Zurich American Insurance Company v. Ocwen Financial Corporation
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- 19-3052 (7th Circuit, Mar 12,2021) Published
- Tag(s):
-
- Ruling:
- A creditor or debt collector who violates the bankruptcy discharge, the Fair Debt Collection Practices Act ("FDCPA"), and the Telephone Consumer Protection Act ("TCPA") was not entitled to have its general commercial liability insuror defend the consumer litigation. The debtor's factual allegations in her claims against the creditor adequately pled violations of the FDCPA and the TCPA. The insurance policy excluded coverage for damages resulting from the creditor's violations of the FDCPA and TCPA. Thus, the insured had no coverage under the policy.
- Procedural context:
- A debtor who had received a bankruptcy discharge sued Ocwen Financial Corporation for damages arising from alleged breaches of the bankruptcy discharge, the Fair Debt Collection Practices Act and the Telephone Consumer Protection Act. Ocwen demanded that its general commercial liability insurance company, Zurich American Insurance Company, defend this litigation. In response, Zurich brought a declaratory judgment action against Ocwen. The district court granted Zurich judgment on the pleadings, concluding that Ocwen had no insurance coverage because the debtor's litigation was excluded under the insurance policy.
- Facts:
- Ocwen Financial Corporation, which at the time was a limited liability company wholly-owned by Ocwen Mortgage Servicing, a company incorporated in the U.S. Virgin Islands with its principal place of business there. The plaintiff, Zurich American Insurance Company, is a New York corporation with its principal place of business in Illinois. Ocwen demanded that Zurich defend Ocwen in litigation that Ocwen had violated the bankruptcy discharge.
Ocwen collects and services debts. In 2015, Tracy A. Beecroft sued Ocwen in federal court in Minnesota for its attempts to collect on a mortgage loan that Beecroft had discharged in bankruptcy. Ocwen continued to try to collect the debt and made negative reports to credit reporting agencies. Beecroft suffered damages. She had a stress-induced miscarriage and was denied a mortgage due to Ocwen's report to the credit reporting agencies. Beecroft sued Ocwen for violation of the Fair Debt Collection Practices Act ("FDCPA"), the Telephone Consumer Protection Act ("TCPA"), and other laws.
Zurich insured Ocwen with commercial general liability policies. The policies excluded coverage for "bodily injury" and "personal and advertising injury" for violations of the FDCPA, the TCPA, and the Fair Credit Reporting Act. The policies also excluded coverage for bodily injury, property damage, and personal and advertising injury for actual or alleged violations of the TCPA and other laws.
Ocwen demanded coverage. Zurich sued Ocwen in a declaratory action.
- Judge(s):
- EASTERBROOK, ROVNER, and WOOD
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