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Court of Appeal Allows Retroactive Rule Change in Junk Fax Insurance Case

 

Over at the Illinois Appellate Lawyer Blog, our colleague Steven R. Merican recently called our attention to an appeals court decision related to insurance coverage for “junk fax” class actions — an important practice for our firm. Eclipse Manufacturing v. United States Compliance, Nos. 2-06-0825, 2-06-0889 (11/30/07).

In the underlying case, Eclipse Manufacturing Co. filed a class-action lawsuit against United States Compliance for sending Eclipse unsolicited “blast faxes” in violation of the federal Telephone Consumer Protection Act and the Illinois Consumer Fraud and Deceptive Practices Act. Compliance’s insurer, Hartford Casualty Insurance Co., declined to cover the defense. Compliance later settled with Eclipse by simply assigning its right to the full limits of its coverage under the policy. In order to collect this settlement, Eclipse then filed a third-party citation against Hartford.

In part because Hartford hadn’t sought a declaratory judgment on its obligation to defend Compliance, estopping it from raising policy defenses, the trial court sided with Eclipse. Hartford later filed for declaratory judgment in Minnesota, where Compliance is based, but its claim was dismissed for lack of jurisdiction. Hartford appealed, arguing that it was not estopped because the trial court should have applied Minnesota law, which it argued conflicts with Illinois law on estoppel. Furthermore, Hartford argued, its policy doesn’t cover the underlying lawsuit under either state’s law. The Illinois Second District Court of Appeal affirmed the trial court, saying there was no conflict in outcomes between Illinois and Minnesota laws of estoppel. Thus, Hartford was estopped from raising policy arguments — making them irrelevant.

As Merican points out, the appeals court also addressed its jurisdiction — important because Hartford’s “protective” notice of appeal might have been dismissed for lack of jurisdiction until recently. It was filed before a recent change in Illinois Supreme Court Rule 303(a)(1), which previously said a party must file its notice of appeal within 30 days of a final judgment. When Hartford filed its appeal, there had been no final judgment — merely a notice from the trial court that it intended to rule for Eclipse. That would mean the appeal should be dismissed for lack of jurisdiction.

While the appeal was pending, however, Rule 303(a)(1) was changed to address this situation, treating appeals like Hartford’s as if they were filed on the date of the final judgment, making it a legitimate appeal. Because the appeals court had recently ruled in In Re Marriage of Duggan No. 2–06–0061, (October 16, 2007) that a similar rule change applied retroactively to pending appeals, it allowed Hartford’s appeal “[i]n the interest of consistency.” Nonetheless, the appeals court eventually ruled against Hartford.

Our firm has sucessfully certified class actions involving junk faxes and obtained substantial class wide settlements from the defendants and their insurance carriers. If you want to contact one of our Chicago consumer attorneys to pursue a junk fax case click here.