Insurance company seeks declaration over duty to defend Papa John's

A Missouri corporation has filed a complaint for declaratory relief against Papa John’s USA Inc.

In its July 24 complaint, Arch Insurance Co. seeks a declaration from Chicago’s federal court that it has no duty to defend or indemnify the Kentucky-based pizza chain in a class action lawsuit over alleged violations of the Telephone Consumer Protection Act (TCPA).

Besides Papa John’s, Arch lists 50 “John Does” as potential defendants its complaint. Arch asserts that it will seek leave to amend its complaint once it learns the true names and capacities of these John Does, whom it believes may claim an interest in the insurance policy at issue.

The complaint for declaratory relief stems from a lawsuit Heidbreder Building Group LLC brought in May against the pizza chain and PJ Operations Illinois LLC.

In that suit, Heidbreder Building Group claims the two defendants sent or caused to be sent unsolicited fax advertisements in violation of the TCPA, as well as the state’s Consumer Fraud Act and common law conversion. It also lists 10 potential John Doe defendants who may have been involved in sending the faxes.

The TCPA provides a right of action to seek $500 in damages for each unsolicited fax and allows for treble damages in situations where the fax was sent willfully and knowingly.

Heidbreder asserts that there are more than 40 class members in its suit against Papa John’s and PJ Operations and that amount in controversy tops $5 million.

In its complaint seeking declaratory relief, Arch asserts that it owes no duty to defend or indemnify Papa John’s in the underlying suit under its policy and wants a judicial declaration saying so.

The insurance company contends the underlying lawsuit does not allege claims for relief that constitute “damages” under the policy, which covers bodily injury, property damage liability and personal and advertising injury liability.

Although it claims it doesn’t have a duty to do so, Arch notes in its complaint that it has “agreed to participate in Papa John’s defense of the Underlying Lawsuit subject to a full and complete reservation of rights, including subject to satisfaction of the $500,000 Retention amount set forth in the Self Insured Retention endorsement in the Policy.”

In addition to a judicial declaration that it has no duty to defend Papa John’s, Arch’s complaint seeks costs of the suit and other relief the court deems just and proper.

Chicago attorneys Ryan T. Brown and Tatum Lytle of Gordon & Rees LLP represent Arch.