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Vol. 7, Iss. 6
July 18, 2018

 

Coverage For Invasion Of Privacy – But With No “Publication”

Commercial General Liability policies generally offer coverage for invasion of privacy committed by an insured. The standard ISO CGL policy includes, as a defined “personal and advertising injury” offense, the following: “[o]ral or written publication, in any manner, of material that violates a person’s right of privacy.”

However, while the policy affords coverage for violation of a person’s right of privacy, there are certain express qualifications – the privacy invasion must be on account of oral or written publication of material.

But, in Harleysville Preferred Ins. Co. v. Rams Head Savage Mill, LLC, No. 2409 (Md. Ct. Spec. App. June 28, 2018), the court concluded that coverage was owed for invasion of privacy without the happening of a publication of material. In fact, coverage was owed for invasion of privacy under a policy provision that didn’t even have the word privacy in it. [In actual fact, coverage was ultimately precluded based on a criminal act exclusion, but that does not negate the court’s decision regarding the availability of coverage for invasion of privacy.]

Rams Head is an interesting decision. A patron of the Rams Head Tavern was using a single-occupancy women’s restroom when a portable camera fell onto the floor from underneath the sink, close to the toilet. The culprit was determined to be Kyle Muehlhauser, the tavern’s general manager, who pleaded guilty to conducting video surveillance with prurient intent.

Class actions were filed by woman who alleged a variety of causes action, including intrusion of seclusion, and maintained that, as a result of the conduct of Mr. Muehlhauser and Rams Head, they suffered severe humiliation, violation, anxiety, loss of dignity, emotional distress, and the like.

Rams Head, during the two-plus years of surreptitious recording, was insured under three CGL policies issued by Harleysville. Putting aside some issues not relevant here, before the Maryland appeals court was whether coverage was owed under the policies’ “personal and advertising injury” coverage part.

In particular, the court focused on this aspect of the definition: “wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor.” [The court did not address whether there was a “personal and advertising injury” on the basis of an “[o]ral or written publication, in any manner, of material that violates a person’s right of privacy.” This is seemingly on the basis that there was no publication of any recordings made.]

For various reasons, the court held that this aspect of the definition of “personal and advertising injury” was satisfied. First, the court had little trouble concluding that the woman were subjected to an invasion of the right of private occupancy of a room. Occupy, the court concluded, includes the temporary possession of a restroom. The phrase “right of private occupancy” includes the right of an individual who is occupying a single-occupancy restroom in a restaurant or tavern for its intended purpose to do so in private. And the court didn’t exactly go out on a limb in concluding that the video surveillance of such activities constitutes an “invasion” of that right.

The real battleground coverage issue was whether the invasion of the right of private occupancy was of a room, dwelling or premises that a person occupies. As Harleysville saw it, “invasion of the right of private occupancy of a room” does not appear alone in the policy. Thus, the phrase must be interpreted in its context and, here, it appears with two other phrases: “wrongful eviction from” and “wrongful entry into.” Each of these phrases, so Harleysville argued, requires the claimant to allege that they had a possessory interest in the property at issue.

But the court was not convinced, as Harleysville argued, that “right of private occupancy” in this coverage provision, requires “proof of a possessory interest in real property that is the subject of interference by its owner, typically in cases involving the dispossession of a tenant.”

The court based its conclusion on several reasons, including the grammatical structure of the policy language: “We also find it notable that ‘invasion of the right of private occupancy’ is not preceded by the word ‘other,’ which is a standard grammatical cue that a term is meant to encompass what came before it.”

There are other issues in the case and coverage was ultimately precluded based on a criminal act exclusion. But Rams Head is an interesting privacy decision – albeit involving a not-occurring-everyday set of facts.

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