785 F. Supp. 2d 561
N.D.W. Va.2011Background
- Erie insured Pleasant Day Schools under Ultraflex Policy; underlying suit filed Aug 1, 2008 in Monongalia Cty WV alleging hostile work environment, retaliation, wrongful discharge, emotional distress, assault, false imprisonment, invasion of privacy, breach of contract, and WV Wage Act violations; Edmonds family ownership/management tied to insured; Erie seeks declaration of no duty to defend in Henry v. Edmond, No. 08-C-547 (WV 17th Cir) (dkt. 3-1); policy contains Coverage A (bodily injury/property damage) and Coverage B (personal/advertising injury) with ERP exclusion and other exclusions; WV law governs interpretation of policy in diversity; court must compare underlying allegations to policy to determine duty to defend; court finds no duty to defend under Coverage A; ERP exclusion in Coverage B broad enough to preclude coverage for employment-related claims; knowing violation of rights exclusion also applicable; court dismisses case with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend under Coverage A? | Erie: underlying claims could be covered as bodily injury/occurrence. | Edmonds: some claims may be within Coverage A. | No duty to defend under Coverage A. |
| Coverage B ERP exclusion applicability? | ERP excludes employment-related personal/advertising injury. | Claims not clearly employment-related or ambiguous. | ERP exclusion applies; no duty to defend. |
| Knowing violation of rights exclusion? | Exclusion should not apply; facts don't show intent to injure. | Allegations show intentional sexual misconduct, implying knowledge of rights violation. | Knowing violation exclusion precludes defense. |
Key Cases Cited
- Bowyer v. Hi-Lad, Inc., 216 W.Va. 634 (WV Supreme Court 2004) (duty to defend broader than indemnify; intent may be inferred in certain sexual misconduct contexts)
- Bruceton Bank v. United States Fid. & Guar. Ins. Co., 199 W.Va. 548 (WV Supreme Court 1997) (insurer's duty to defend depends on underlying facts and policy terms)
- Cornett Management Co., LLC v. Fireman's Fund Ins. Co., 332 Fed.Appx. 146 (4th Cir. 2009) (ERP exclusion may preclude coverage for false imprisonment when acts affect employment relationship; requires intent in WV law)
- Peterborough Oil Co. v. Great American Ins. Co., 397 F.Supp.2d 230 (D. Mass. 2005) (ERP exclusion ambiguous when applied to employment-related acts; discusses scope of ‘employment-related’)
- Tackett v. American Motorists Ins. Co., 213 W.Va. 524, 584 S.E.2d 158 (WV Supreme Court 2003) (duty to interpret policy questions of law; insurance contract interpretation guided by WV law)