MFG and G.M. Sign settled, and agreed that MFG was liable to the class in the total amount of $22,536,500. According to the settlement agreement, MFG was required to pay $460,000 and the class received the claims against and the rights to payment from St. Paul under the CGL policy. G.M. Sign, for itself and other class members, filed an action requesting a declaratory judgment that the St. Paul policies had to cover the settled claims. The parties then moved for summary judgment.

The U.S. District Court for the Northern District of Georgia granted summary judgment to St. Paul determining that since the fax advertisements were intentionally delivered, it did not constitute an “accident” under Georgia law, despite the fact that the sender erroneously believed that it had consent to send the advertisements. G.M. Sign appealed to the Eleventh Circuit arguing that MFG required indemnification for the liability because the term “accident” under Georgia law covered injuries resulting from negligence, and MFG sent the faxes negligently because it never intended to send any advertisements without the consent of the recipient. Thus, according to G.M. Sign, MFG had no intent to injure the recipients of its faxes. St. Paul responded that no accident had occurred when the faxes were sent out because by sending out the faxes MFG intended to cause the property damage, the use of the unwilling recipients' fax machines and the use of their ink and paper. St. Paul argued that the mistaken belief that the recipients had consented to receive the advertisements was immaterial.

The Eleventh Circuit Court affirmed, finding that there was no accident because, in sending the faxes, MFG engaged in intentional conduct premised on erroneous information which did not constitute an accident. The decision explained that the policies did not define the term “accident” but under Georgia law, the common meaning of “accident” was “an unexpected happening without intention or design.

In a case from 2000, Mindis Metals, Inc. v. Transportation Ins. Co. the 11^th Circuit held that under Georgia law intentional conduct premised on erroneous information was not an “accident” for general liability purposes. The court held that the fact that MFG mistakenly thought that the recipients had consented to receive advertisements was insufficient to render the property damage that occurred an accident under Georgia law. It concluded that the policies' property damage provisions provided no coverage for the liability arising from the fax conduct and the court had correctly granted the insurer summary judgment.

Editors Note: Normally for a case to occur the plaintiff would need to suffer damages. Thus is the case here as well. Although it seems like no true damages were suffered, each entity that received a fax lost paper and ink and use of its fax machines amounting in hundreds of thousands of dollars overall.