“Defendants’ scheme was devious and unlawful: they secretly conspired to spread false accusations about and financially decimate Ocwen/Altisource.* Utilizing various nefarious tactics, including by improperly pressuring trustees and ratings agencies, Defendants first sought to prevent Ocwen from expanding its mortgage business…”
*Bill Erbey’s $3 Billion dollar fined Ocwen/Altisource
7th Circuit Finds Insurer Has No Duty to Defend Mortgage Servicer Against Robocall Lawsuit
MAR 16, 2021 | REPUBLISHED BY LIT: MAR 17, 2021
A liability insurance carrier that excluded any violation of telecommunications laws from coverage had no duty to defend a loan servicer from a class-action lawsuit that accused it of making harassing robocalls to more than 1 million cell phones.
The 7th Circuit Court of Appeals on Friday affirmed a U.S. District Court’s declaration that Zurich American Insurance Co. did not have to defend Ocwen Mortgage Servicing from the lawsuit. Ocwen settled the action in June 2019 by agreeing pay $21.5 million in damages, plus about $4.7 million for the plaintiff’s attorney fees.
Tracee A. Beecroft says that after she discharged a mortgage debt through bankruptcy, Ocwen, headquartered in the Virgin Islands, called her cell phone 58 times, using an an automated dialing system for at least some of those calls. Beecroft claimed the constant calls were so stressful that she suffered a miscarriage.
In 2015, Beecroft filed a lawsuit in federal court in Minnesota on behalf of herself and other people who received robocalls from Ocwen on their cell phones. The suit was consolidated with another lawsuit filed in Illinois.
Eventually, a U.S. District Court certified a class consisting of the owners of 1,685,757 unique cell phone numbers. The suit alleged that Ocwen had violated the Fair Debt Collection Practices Act and the Telephone Consumer Protection Act.
The TCPA prohibits the use of recorded or artificial voices on calls that are placed to consumers’ cell phones, while the FDCPA bars any calls that are made with an intent to “annoy, abuse or harass.”
Zurich was well aware of those laws and the potential liability they can impose. The carrier excluded damages caused by any violations of the TCPA and the FDCPA from coverage in the commercial general liability policies it issued to Ocwen from 2010 to 2016.
Ocwen, regardless, asked Zurich to defend it shortly after Beecroft filed suit. Instead, Zurich filed a lawsuit seeking a court declaration that it had no duty to defend. U.S. District Judge Charles P. Kocoras ruled in Zurich’s favor.