O'Neill Investigations, Inc. v. Illinois Employers Insurance of Wausau

MATTHEWS, Justice,

dissenting.

The state has sued O’Neill for “unfair and/or deceptive acts or practices” under the Alaska Unfair Trade Practices and Consumer Protection Act, AS 45.50.471-561. The relief sought by the state includes, among other things, “restoration to individuals of monies or property acquired by [O’Neill] as the result of conduct complained of herein.” In my opinion, this aspect of the state’s claim falls within the coverage afforded under the insurance policy in question and therefore the appellee had the obligation to defend O’Neill.1

*1180The policy language pertaining to liability coverage which is relevant here is as follows:

I. LIABILITY COVERAGE: To pay on behalf of the Insured Member all sums which the Insured Member shall be legally obligated to pay as damages in the performance of services for others in the Insured Member’s business as a Collection Agency by reason of:
A. any negligent act, error, omission, false arrest, detention or imprisonment, malicious prosecution, libel, slander or defamation of character, invasion of privacy, wrongful attachment, wrongful eviction, wrongful entry, humiliation alleged to have resulted therefrom. ...

The state’s claim falls within the above language. Misrepresentation is an important aspect of the state’s claim. State v. O’Neill Investigations, Inc., 609 P.2d 520, 535, 536 (Alaska 1980). Misrepresentations are acts or omissions. Further, the misrepresentations alleged by the state, to be actionable, need only be negligent. “Intent to deceive need not be proved. All that is required is a showing that the acts and practices were capable of being interpreted in a misleading way.” Id. at 535 (footnotes omitted). Thus the state’s claim is, in part, one for negligent acts or omissions. Moreover, the policy covers invasions of privacy. Among the acts with which O’Neill is being charged are making telephone calls to employers and other third parties standing in a close relationship to debtors concerning their debts. We have noted that such acts may give rise to liability on the state’s complaint. Id. at 536. The essence of the wrong for which such liability is imposed is, it seems to me, invasion of privacy. This aspect of the state’s claim is, therefore, also covered by the policy.

The majority opinion does not take direct issue with the foregoing conclusions. Instead, it argues that the “restoration of monies” which the state has sued for is somehow different from “damages” as that term is used in the insuring agreement. We have held that an insurance policy must be construed to “provide the coverage which a layperson would have reasonably expected, given a lay interpretation of the policy language.” Stordahl v. Government Employees Insurance Co., 564 P.2d 63, 66 (Alaska 1977). In my view, it is entirely unrealistic to suppose that a layperson would reasonably expect that damages do not include the restoration of monies.

A layperson interested in determining whether the term “damages” encompassed “restoration to individuals of monies” might reasonably refer to a standard dictionary. Webster’s New International Dictionary defines “damages” in terms that clearly include what the state seeks in this case: “compensation or satisfaction imposed by law for a wrong or injury caused by a violation of a legal right.”2 If our hypothetical layperson wished to go further he might refer to a standard law reference work, Black’s Law Dictionary. He would learn that “damages” include reparations;3 and include all elements of a judgment which constitute the total amount to be recovered under correct principles of law.4 He would thus learn that both the laity and the legal profession would describe what the state is seeking as “damages.”

Having concluded that some of the state’s claims are within the liability coverage clause of the insurance policy, it is necessary to turn to the exclusions portion of the policy to see whether there is an applicable exclusion. The majority opinion mentions two, but does no more than set them out and conclude with no discussion of them that they bar coverage. In fact, neither exclusion applies.

*1181The first excludes “any fraudulent, dishonest, or criminal act by the Insured Member or any employee of the Insured Member .... ” This exclusion does not apply because O’Neill is being charged with conduct which is not necessarily criminal, fraudulent, or dishonest. See State v. O'Neill Investigations Inc., 609 P.2d at 534-35.

The second exclusion mentioned is an exclusion as to “liability arising out of the wilful violations of any statute applicable to the Insured Member as a Collection Agency or Credit Bureau.... ” Again, this exclusion does not bar coverage because O’Neill is not being charged only with willful violations. Id. Indeed, the state’s complaint contains no allegation of willfulness with respect to any of the alleged misrepresentations made by O’Neill.

The majority opinion suggests that it is important that this suit was brought by the state rather than by a private individual, without specifying how that fact relates either to any condition of coverage or to any exclusion in the policy. Under neither the coverage conditions nor the exclusions are suits brought by government agencies or class actions precluded. Likewise, nothing in the deductible clause of the policy states that such clause is inapplicable to claims asserted by an entity in a representative capacity.

For the foregoing reasons, I dissent.

. See Afcan v. Mut. Fire, Marine, and Inland Ins. Co., 595 P.2d 638, 645 (Alaska 1979): “[T]he language of the standard duty to defend clause creates a reasonable expectation on the part of the insured that he will be defended by the insurer whenever a complaint states a cause of action within, or potentially within, the policy coverage.” (Emphasis in original).

. Webster’s New International Dictionary 664 (2d ed. 1959).

. Black’s Law Dictionary 466 (rev. 4th ed. 1968), citing McNaghten Loan Co. v. Sandifer, 20 P.2d 523, 526 (Kan. 1933).

. Black’s Law Dictionary, supra at 466, citing Binder v. Harris, 267 Mass. 162, 166 N.E. 707, 708 (1929).