Florida – no coverage when first of related wrongful acts occurred before policy period


by Christopher Graham and Joseph Kelly

The Zodiac Group, Inc. v. Axis Surplus Insurance Company, Case No. 13-10941 (11th Cir. Oct. 23, 2013)(Florida)

Axis issued a professional liability policy to Zodiac Group, Inc. and two individuals (collectively, “Zodiac”). Zodiac offers “psychic” hotline telephone services.

In November 2001, Zodiac entered into an agreement under which Linda Georgian, a renowned pyschic and tv host, agreed to endorse Zodiac’s services. In March 2007, the agreement ended.

In April 2008, Georgian sued Zodiac in Florida state court alleging that Zodiac used her name and likeness after the agreement expired. In November 2009, Gregorian’s complaint was dismissed without prejudice for lack of prosecution. In January 2010, Georgian sued Zodiac in federal court with a complaint predicated on the same wrongful conduct as her state court complaint. The parties ultimately settled.

Axis issued consecutive professional liability policy to Zodiac with policy periods of October 1, 2008 to October 1, 2009 and October 1, 2009 to October 1, 2010.

The Axis policy provides coverage for claims arising from “interference with rights of privacy or publicity, including … commercial appropriation of name or likeness.”

The Axis policy provides that “all Claims arising from the same Wrongful Act” are deemed to have been made on the same date; and all wrongful acts “related by common facts, circumstances, transactions, events, and/or decisions … as one Wrongful Act.”

After the federal court complaint was filed in January 2010, Zodiac notified Axis of the litigation. Axis denied coverage and refused to defend because the claims in the federal complaint were “first made” before the October 1, 2008 to October 1, 2009 policy period.

Zodiac subsequently filed suit against Axis seeking a declaration of coverage. The 11th Circuit noted that the wrongful acts alleged in Georgian’s state and federal complaints

The 11th Circuit dismissed Zodiac’s complaint because “a condition precedent to coverage under the Policy was that the claims have been ‘first made … during the Policy Period’ from October 2008 to October 2010. Because all claims in Georgian’s state and federal complaints ‘aros[e] from the same Wrongful Act’ and because the Policy deemed the claims for that same Wrongful Act to have been first made in April 2008, the claims in Georgian’s federal complaint were not ‘first made’ during the policy period.”

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