Mistakenly sending faxes to companies believed to have agreed to accept them is not an “accident,” says a federal appeals court, in upholding a lower court ruling in favor of a Travelers Cos. Inc. unit that denied coverage on the claim.

Atlanta-based MFG.com began a fax advertising program by purchasing lists of people it believed had consented to receive marketing materials by fax, according to Friday’s ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in G.M. Sign Inc., as judgment creditor; and assignee of MFG.com v. St. Paul Fire & Marine Insurance Co.

Between Sept. 18, 2005, and Nov. 15, 2008, MFG sent about 494,212 fax advertisements to the people included on the purchased lists, believing that its advertising program complied with all applicable laws, according to the ruling.

Round Lake, Illinois-based G.M. Sign brought a putative class action against MFG charging violations of the Telephone Consumer Protection Act in which it alleged that it and other members of the putative class had not granted permission to receive the faxes.

The litigation eventually settled for about $22.5 million with MFG agreeing to pay $460,000 of this amount and assigning to G.M. Sign its claims and rights to payment from its insurer, Travelers unit St. Paul Fire & Marine Insurance Co.

St. Paul denied coverage, and G.M. Sign filed suit against the insurer. The U.S. District Court in Atlanta granted St. Paul summary judgment in the case, which a three-judge appeals court panel unanimously upheld.

G.M. Sign argued St. Paul is required to indemnify MFG for its TCPA liability because the term “accident” in the policy, under Georgia law, covers injuries resulting from negligence, said the ruling.

“St. Paul responds that no accident occurred when MFG sent the faxes because by sending the faxes, MFG intended to cause the relevant property damage: the use of the recipients’ fax machines and the depletion of their ink and paper,” said the ruling.

The panel agreed with St. Paul. “The Policies provide no definition for the term ‘accident.’ But 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,’” said the ruling, in quoting an earlier ruling,

“Prior published precedent of this Court requires us to conclude that no accident occurred when MFG sent the faxes at issue here,” said the ruling, in affirming the lower court’s judgment.

G.M. Sign’s attorney had no comment, while a St. Paul attorney could not be immediately reached for comment.

Litigation stemming from alleged violations of the Telephone Consumer Protection Act, although down in 2018 from previous years, remains a major headache for policyholders, who are also facing resistance from insurers unwilling to provide coverage.

In another TCPA case involving G.M. Sign, in 2014 an Illinois appellate court ruled State Farm Fire & Casualty Co. was not responsible for a $4.9 million settlement stemming from a 2010 junk fax lawsuit.