Passover is one of the many holidays Jewish people celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the Passover Seder for Americans: An All English - Easy to Perform - Passover Seder by [Zalma, Thea, Zalma, Barry]mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being?

All Jewish fathers are required to teach their children, at least once a year at the Passover holiday, about the exodus from slavery in Egypt. For American Jews who have difficulty understanding Hebrew and complicated books describing the Exodus, my wife and I wrote this book to use for our own Seder where each member of the family reads part of the book.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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