FEDERAL DISTRICT COURT FINDS NO DUTY TO DEFEND - POLICY’S FIELD OF ENTERTAINMENT EXCLUSION PRECLUDES COVERAGE

Recently, in Rick’s Cabaret International, Inc. v. Indemnity Insurance Corporation, 2012 WL 208606, Civil Action No. H–11–3716 (S.D.Tex., Jan. 24, 2012), an insured sought coverage under a policy for two class action lawsuits filed against it in Florida for allegedly sending numerous advertising text messages to cell phones without the cellular subscribers’ consent. The insurer, Indemnity Insurance Corporation (IIC), denied coverage asserting that the claims fell within the “Field of Entertainment” Exclusion and the “Legal Liability” Exclusion in the Policy.  Plaintiff, Rick’s Cabaret International, Inc. filed suit seeking a declaratory judgment that there was coverage under the Policy and that IIC owed Rick’s a duty to defend in the two class action lawsuits.

Looking at Plaintiff’s pleadings and the Policy language, the Court held that the “Field of Entertainment” exclusion applied to negate the duty to defend and therefore IIC had no duty to indemnify.  The Court further held that the “Legal Liability” Exclusion excluded coverage for breach of contract claims against the insured.  The Court allowed Plaintiff to recover the expenses and fees allowed by Rule 4(d)(2) of the Federal Rules of Civil Procedure for obtaining service on Defendant since Defendant declined to waive service as well as legal fees incurred in preparing the Motion for Costs and Fees for Service of Complaint.