Eleventh Circuit Affirms Dismissal of Claim against Insurer for Indemnification or a Defense for a Privacy Claim under a Professional Liability Policy

by Wilson Elser

On October 22, 2013, in The Zodiac Group, Inc. v. Axis Surplus Insurance Co., the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s dismissal of The Zodiac Group’s (Zodiac’s) claim against its insurer for indemnification or a defense under a professional liability insurance policy (the Policy). The Eleventh Circuit explained that since the underlying privacy/publicity claim against Zodiac and David Felger and Daniel Felger (Felgers), who own and operate Zodiac, was not first made during the policy period (the claim related back to a claim that was asserted before the policy incepted), the condition precedent to coverage was not satisfied.

Zodiac’s claim for coverage arises out of Linda Georgian’s (Georgian’s) commencement of a state court action and subsequent federal court action based on Zodiac’s purported improper use of Georgian’s name and likeness to promote Zodiac’s psychic services. In November 2001, Zodiac entered into an endorsement agreement with Georgian, a well-known psychic and co-host of the Psychic Friends Network®, that required Georgian to provide endorsement services to Zodiac for telephone psychic entertainment services. The endorsement agreement ended in March 2007.

In April 2008, Georgian commenced a state court action against Zodiac alleging that Zodiac, after the endorsement agreement ended, improperly used Georgian’s name and likeness to falsely imply she endorsed The Zodiac Group’s services. Georgian’s state court action was eventually dismissed without prejudice for lack of prosecution.

In January 2010, Georgian commenced suit in federal court against Zodiac and the Felgers based on claims substantially similar to those asserted by Georgian in her prior state court action solely against Zodiac. Those claims included, but were not limited to,

  • Misusing Georgian’s name and making false claims on The Zodiac Group’s website that Georgian endorsed its psychic services
  • Publishing and advertising listings falsely promoting The Zodiac Group’s telephone numbers as Georgian’s
  • Directing its psychic telephone workers to falsely inform callers that Georgian had a line with, was affiliated with or owned the telephone network
  • Directing its psychic telephone workers to falsely inform callers they were Georgian
  • Fostering a misbelief that Georgian endorsed or was affiliated with The Zodiac Group.

The federal complaint alleges that these acts continued through at least September 2009. The district court dismissed most of Georgian’s claims before the parties settled the remaining claims.

After their insurer denied coverage for Georgian’s federal claim, Zodiac and the Felgers commenced suit against the insurer seeking declaratory relief and damages for breach of contract. The insurer moved to dismiss the action pursuant to Rule 12(b)(6) and the district court granted the insurer’s motion. Zodiac and the Felgers appealed the dismissal to the Eleventh Circuit, which affirmed the district court’s dismissal of the action.

Zodiac and the Felgers claimed coverage for the claim because the policy covered claims arising from “interference with rights or privacy or publicity, including… commercial appropriation of name or likeness.”  Relying on a condition precedent for coverage based on prior wrongful acts being “first made against an Insured during the Policy Period,” which was from October 2008 to October 2010, the Eleventh Circuit held that the insurer properly denied coverage. The Eleventh Circuit explained that under the Policy, “all Claims from the same Wrongful Act” are deemed to have been made on the same date. A “Wrongful Act” is “conduct or alleged conduct by an Insured.” As such, the Policy treats all wrongful actions “related by common facts, circumstances, transactions, events and/or decisions … as one Wrongful Act.”

Consequently, Georgian’s state and federal actions were found to be related by common facts, circumstances, transactions, events and/or decisions. The Felgers argued that since they had not been named in Georgian’s state court action, Georgian’s federal court action was a “new wrongful act” against them. The Eleventh Circuit disagreed, holding that the Policy did not limit this broad language to only those acts committed by a single action.

In addition, the Policy provided that “claims arising from the same Wrongful Act” were deemed to have been made the “earlier of” the date “the first of those claims [was] made against any Insured” or the “first date [the insurer] receive[d] the Insured’s written notice of the Wrongful Act.” Here, since Georgian filed her state claim in April 2008 before the Policy incepted on October 2008, the Eleventh Circuit found that Georgian’s federal complaint was not covered under the Policy and that the insurer did not owe indemnity or a defense.

When, as in Zodiac Group, a policy treats all wrongful actions “related by common circumstances, transactions, events and/or decisions” as “one wrongful act,” then even successive suits involving different insureds under the policy can be viewed as arising from the same wrongful act, when the record confirms that the second suit arises from the same facts and circumstances as the first.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Wilson Elser | Attorney Advertising

Written by:

Wilson Elser

Wilson Elser on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.