ST. LOUIS - Travelers Insurance Company doesn’t have to cover expenses Anheuser Busch Employee Credit Union incurred in defending a class-action consumer lawsuit, a federal judge ruled.
“There was no potential for coverage under the relevant policies,” U.S. District Court Judge Catherine Perry ruled April 6. “Travelers had no duty to defend ABECU from the underlying claims or indemnify it against the resulting damages.”
The case began in 2015 when the credit union repossessed a car from Daniel Wells and sold it. The sales price didn’t cover the amount owed so the credit union filed suit in Missouri state court seeking a deficiency judgment.
Wells filed a class-action counter suit on behalf of himself and other borrowers whose vehicles were repossessed and sold by the credit union. Travelers' counter suit claimed the credit union failed to give proper notice before accelerating the unpaid car loans and submitting false information on the borrowers to the local and national credit bureaus.
The credit union was insured by Travelers and asked the company to cover legal expenses and damages.
The credit union settled the suit in 2018 for an amount that exceeded its liability coverage. Travelers refused to pay and the credit union sued.
The judge examined two parts of the credit union’s policy with Travelers. The first part covered damage caused by an an “occurrence,” which is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
Travelers claimed the credit union’s repossession of cars was not an accident but an intentional act. The judge agreed.
“The damages are unavoidably attributable to ABECU’s deliberate vehicle repossessions, and consequently cannot be attributed to any accidental ‘occurrence’,’” she wrote.
The second part of the credit union policy covered “personal injury” or “advertising injury” but excluded anything caused by professional credit union financial services.
The judge held that this exclusion exempted Traveler’s from covering the alleged false reporting to credit bureaus alleged in the counter suit.
“I conclude that the liability-triggering services were ‘professional’ in nature and the resulting ‘personal injury’ damages thus excluded from coverage,” she wrote in granting Travelers’ motion for summary judgment.
Anheuser Busch Employee Credit Union v. Travelers Property Casualty Company of America, U.S. District Court, Eastern District of Missouri, Eastern Division, 4:18 CV 1208