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Tunica Pharmacy, Inc. v. Cumberland Mutual Fire Insurance Co.

June 23, 2010

TUNICA PHARMACY, INC., PLAINTIFF-APPELLANT, AND BUSINESS PRO COMMUNICATIONS, INC., PLAINTIFF,
v.
CUMBERLAND MUTUAL FIRE INSURANCE COMPANY, DEFENDANT-RESPONDENT, AND EXPRESS PRODUCTS, INC., DEFENDANT.



On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-5827-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 3, 2010

Before Judges Payne, Miniman and Waugh.

Plaintiff, Tunica Pharmacy, Inc., a lead plaintiff in a class action lawsuit filed against defendant, Express Products, Inc., appeals from the dismissal without prejudice of an insurance coverage action instituted by it and Business Pro Communications, Inc.*fn1 against a liability insurer of Express Products, Cumberland Mutual Fire Insurance Company, on the ground of comity. We affirm, finding that (1) an earlier-filed insurance coverage action was instituted by Cumberland in the United States District Court for the Eastern District of Pennsylvania and remains pending; (2) the parties to the two actions are substantially the same as the result of the undertaking of Tunica and the class it represents to defend the interests of Express Products in the Pennsylvania coverage dispute; (3) a substantial identity exists in the issues presented in the two actions; and (4) special equities do not require continuation of the New Jersey litigation.

I.

On December 30, 2004, Business Pro Communications, Inc., an Illinois corporation, filed a class action complaint against Express Products in the Nineteenth Judicial Circuit, Lake County, Illinois. In that suit, Business Pro claimed that Express Products had violated the Telephone Consumer Protection Act (TCPA), 47 U.S.C.A. § 227, and the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. 505/2, and had committed common-law conversion of fax paper, toner, fax memory, and valuable time by sending unsolicited fax advertisements to businesses nationwide. In its complaint, Business Pro described the putative class as:

All persons who (1) on or after four years prior to the filing of this action, (2) were sent telephone facsimile messages of material advertising the commercial availability of any property, goods, or services by or on behalf of Defendant, and (3) with respect to whom Defendant cannot provide evidence of prior express permission or invitation for the sending of such faxes.

Tunica, a Mississippi corporation, was named as an additional plaintiff and class representative in an amended complaint filed on February 7, 2008.

During the period at issue, Express Products was covered by four policies of insurance, two issued by Maryland Casualty Company and two issued by Cumberland. At some point, Express Products tendered the defense of the action to Cumberland, which had insured the company pursuant to policy number S201221 from April 26, 2001 through April 26, 2003. Cumberland denied coverage, and on June 20, 2008, it filed a declaratory judgment action against Express Products in the United States District Court for the Eastern District of Pennsylvania seeking a declaration that it had no duty to defend or indemnify Express Products in connection with the class action litigation. Neither Business Pro nor Tunica was named as a defendant in Cumberland's coverage suit.

Five months later, on November 19, 2008, Tunica and Business Pro filed a complaint against Cumberland and Express Products in the Superior Court of New Jersey, Camden County, seeking a declaration that Cumberland owed a duty of defense and indemnification to Express Products.

On May 29, 2009, Business Pro and Tunica entered into a settlement agreement with Express Products. The agreement recited the allegations of the complaint; the existence of a purported class of 2,188 persons; and the alleged faxing of 125,191 unauthorized advertisements to class members in the period from February 27, 2002 through October 25, 2004, resulting in alleged statutory damages pursuant to the TCPA of $62.5 million. Recognizing that the assessment of such damages against Express Products would result in the company's bankruptcy, the parties agreed to settle the litigation for the sum of $7,999,999.96, collectible only from the proceeds of the two policies of insurance issued by Cumberland to Express Products and two policies issued by Maryland Casualty to it. The agreement thus contained a covenant not to execute that provided:

The Class agrees not to seek to execute, attach or otherwise acquire any of the property or assets of Defendant and/or its officers, directors, shareholders, and employees of any kind other than the four Insurance Policies and claims against Defendant's insurers to satisfy or recover on the Judgment, and agrees to seek recovery to satisfy the Judgment only against Defendant's insurers and from the Insurance Policies issued to Defendant including, but not limited to, those four ...


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