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Plaintiff v. Major Insurer

February 2012

Sedgwick obtained a favorable appellate ruling on behalf of our client, a major insurer, in the California Court of Appeal, Second Appellate District. The plaintiff, a tile and stone producer, challenged a summary judgment entered against it in a bad faith action filed against our client.  Although the trial court granted summary judgment based on an exclusion, the Court of Appeal affirmed our summary judgment on our primary theory – no insurance coverage under the policy for the employment-related torts.  After a woman who worked for the plaintiff filed an employment discrimination and harassment action against it, it tendered the defense of the action under its business liability insurance policy. Our client investigated the matter and returned the tender after determining the allegations in the employment action did not constitute an “accident” or “occurrence,” which would invoke the insuring clauses within the policy. Our client further determined that the “employment practices” and “intentional acts” exclusions barred coverage for the claim and provided another equally sound reason to return the tender of defense and indemnity. Sedgwick reasserted these bases in support of its summary judgment motion below. The trial court agreed that the “employment practices” exclusion applied and entered judgment for our client. On appeal, the appellate court returned to the primary question whether the plaintiff met its burden to establish that the underlying claim fell within the scope of basic coverage in the first instance. It agreed with Sedgwick that the plaintiff cannot prevail on the threshold coverage issue and, thus, did not reach our alternative grounds for affirmance based on the “employment practices” and “intentional acts” exclusions.