Petition for Writ of Certiorari — Rodenburg LLP, dba Rodenburg Law Firm, Petitioner v. The Cincinnati Insurance Company

No.

IN THE

Supreme Court of the United States

RODENBURG LLP, DOING BUSINESS AS

RODENBURG LAW FIRM, PETITIONER

vz.

CERTAIN UNDERWRITERS AT LLOYD’S OF LONDON,

SYNDICATE NO. 4020, SUBSCRIBING TO POLICY NUMBER

DCLPLA 00574-00

AND

THE CINCINNATI INSURANCE COMPANY

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

CLIFTON RODENBURG

Counsel of Record

Rodenburg Law Firm

3800 NP Ave., Suite 105

P.O. Box 2427

Fargo, ND 58108-2427

rodenburgc@aol.com

(701) 235-6411

CURRY & TAYLOR ¢ (202) 350-9073

1

QUESTION(S) PRESENTED

1. Did the court of appeals’ expansive reading of a

boilerplate exclusion used nationwide by insurers in their

commercial liability policies, a reading which makes the

policy’s coverage illusory and therefore worthless,

overturn North Dakota substantive law, create a split of

authority among the jurisdictions which have considered

the identical question and deprive petitioner of the

property rights to which it would otherwise be entitled in

State court?

2. Can the Violation of Statutes exclusion used

nationwide by insurance companies when writing

commercial liability policies be enlarged despite its

limiting language to incorporate the violation of any

statute, ordinance or regulation “which prohibits or limits

the...communicating...of material or information” in order

to deny coverage for claims understood to be within the

range of risks contemplated by the insured when it

purchased the policy?

Ww

PARTIES TO THE PROCEEDING

All the parties in this proceeding are listed in the

caption.

STATEMENT OF RELATED CASES

None

TABLE OF CONTENTS

Page

(QUESTION(S) PRESENTED ..........cssssccsssscsscessscccessescescessssecesesseeeessnes i

PARTIES TO THE PROCEEDING.........sssccsccscesssssscceccecessesssceeeseceseeees il

STATEMENT OF RELATED CASES. .......csccccssscscssssssccessscescesssecessees i

TABLE OF AUTHORITIES..........ccssscssssscessseccessecesssecescseceeeseeceesseeesees IV

OPINIONS BELOW.........ssccccssscsssscccssseccessecessstecesscsecsseeesssecessseecsssees 1

JURISDICTION .......ssssccccesssseccssssscccccesesssceccssssscsccsssssscsecessssseeeceesenees 2

RELEVANT PROVISIONS INVOLVED ...........ccssescccssessreccessesseeeeeees 5)

STATEMENT.......cccccsssccesssecssscccessecssssecessseccsesseecessteesesesesesseeeessesesees 10

REASONS FOR GRANTING THE PETITION .........csccssssssssscsesesceeees 20

CONCLUSION ......ccccsssscssssccsssscccessecesssecessstecsesseceesseccessesecesseeeesseeesses 36

APPENDIX

Circuit COUrt DeCISiON...........ccseccssccsecsccssssccsccssssscssccscescssssesseees la

District Court DeCiston ...cccccccccccccccsssssscccecssccssccccescsscsssscseseceees 14a

District Court DeCiston ...cccccccccccccccsssssscccecssccssccccescsscsssscseseceees 32a

Order Denying REheCaring........ccccsscrccssescrccsssssccesesseccsssscscesecees 53a

Ww

TABLE OF AUTHORITIES

Page

CASES

AANENSON V. BASTIEN, 438 N.W.2D 151, 156 (N.D.

1989) ......ccssccsssssccssscssstcessccessecesseeceseseeseeesssceseseecsseeessseseeseeeesesens 31

AID INS. SERVICES, INC. V. GEIGER, 294 N.W.2D

A11, 414 (N.D. 1980) ...........cccsssccessscssssecssecesssecesseessseseeseeees 27, 30

BOARD OF REGENTS V. ROTH, 408 U.S. 564, 571-572

(1972).......csssccesssccssscsssecsescecescseesseceseeesseceesseescsesessceecsseesssseeesees 34

BOLLINGER V. NATIONAL FIRE INS. Co., 154 P.2D

399, 403 (CAL.1944)........ccscccsscscsssrcsssccescsecssecesseeessceeesseeeesseees 22,

BRASH V. GULLESON, 8385 N.W.2D 798, 803 (N.D.

2013) ....ccsscccssscssscccsccsssecscseceesccecsessesceessseesseecesceeessecesseeeeserens 27

BRUNSOMAN V. SCARLETT, 465 N.W.2D 162, 168-69

CN.D. 1991).........cccssccssscssssscssseecssscesscccesceesssecceseeessceessseesssseeesees 28

BUSH V. GORE, 542 U.S. 692,740-742 (2000) .........sscccsssessssesssees 32

CINCINNATI. MILLS V. AGRICHEMICAL AVIATION,

INC., 250 N.W.2D 663, 671-673 (N.D. 1977)........ccccsscsssreeeees 31

CLAY V. SUN INSURANCE OFFICE, 363 U.S. 207,

210-212 (1960)..........s:cccssccsscscssscccssesessssecssecssseecsseeessseeceseresseeees 34

DAY ZIMMERMAN, INC. V. CHALLONER, 4238 U.S. 3,

A (1975) .....scccssscssssccsstsesscsecssecssssecesseesssecesseeesseecesseesesesessesessereess 33

DUE PROCESS CLAUSE. PALMORE V. SIDOTI, 466

U.S. 429, 434 (1984) .........sccssssssssesscscesseesssesesssessseeessecesseeessees 34

ERIE R. Co. V. TOMPKINS, 304 U.S. 64 (1988) .........ceesceesesceees 22

FELDER V. CASEY, 487 U.S. 131, 151 (1988)... eecceeeseeeees 32

FINSTAD V. STEIGER TRACTOR, INC., 301 N.W.2D

392, 898 (N.D. 1981) .........csccccsssccsctesssccsssecssssecescseesecssseeeeseeees 27

GASPARINI V. CENTER FOR HUMANITIES, INC., 518

U.S. 415, 426 (1996)..........cccsscccssesscscesseesssecessssesseeessecesseeessnes 33

GIBBES V. ZIMMERMAN, 290 U.S. 326, 382 (1938) .........cceceees 34

GORDON V. VIRTUMUNDO, 575 F.8D 1040, 1047-1048

(9™ CIR. 2009)........:ccssccssssccessscessscessccssseceesssessecesseeessseeessrecssees 25

GUARANTY TRUST Co. YORK, 326 U.S. 99, 109

(1945).......ccscccssscccscsesscecssseccessseesecssseeesseccsseescseseeseeecsseessssceesees 32

HARRINGTON V. HARRINGTON, 365 N.W.2D 552, 555

(0 D8 6/215) ee 28

2)

HICKS V. FEIOCK, 485 U.S. 624, 630 N.3 (1988).......csccssssseseees 33

JOHNSON V. FANKELL, 520 U.S. 911, 916 (1997)..........ccsssseeee 32

KIEF FARMERS CO-OP ELEVATOR Co. V.

FARMLAND MUT. INS. Co., 534 N.W.2D 28, 32

(N.D. 1995) .......ccccsscsssescescsssccsccssesscecsscestceceessessesesssesseseneeees 27

KLAXON Co. V. STENTOR ELECTRIC

MANUFACTURING CoO., 318 U.S. 487, 497 (1941)...........cc000 33

LEHMAN BROTHERS V. SCHEIN, 416 U.S. 386,

390-391 (19OTA) ........ceccsccsscssecccesssscesccsstescesssssescesssecessceaseaceass 34

LEWIS V. CASEY, 518 U.S. 348, 346 (1996)...........ccssscsscsssesreees 34

LINK V. FEDERATED MUT. INS. Co., 386 N.W.2D

897, 900 (N.D. 1986) ..........scccccsscsssessessssscescsstessesssessesscsaseceases 27

MARTIN V. CCH, INC., 784 F. SUPP.2D 1000, 1004

CN.D. ILL, 2011)... eeccseesesccsccecssnccesceccessestecscsssessesseeseessenss 24

MONTICELLO INS. V. MIKE'S SPEEDWAY LOUNGE,

949 F. SUPP. 694, 701-708 (S.D. IND. 1996) ...........:cccccccssesees 29

MOTOR VEHICLE MFRS. ASS'N V. STATE FARM

MutT. AUTO. INS. CO., 463 U.S. 29, 43 (1988)........scscccceseeeees 34

OLDS V. GENERAL ACC. FIRE & LIFE ASSUR.

CORPORATION, 155 P.2D 676, 680

(CAL. APP.1945).......ccscccssscscsscsccsscssssecscssecssssecsessesseseesccscescceees 22

PHYSICIANS HEALTHSOURCE, INC. V.

BOEHRINGER INGELHEIM PHARM., INC., 847

F.3D 92, 99-100 (2ND CIR. 2017)........cssssesssssssescessessessesseseeseees 24

RESOLUTION TRUST V. DICKINSON ECONO-

STORAGE, 474 N.W.2D 50 (N.D. 1991) ..... eee eesssssseeseceeeeeeees 31

SALVE REGINA COLLEGE V. RUSSELL, 499 U.S. 225,

234 (1991)... ecssscsceccecscecccsccececsecsscsscssssssssecsesseeseseceesecsacseseeses 32

SAVELKOUL V. BOARD OF COUNTY

COMMISSIONERS, 96 N.W.2D 394, 398

(N.D. 1959).......cccsssssseccssscnscsscnscscsscccscssccssssessscsessssesscsecsaceees 31

SCORE V. AMERICAN FAMILY MUTUAL INS. Co.,

588 N.W.2D 206, 211 (N.D. 1995)..........cccccsscssssssssseesscsesseessees 29

SORLIC V. NESS, 323 N.W.2D 841, 850 (N.D. 1982)...........sc000 31

ST, CLAIR V. EXETER EXPLORATION Co., 671 F.2D

1091, 1095-1096 (8TH CIR. 1982)..........ccccccssssssssssssesssssssseesees 28

WEST V. AT&T Co., 311 U.S. 228, 236 (1940)... eeesesseeeeeees 33

VI

STATUTES

15 U.S.C. $8 1692-1692... eessescssscecsscreessccscsssecssssssessssscesces 14

15 U.S.C. § 1692C..........cssccsssscssssssecssssesssssecesesceessseeessseeeseeesess 3, 25

15 U.S.C. § 1692c(b) & 1692 f.........eccsccscssstcsssceecsseesssesesenees 20

15 U.S.C. § 16920 ..........cscccssssscssstecssssecssssscsssseecssssccssssecsssceeesssseess 5

15 USC § 16926 uu... cescsscssccesssscsesssceessscesessceecsscsecssesessscecesecesens 6

15 U.S.C. § 16926... esssccesssscessscecsssceessssccesesceessseeeseseceseseeess 6

15 U.S.C. 88 (701-7718 oo... ccccsccsscsscsscsssscesesssecesesceessseecssceeesenees 24

28 U.S.C. § 12541)... ecscscesscecssscesssecsssccessssecessssecsssseesssseess 2

28 U.S.C. § 1882(a)(1) «0... cccssssccsscssressscscessceecsssesssesceessscessssesens 3

28 U.S.C. § 1446(a).........csscscsssssecsssscessscecssssseesssesesseeees 15, 17, 19

28 U.S.C. § 2101(C) ou... ccsscsccssceecsscsscssccscsssccssssseessssscsssceeesseseess 2

AT U.S.C. § 227 vo .ccccsccssscsscsscecssccscssccsessscscssscescsssesecsccsessscsessecees 24

NDCC 9-07-14... .ccccscssscsecsssccsscscsssceessscssessssecssscsecsscsessscseesses 31

NDCC 9-07-19 ..........cscscsssssecssscscssccscsssceessscscesssrecssscsesssesessscseesees 30

North Dakota Century Code 14-02-02 ............sseccesseeeees 9, 13, 14

North Dakota Century Code 31-11-05(25)....... ee eeeeceeeees 9,31

North Dakota Century Code 9-07-14 & 9-07-19...........ccccsssceeees 8

North Dakota Century Code 9-08-01 ..............ccscsscssssrecessees 9, 35

RULES

Supreme Court Rule 10(C)...........cssssssesssscccsssscscessssecesssseeeess 23

Supreme Court Rule 18.8 ou... ssssssccsssceccsssscececssceeccsseseeeeseees 2

OTHER AUTHORITIES

Boardman, M. E., Contra Proferentem: The Allure

of Ambiguous Boilerplate, 104 Mich. L. Rev. 1105,

1118 (2OOG) ...........eccssscesscesscessccssscccsseccesecesesesseccesseessseeeenees 35

Illusory Coverage Doctrine, A Critical Review, 166

U. Penn. Law Rev. 1545, 1561-1562 (2018).............eeseccessees 29

Insurance Policy Interpretation, 21 Conn. Ins. Law

J. 829, 843 (2019) oe eccsscssstccssecessccesecsssecssseceesesceseescssceesees 27

1

OPINIONS BELOW

The published decision of the United States

Court of Appeals for the Eighth Circuit in Rodenburg

LLP v. Certain Underwriters at Lloyd’s of London,

Syndicate No. 4020 et al., C.A. No. 20-2521, decided

August 25, 2021, and reported at 9 F.4th 1033 (8th Cir.

2021), affirming the District Court’s grant of summary

judgment to respondent Cincinnati Insurance

Company, is set forth in the Appendix hereto (App. 1-

13).

The published Order of the United States

District Court for the District of North Dakota,

Eastern Division, in Rodenburg LLP v. Certain

Underwriters at Lloyd’s of London, Syndicate No. 4020

et al., Civil Action No. 3:19-cv-00027, filed June 24, 2020,

and reported at 468 F. Supp.3d 1125 (D.N.D. 2020),

granting respondent Lloyd’s of London’s motion for

summary judgment motion and dismissing petitioner’s

complaint with prejudice, is set forth in the Appendix

hereto (App. 14-31).

The published Order of the United States

District Court for the District of North Dakota,

Eastern Division, in Rodenburg LLP v. Certain

Underwriters at Lloyd’s of London, Syndicate No. 4020

et al., Civil Action No. 3:19-cv-00027, filed January 9,

2020, and reported at 432 F. Supp.3d 979 (D.N.D. 2020),

granting respondent Cincinnati Insurance Company’s

motion for summary judgment, denying petitioner’s

cross motion for summary judgment and dismissing

petitioner’s complaint with prejudice, is set forth in the

Appendix hereto (App. 32-52).

2

The unpublished order of the United States

Court of Appeals for the Eighth Circuit in Rodenburg

LLP v. Certain Underwriters at Lloyd’s of London,

Syndicate No. 4020 et al., C.A. No. 20-2521, filed on

September 30, 2021, denying petitioner’s timely filed

petition for rehearing or, in the alternative, for

rehearing en banc, is set forth in the Appendix hereto

(App. 53).

JURISDICTION

The decision of the Court of Appeals for the

Eighth Circuit affirming the District Court’s grant of

summary judgment to respondent Cincinnati Insurance

Company and its dismissal of petitioner’s complaint was

entered on August 25, 2021; and its order denying

petitioners’ timely filed petition for rehearing or, in the

alternative, for rehearing en banc, was filed on

September 30, 2021 (App. 1-13;53).

This petition for writ of certiorari is filed within

ninety (90) days of September 30, 2021, the date the

court of appeals denied petitioners’ timely filed petition

for rehearing or, in the alternative, for rehearing en

banc. 28 U.S.C. § 2101(c). Supreme Court Rule 18.3.

The jurisdiction of this Court is invoked

pursuant to the provisions of 28 U.S.C. § 1254(1).

5)

RELEVANT PROVISIONS INVOLVED

United States Constitution, Amendment V:

No person shall...be deprived of life, liberty, or

property, without due process of law....

28 U.S.C. § 1832(a)(1) (_ diversity

jurisdiction; amount in controversy; costs ):

(a) The district courts shall have original

jurisdiction of all civil actions where the matter

in controversy exceeds the sum or value of

$75,000, exclusive of interest and costs, and is

between—

(1) citizens of different States....

15 U.S.C. § 1692c (Fair Debt Collection

Practices Act):

Communication in connection with debt

collection

(a) Communication with the consumer generally.

Without the prior consent of the consumer given

directly to the debt collector or the express

permission of a court of competent jurisdiction, a

debt collector may not communicate with a

consumer in connection with the collection of any

debt—

(1) at any unusual time or place or a time or place

known or which should be known to be

inconvenient to the consumer.

In the absence of knowledge of circumstances to

the contrary, a debt collector shall assume that

A

the convenient time for communicating with a

consumer is after 8 o’clock antemeridian and

before 9 o’clock postmeridian, local time at the

consumer’s location;

(2) if the debt collector knows the consumer is

represented by an attorney with respect to such

debt and has knowledge of, or can readily

ascertain, such attorney’s name and address,

unless the attorney fails to respond within a

reasonable period of time to a communication

from the debt collector or unless the attorney

consents to direct communication with the

consumer;

or

(3) at the consumer’s place of employment if the

debt collector knows or has reason to know that

the consumer’s employer prohibits the consumer

from receiving such communication.

(b) Communication with third parties.

Except as provided in section 1692b of this title,

without the prior consent of the consumer given

directly to the debt collector, or the express

permission of a court of competent jurisdiction,

or as reasonably necessary to effectuate a

postjudgment judicial remedy, a debt collector

may not communicate, in connection with the

collection of any debt, with any person other

than the consumer, his attorney, a consumer

reporting agency if otherwise permitted by law,

the creditor, the attorney of the creditor, or the

attorney of the debt collector.

(c) Ceasing communication. If a consumer

notifies a debt collector in writing that the

consumer refuses to pay a debt or that the

consumer wishes the debt collector to cease

D

further communication with the consumer, the

debt collector shall not communicate further

with the consumer with respect to such debt,

except—

(1) to advise the consumer that the debt

collector’s further efforts are being terminated;

(2) to notify the consumer that the debt collector

or creditor may invoke specified remedies which

are ordinarily invoked by such debt collector or

creditor; or

(3) where applicable, to notify the consumer that

the debt collector or creditor intends to invoke a

specified remedy.

If such notice from the consumer is made by

mail, notification shall be complete upon receipt.

(d) “Consumer” defined

For the purpose of this section, the term

“consumer” includes the consumer’s spouse,

parent Gf the consumer is a minor), guardian,

executor, or administrator.

15 U.S.C. § 1692d:

(d) Harassment or abuse

A debt collector may not engage in any conduct

the natural consequence of which is to harass,

oppress, or abuse any person in connection with

the collection of a debt. Without limiting the

general application of the foregoing, the

following conduct is a violation of this section:

(1) The use or threat of use of violence or other

criminal means to harm the physical person,

reputation, or property of any person.

6

(2) The use of obscene or profane language or

language the natural consequence of which is to

abuse the hearer or reader.

(3) The publication of a list of consumers who

allegedly refuse to pay debts, except to a

consumer reporting agency or to persons

meeting the requirements of section 1681la(f) or

1681b(8) [1] of this title.

(4) The advertisement for sale of any debt to

coerce payment of the debt.

(5) Causing a telephone to ring or engaging any

person in telephone conversation repeatedly or

continuously with intent to annoy, abuse, or

harass any person at the called number.

(6) Except as provided in section 1692b of this

title, the placement of telephone calls without

meaningtul disclosure of the caller’s identity.

15 USC § 1692e (purposes of the FDCPA):

(e) Purposes

It is the purpose of this subchapter to eliminate

abusive debt collection practices by debt

collectors, to insure that those debt collectors

who refrain from using abusive debt collection

practices are not competitively disadvantaged,

and to promote consistent State action to protect

consumers against debt collection abuses.

15 U.S.C. § 1692f (Unfair Practices ):

A debt collector may not use unfair or

unconscionable means to collect or attempt to

collect any debt. Without limiting the general

7

application of the foregoing, the following

conduct is a violation of this section:

(1) The collection of any amount (including any

interest, fee, charge, or expense incidental to the

principal obligation) unless such amount is

expressly authorized by the agreement creating

the debt or permitted by law.

(2) The acceptance by a debt collector from any

person of a check or other payment instrument

postdated by more than five days unless such

person is notified in writing of the debt

collector’s intent to deposit such check or

instrument not more than ten nor less than three

business days prior to such deposit.

(3) The solicitation by a debt collector of any

postdated check or other postdated payment

instrument for the purpose of threatening or

instituting criminal prosecution.

(4) Depositing or threatening to deposit any

postdated check or other postdated payment

instrument prior to the date on such check or

instrument.

(5) Causing charges to be made to any person for

communications by concealment of the true

purpose of the communication. Such charges

include, but are not limited to, collect telephone

calls and telegram fees.

(6) Taking or threatening to take any nonjudicial

action to effect dispossession or disablement of

property if—

(A) there is no present right to possession of the

property claimed as collateral through an

enforceable security interest;

(B) there is no present intention to take

possession of the property; or

8

(C) the property is exempt by law from such

dispossession or disablement.

(7) Communicating with a consumer regarding a

debt by post card.

(8) Using any language or symbol, other than the

debt collector’s address, on any envelope when

communicating with a consumer by use of the

mails or by telegram, except that a debt collector

may use his business name if such name does not

indicate that he is in the debt collection business.

North Dakota Century Code 9-07-14 & 9-07-

19 (Interpretation of Contract):

9-07-14. Interpreted as promisor believed

promisee understood it.

If the terms of a promise in any respect are

ambiguous or uncertain, it must be interpreted

in the sense in which the promisor believed at

the time of making it that the promisee

understood it.

9-07-19. Uncertainty interpreted against party

causing it -

Presumption as to cause.

In cases of uncertainty not removed by the

preceding rules, the language of a contract

should be interpreted most strongly against the

party who caused the uncertainty to exist. The

promisor is presumed to be such party, except in

a contract between a public officer or body, as

such, and a private party, and in such case it is

presumed that all uncertainty was caused by the

private party.

9

North Dakota Century Code _ 9-08-01

(Provisions that are unlawful ):

Any provision of a contract is unlawful if it is:

1. Contrary to an express provision of law;

2. Contrary to the policy of express law, though

not expressly prohibited; or

3. Otherwise contrary to good morals.

North Dakota Century Code 31-11-05(25):

Maxims of jurisprudence - How to be used

and applied - List.

The maxims of jurisprudence set forth in this

section are not intended to qualify any of the

provisions of the laws of this state, but to aid in

their just application:

25. Particular expressions qualify those which

are general.

North Dakota Century Code 14-02-02; 03; 04

(Defamation):

14-02-02. Defamation classified.

Defamation is effected by: 1. Libel; or 2. Slander.

14-02-08. Civil libel defined.

Libel is a false and unprivileged publication by

writing, printing, picture, effigy, or other fixed

representation to the eye, which exposes any

person to hatred, contempt, ridicule, or obloquy,

or which causes the person to be shunned or

10

avoided, or which has a tendency to injure the

person in the person's occupation.

14-02-04. Civil slander defined.

Slander is a false and unprivileged publication

other than libel, which:

1. Charges any person with crime, or with

having been indicted, convicted, or punished for

crime;

2. Imputes to the person the present existence of

an infectious, contagious, or loathsome disease;

3. Tends directly to injure the person in respect

to the person's office, profession, trade, or

business, either by imputing to the person

general disqualifications in those respects which

the office or other occupation peculiarly requires,

or by imputing something with reference to the

person's office, profession, trade, or business

that has a natural tendency to lessen its

profits...

STATEMENT

Petitioner Rodenburg LLP (“petitioner”) is a

North Dakota law firm primarily engaged in debt

collection. In early 2015, petitioner purchased from

respondent Cincinnati Insurance Company

(‘respondent” or “Cincinnati”) two insurance policies

which covered its law practice for the period from May

1, 2015, through May 1, 2018. The policies were

governed by North Dakota law and included two kinds

of coverage, i.e., a commercial general liability coverage

(“the CGL Policy”) which excluded professional liability

coverage and a commercial umbrella liability coverage

11

(“the Umbrella Policy”) which did not exclude

professional liability coverage.

Both Cincinnati policies provided petitioner with

insurance for damages arising from its law practice

which resulted in certain kinds of injuries: “bodily

injury,’ “personal and advertising injury,” and

“property damage” (App. 39-40). For coverage to apply,

the injuries must have resulted from an “occurrence”

which the policies defined for practical purposes as an

accident although the Umbrella Policy’s definition of

“occurrence” included coverage for intentional torts

which cause “personal and advertising” injuries (App.

39-40;52).

Both policies also contain various exclusions

from coverage, including one for any claim for “bodily

injury” or “property damage” which may reasonably be

expected to result from the intentional or criminal acts

of [petitioner] or which is in fact expected or intended”

by petitioner (App. 44-45;48).

Cincinnati also wrote another exclusion into its

policies, the so-called “Violation of Statute” exclusion

(App. 9;48-49). It provides:

This insurance doe not apply to:

8. Distribution of Material in Violation of

Statutes

Any liability arising directly or indirectly out of

any action or omission that violates or is alleged

to violate:

12

a. The Telephone Consumer Protection Act

(TCPA), including any amendment of or addition

to such law;

b. The CAN-SPAM Act of 2008, including any

amendment of or addition to such law; or

ce. Any statute, ordinance or regulation, other

than the TCPA or CAN-SPAM Act of 2003, that

prohibits or limits the sending, transmitting,

communicating or distribution of material or

information.

(App. 9;48-49) (emphasis supplied).

Besides this coverage from Cincinnati, petitioner

also purchased from respondent Certain Underwriters

at Lloyd’s of London, Syndicate No. 4020, subscribing

to Policy Number DCLPLA 00574-00 (“Lloyd’s”) a

claims-made policy of insurance covering its law

practice, effective May 10, 2017, through May 10, 2018,

with a retroactive date of May 10, 2009 (App. 15-17). Its

coverage indemnified petitioner for any damages it may

become legally obligated to pay as the result of any

“negligent act, error or omission in Professional

Services” petitioner provided for which it was legally

responsible (App. 15-16). It required that the claim be

made within the policy period and based on an incident

occurring after the retroactive date with petitioner

being obligated to provide Lloyd’s with written notice

“of the Claim while this Insurance Policy is in effect”

(App. 16).

With this liability insurance in place, petitioner

in January of 2011 received a defaulted credit card

account for collection belonging to one Charlene

Williams (“Williams”). Petitioner’s client, Portfolio

13

Recovery Associates (“PRA”), provided petitioner with

Williams’ street address in Coon Rapids, Minnesota.

Unknown to petitioner, the Coon Rapids address

belonged not to Williams but rather to an individual

named Charlene Williams-Mumbo (“Williams-Mumbo”)

(App. 17;34). Based on the information provided it,

petitioner commenced a civil action against Williams in

Minnesota state court, serving her with the summons

and complaint at the address given it by the assignor

(Id.). When Williams failed to answer, petitioner

obtained a default judgment on December 6, 2011 (/d.).

Williams-Mumbo, who lived at the Coon Rapids

address, retained an attorney (Daniel York) to vacate

the default judgment but he did nothing further to

respond to petitioner’s follow-up inquiries (App. 17-

185384).

On November 8, 2016, PRA advised petitioner

that Williams was now employed and it then attempted

to collect on the judgment debt, serving Williams at the

same Coon Rapids address with notice of its intent to

garnish her earnings and then, after receiving no

response, serving her employer with the garnishment

papers (App. 18;34). Williams, who had never lived at

the Coon Rapids address, learned from her employer in

December of 2016 of petitioner’s garnishment of her

wages (App. 18;34-35). Beginning late that month,

Williams contacted petitioner by phone, asserting that

she did not owe the debt, did not live at the Coon

Rapids address, and never received notice of the

lawsuit or the judgment before garnishment

commenced (App. 18-19;34-35). In January of 2017, she

filed complaints against petitioner with Minnesota’s

Attorney General and the Consumer Financial

Protection Bureau (App. 19;35).

14

Yet petitioner could not discuss the matter with

Williams personally because Attorney York

represented her and it so advised Williams (App. 19).

Williams, on her own initiative, contacted York who

eventually confirmed with petitioner on February 16,

2017, that the Charlene Williams whose wages were

garnished was not the judgment debtor and that he

represented a different person named Charlene

Williams in 2011 regarding the default judgment (/d.).

Soon thereafter, petitioner ceased garnishment, vacated

the default judgment and dismissed the underlying

lawsuit, directing the third-party servicer who held the

garnished funds to return them to Williams (App. 19-

20).

On October 31, 2017, Williams filed suit against

petitioner and PRA in the federal district court for the

District of Minnesota alleging nine claims and seeking

damages for petitioner’s alleged violations of the Fair

Debt Collection Practices Act (15 U.S.C. §§ 1692-1692p)

(“the FDCPA”), conversion, trespass to chattels, civil

theft, wrongful garnishment and invasion of privacy

(App. 21;35). She claimed injuries of extreme emotional

distress, anxiety, humiliation, embarrassment and

annoyance (Id.).

In response to the lawsuit, petitioner sought

coverage from Lloyd’s on its claims-made policy (App.

35). On January 18, 2018, Lloyd’s denied coverage (App.

21). Petitioner also sought coverage from Cincinnati

under the CGL and Umbrella policies it purchased in

2015 (App. 35). Cincinnati denied coverage under each

policy Ud.). As it wrote petitioner on March 7, 2018,

there was no coverage under the CGL policy because

Williams’ claims did not allege any “bodily injury” or

15

“property damage” and because of other exclusions of

professional liability coverage . As for the Umbrella

policy, there was no coverage for the reason that,

among others, Williams’ claims which alleged a

“personal or advertising injury” are “excluded from

coverage by the Violations of Statute exclusion.”

Petitioner undertook its own defense of

Williams’ lawsuit and ultimately entered into a

settlement in November of 2018 (App. 36). On January

19, 2019, petitioner brought a civil action against

Cincinnati and Lloyd’s in North Dakota state district

seeking a declaratory judgment and damages stemming

from their refusal to honor their contractual duty to

defend and indemnify it in the Williams lawsuit (App.

36). On January 30, 2019, respondents timely removed

this civil action to the federal district court for the

District of North Dakota pursuant to 28 U.S.C. §

1446(a) & (ce) Ud.).

By September 19, 2019, petitioner and Cincinnati

had filed cross motions for summary judgment; and on

January 8, 2020, Lloyd’s filed its own motion for

summary judgment against petitioner (App. 32-33). On

January 9, 2020, the district court, Welte, J., issued an

order granting Cincinnati’s summary judgment motion,

denying petitioner’s cross motion for the same relief

and dismissing petitioner’s complaint against Cincinnati

with prejudice (App. 32-52).

The parties agreed that the issue of Cincinnati’s

duty under its Umbrella Policy to defend and indemnify

petitioner is governed by North Dakota law and the

district judge ostensibly applied this substantive State

law in order to predict how the North Dakota Supreme

16

Court would decide the question (App. 37). He

determined that Williams’ claims against petitioner did

not meet the policy’s definition of “property damage” so

as to trigger Cincinnati’s duty to defend and indemnify

petitioner (App. 48). However, her allegations did allege

“bodily injury” within the policy’s language but those

injuries resulted from petitioner’s intentional conduct in

wrongfully garnishing her wages, thereby failing to

meet the policy’s definition of an “occurrence,” an event

founded on an “accident,” and therefore her allegations

did not invoke Cincinnati’s duty to defend and

indemnify petitioner for her “bodily injury” (App. 44-

48).

Yet the district court did conclude that

Cincinnati’s Umbrella Policy was invoked by the

allegations of Williams’ complaint that petitioner

committed certain common law intentional torts in the

course of its wrongful garnishment of her wages, among

them conversion, invasion of privacy and even malicious

prosecution and defamation although these latter two

claims were not overtly alleged but impliedly found in

her allegations (App. 42-48). These were claims of

“personal and advertising injury” within the policy’s

definition and thereby triggered Cincinnati’s

affirmative duty to defend and indemnify petitioner

unless these claims came within any of the Umbrella

Policy’s various exclusions from coverage (App.

43;44:48),

Judge Welte ruled that one of the policy’s

exclusions entitled “Distribution of Material in

Violation of Statutes” applied here (App. 48-49). As he

read the exclusion together with Williams’ allegations,

he determined that her claims that petitioner violated

17

the FDCPA, a federal statutory regime aimed at

prohibiting unfair practices by debt collectors, comes

within J 8.c. of the exclusion, ie., “[a]ny statute,

ordinance or regulation, other than the TCPA or CAN-

SPAM Act of 2003, that prohibits or limits the sending,

transmitting, communicating or distribution of material

or information” (App. 49). He did so “because [the

FDCPA] prohibits or limits the communicating of

information” even though this statute was not

expressly identified in any part of this exclusion (App.

49-50).

The district judge rejected petitioner’s argument

that to be considered a part of | 8.c.’s_ catch-all

provision, a statute must be of a type similar to the two

enumerated statutes identified in Jf 8.a. & b., 1e., The

Telephone Consumer Protection Act (“TCPA”) or The

CAN-SPAM Act of 2008 (“CAN-SPAM”), which

together make it unlawful for soliciting marketeers---

not debt collectors---to make unwanted, unsolicited

electronic, fax, telephone or even’ e-mail

communications with random consumers (App. 49-50).

As he saw it, the exclusion encompasses any statute

which prohibits or limits the communicating of

information and the FDCPA is such a statute (/d.). Nor

was it required to be expressly identified by the

exclusion itself since such a requirement would render

the catch-all provisions of | 8.c. “perpetually useless”

(App. 50).

Because the motion judge ruled that the FDCPA

prohibits or limits the communicating of information

within the contemplation of J 8.c., he ruled that the

Violation of Statutes exclusion precludes coverage for

any liability arising directly or indirectly out of any

18

action that is alleged to have violated the FDCPA and

that includes liability for all Williams’ statutory and

common law tort claims “because that liability...arises

from [petitioner’s] alleged violations of the FDCPA”

(App. 50-51). Thus all of Williams’ claims against

petitioner alleging statutory and common law torts

came within this exclusion (App. 51). With no possibility

of coverage for any of Williams’ claims under its

Umbrella Policy, Cincinnati had no duty to defend and

indemnify petitioner (App. 51-52).

On June 24, 2020, Judge Welte granted Lloyd’s

summary judgment because petitioner was aware of

sufficient facts before May 10, 2017, when Lloyd’s

claims-made policy became effective, for it to

reasonably expect Williams’ lawsuit, a fact which

disqualified petitioner from now seeking coverage for

that lawsuit under Lloyd’s claims-made policy (App. 14-

31).

Petitioner appealed the lower court’s ruling that

there was no coverage under Cincinnati’s Umbrella

Policy and on August 25, 2021, the court of appeals

unanimously affirmed the judgment (App. 1-13). It first

determined that Williams’ claimed injury of emotional

distress did not invoke Cincinnati’s duty to defend and

indemnify because this injury was not the result of an

“occurrence” as defined by the policy, i. “[aln

accident...that results in ‘bodily injury” (App. 6-7).

Instead of the result of a mistake by petitioner,

Williams alleged that her emotional distress was caused

by petitioner’s intentional conduct in wrongly

garnishing her wages, an allegation which does not

invoke Cincinnati’s obligations under its Umbrella

Policy (App. 7).

19

Like the district court, the Panel concluded that

Williams’ statutory and common law claims of invasion

of privacy, defamation and malicious prosecution arising

from this wrongful garnishment came within the

policy’s definition of “personal and advertising injury”

which was caused by an “occurrence” under the policy,

ie., an “offense that results in ‘personal and advertising

injury,” thereby invoking Cincinnati’s duty to defend

against the Williams lawsuit, unless these claims came

within the Umbrella Policy’s exclusion entitled

“Distribution of Material in Violation of Statutes” (App.

7-8).

Applying just some of North Dakota substantive

law, the Panel ruled that ¢ 8.c. of this Violation of

Statutes exclusion was unambiguous, that its clear

language “on its face” encompasses alleged violations of

the FDCPA and therefore it must be enforced as

written (App. 10). Cincinnati’s policy therefore

“excludes coverage for [petitioner’s] potential FDCPA

liability because the statute falls within the plain

language of Subsection &(c)” CUd., citing 15 U.S.C. §

1692d).

In so ruling, the Panel refused to recognize that

applying such a broad interpretation to { 8.c. would

render illusory the insurance coverage for a major

source of potential liability under the FDCPA that

petitioner, a law firm primarily engaged in debt

collection, understood it was purchasing when it paid

premiums to Cincinnati for its Umbrella Policy (App.

10). Moreover, it rejected authority from another

jurisdiction reaching the opposite conclusion about

identical language in the exclusion before it, apparently

relying on North Dakota law in doing so (App. 9-10).

20)

Finally, the Panel ruled that FDCPA’s inclusion

in J &.c. has the effect of excluding coverage for all the

intentional torts alleged in Williams’ complaint (App.

11). Because the alleged conduct underlying the

FDCPA claims was the same conduct underlying the

invasion of privacy claim as well as the unpled but

implied defamation and malicious prosecution claims,

Cincinnati's policy “does not cover [petitioner’s]

potential liability to Williams for any of the covered

injury alleged in the complaint” (App. 11-12, citing 15

U.S.C. § 1692c(b) & 1692f) ).

On September 30, 2021, the Panel denied

petitioner’s timely petition for rehearing or, in the

alternative, for rehearing en banc (App. 53).

REASONS FOR GRANTING THE PETITION

The Panel’s Expansive Reading of a Boilerplate

Exclusion Used Nationwide by Insurers in Their

Commercial Liability Policies—A Reading Which

Makes the _ Policy’s Coverage Illusory and

Therefore Worthless—Overturns North Dakota

Substantive Law, Creates a Split of Authority

Among the Jurisdictions Which Have Considered

The Identical Question, Presents A Public Policy

Problem of National Proportions and Deprives

Petitioner of the Property Rights to Which it

Would Otherwise Be Entitled in State Court.

Cherrypicking just some of North Dakota

substantive law in order to bolster its ruling, the Panel

concluded that Cincinnati could sell a professional

liability policy to petitioner, a law firm engaged

primarily in debt collection, and incorporate within it an

21

exclusion covering a major source of potential liability

which would apply to virtually every claim petitioner

might reasonably be expected to file. Under the Panel’s

reading of the Violation of Statutes exclusion to

incorporate the FDCPA, a statutory regime aimed

exclusively at debt collectors, the prospects of coverage

by Cincinnati for claims made against petitioner are so

remote that the professional liability insurance it sold

petitioner can justifiably be deemed illusory and

therefore worthless.

But North Dakota decisional law holds that

when a policy’s language is interpreted so broadly as to

nullify most, if not all, of the coverage for which the

insured thought he was paying premiums, producing

dramatically different opinions by the insured and the

insurer about the scope of coverage, the policy is

ambiguous. This invokes another coherent body of

North Dakota substantive law to resolve the ambiguity:

the law addressing contracts of adhesion; the narrow

reading of exclusions from coverage; a construction of

the policy favoring the insured where the insurer

drafted the policy; the unequal bargaining position of

the parties; and the resort to other canons of

construction such as ejyusdem generis and contra

proferentem, to resolve the contextual ambiguity

created when a exclusion from coverage can be

construed, as here, to destroy all coverage the insured

understood he was purchasing.

All this substantive State law, if the Panel had

applied it, would have conjoined to compel the

conclusion that the Violation of Statues exclusion when

read to include the FDCPA is overly broad, an

overbreadth which renders ¥ 8&.c. of the exclusion

22

ambiguous, invoking established rules of insurance

contract interpretation under North Dakota law, rules

which would render the exclusion inapplicable to the

allegations of Williams’ complaint and_ obligate

Cincinnati to defend and indemnify petitioner for the

“personal and advertising injury” she alleged therein.

North Dakota’s state courts, applying this State

substantive law, including the eywsdem generis rule of

construction, therefore would not have recognized

Cincinnati’s right under the policy to disclaim coverage

for Williams’ suit based on { 8.c.’s exclusion or the

FDCPA.

The Panel’s ruling otherwise violates Erie R. Co.

v. Tompkins, 304 U.S. 64 (1988) because a civil action

removed to federal court based on diversity of

citizenship should not lead to a substantially different

result than in State court a block away; it contravenes

the rulings of courts in other jurisdictions construing

the language of this identical exclusion, creating a

remarkable split of authority about the meaning of this

ambiguous boilerplate language used nationwide by

insurance companies when writing commercial liability

policies; and it is against the public policy of North

Dakota since this overbroad reading of the exclusion is

antithetical to the primary function of insurance which

is to insure, not simply to collect premiums from

policyholders without risk. See Olds v. General Acc.

Fire & Life Assur. Corporation, 155 P.2d 676, 680 (Cal.

App.1945) quoting Bollinger v. National Fire Ins. Co.,

154 P.2d 399, 403 (Cal.1944) (Traynor, J.).

The Panel’s decision therefore presents a

compelling question with national significance since its

decision broadly interpreting the boilerplate Violation

23

of Statutes exclusion to encompass any statute “which

prohibits or limits the sending, transmitting,

communicating or distribution of material or

information”-----even the FDCPA----affects the entire

property and casualty industry and _ policyholders

nationwide. That question is: whether the Violation of

Statutes exclusion used nationwide by insurance

companies when writing commercial liability policies

can be enlarged despite its limiting language to

incorporate the violation of any statute, ordinance or

regulation “which prohibits or limits

the...communicating...of material or information” in

order to deny coverage for claims understood to be

within the range of risks contemplated by the insured

when it purchased the policy?

This exceptionally important issue, raised within

the context of the Panel’s refusal to apply North Dakota

substantive law to resolve this controversy consistent

with Erie, comes within Supreme Court Rule 10(c)’s

guidance about the considerations which point toward

the Court’s granting a petition for certiorari, i.e., when

“a United States court of appeals has decided an

important question of federal law that has not been, but

should be, settled by thle] Court, or has decided an

important federal question in a way that conflicts with

relevant decisions of th[e] Court.”

The Court should grant certiorari to review the

decision of the court of appeals, determine that the

Panel either refused to apply or misread the

substantive law of North Dakota regarding the

ambiguity of this Violation of Statutes exclusion and

that, had it faithfully applied substantive State law,

would have concluded that Cincinnati was obliged

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