In this dеclaratory judgment action, plaintiff insured appeals from summary judgment in favor of defendants insurers.
1
Plaintiff argues that the trial court erred in concluding that the business owner’s policy that defendants issued to plaintiff did not provide coverage for a former employee’s defamation claim against plaintiff. We review for errors of law,
Hoffman Construction Co. v. Fred S. James & Co.,
Plaintiff purchased a “Kemper Premier Business-owners Special Policy” from defendants in May 2000. The policy included separate forms providing coverage for property dаmage and commercial liability. Only the latter coverage is at issue here. The policy provided that defendants “will pay those sums that the insured becomes legally obligated to pay as damages because of * * * ‘personal injury 5 * * * to which this insurance applies.” It further provided that the insurance applies to “ ‘[p]ersonal injury 5 caused by an offense arising out of your business * * * but only if the offense was committed in the ‘coverage territory 5 during the policy period.”
The policy defined “personal injury” as
“injury, other than ‘bodily injury 5 or ‘advertising injury,’ arising solely out of one or more of the following offenses:
Hi * * *
“d. Orаl or written publication of material that slanders or libels a person or organization or a person’s or organization’s goods, products or services; or
“e. Oral or written publication of material that violates a person’s right of privacy.”
(Boldface in original.)
In July 2001, Hagler brought an action against plaintiff that included a claim for “interference with economic opportunity” based on plaintiffs conduct after Hagler’s termination in January 2001. Hagler later filed an amended complaint that added several other claims but did nоt alter the substantive allegations of the interference with economic opportunity claim. Only the latter claim is at issue in this action. As pertinent here, Hagler alleged in that claim that she would have been hired by a prospective employer if plaintiff had not wrongfully interfered by:
“1. * * * publishing to [the prospective employer] a false and defamatory letter * * * that [Hagler] was a former employee of [plaintiffl, that [Hagler] was prohibited from having any contact with [the prospective employer’s] clinical research director * * * and that [plaintiffl would file a lawsuit against [the prospective employer] if they had contact with [Hagler]. Although not stated directly, implicit in the libelous communication above described was the assertion by [plaintiffl that [the prospective employer] would be sued if, in fact, that organization hired [Hagler].
“2. The false assertions described [in the previous paragraph] were made with the motive to prevent [plaintiffs] employees and former employees, including [Hagler], who were lawfully entitled to seek employment elsewhere from seeking and finding employment with a competing business. At all times [plaintiffl knew and [was] aware that there was no non-competition agreement in force and effect between [plaintiffl and [its] employees, including [Hagler]. [Plaintiffl knew that [its] threats to file a lawsuit against [the prospective employer], should that organization hire [Hagler] or other employees of [plaintiffs] were groundless and without merit whatsoever.”
Plaintiff thereafter moved for summary judgment, and defendants filed a cross-motion for summary judgment. The trial court denied plaintiffs motion for summary judgment and granted defendants’ cross-motion, based on its conclusion that plaintiffs claim was subject to the ERP exclusion in the policy.
On appeal, plaintiff assigns error to the grant of summary judgment in favor of defendants. Plaintiff asserts that the ERP exclusion applies only to prospective and current employees, not to former employees. Plaintiff asserts that, at the least, its proposed construction is reasonable, thus making the exclusion ambiguous and requiring us to construe the ambiguity in its favor. Defendants reply that the ERP exclusion is unambiguous and that it is not limited in scope to current employees. Plaintiff raises an alternative theory for the first time in its reply brief on appeal — specifically, that the defamation alleged by Hagler was not “employment-related” because plaintiffs statements did not relate to Hagler’s work performance. Defendants contend that plaintiffs alternative theory is unpreserved and not properly before us. We begin our analysis with plaintiff’s original theory, as framed before the trial court and in plaintiffs opening brief on appeal.
Ordinarily, we evaluate a duty to defend claim by examining two documents: the complaint and the insurance
policy. American Hardware Ins. Group v. West One Auto.,
We interpret insurance policy provisions according to the analytical framework set out in
Hoffman Construction Co.
We first determine whether the policy defined the term at issue and, if it did not, we look to the plain meaning of the term.
American Hardware Ins. Group,
Hagler’s complaint alleged that she was not hired by a prospective employer because plaintiff sent a “false and defamatory letter” to the prospective employer stating that Hagler was prohibited from having contact with representatives of that employer. 2 The ERP exclusion provides:
“This insurance does not apply to:
* * * *
“r. Employment-Related Practices
“ ‘Bodily injury,’ ‘personal injury,’ or ‘advertising injury’ to:
“1) A person arising out of any:
“a) Refusal to employ that person;
“b) Termination of that person’s employment; or
“c) Employment-related practices, policies, acts or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, or discrimination directed at that person; or
“2) The spouse, child, parent, brother or sister of that person as a consequence of ‘bodily injury’ or ‘personal injury’ to that person at whom any of the employment-related practices described in paragraphs a), b) or c) above is directed.
“This exclusion applies:
“1) Whether the insured may be liable as an employer or in any other capacity; and
“2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.”
(Boldface in original.) This case сoncerns the meaning of subsection (r)(1)(c), which excludes from coverage personal injury “arising out of any * * * [e]mployment-related practices, policies, acts or omissions.” The policy does not define either the phrase or its constituent terms. Accordingly, we consider the ordinary meanings of those terms.
American Hardware Ins. Group,
The ordinary meaning of the words “arising out of’ is very broad.
See Oakridge Comm. Ambulance v. U. S. Fidelity,
The other key term is “employment-related.” As pertinent here, “employment” means “activity in which one engages and employs his time and energies * * * as (1): work (as customary trade, craft, service, or vocation) in which one’s labor or services are paid for by an employer.” Id. at 743. “Related” means “having relationship : connected by reason of an established or discoverable relation.” Id. at 1916. Plaintiff argues that, because the definition of “employment” uses the present tense and, “if anything, the definitions [of ‘related’] are neutral as to tense, depending upon the word to which it is connected,” “employment-related” must refer to present employment. We disagree.
Dictionaries often define in the present tense words that include past and future components, including the terms on which plaintiff relies in support of its contention — “calling” and “occupation.” Both of those words are defined, in part, as activities in which a person “engages.”
Id.
at 318, 1560. Further, “employment” is linked to the modifying term “related” by a hyphen. That modifier broadens its subject, “employment,” to include things with which the subject has a connection or relationship. Thus, “employment-related” could include any manner, including a temporal link, by which a particular practice, policy, act or omission is connected to employment. That tentative conclusion must, however, be tested by an examination of both the particular context in which the term “employment-related” is used in the policy and the broader context of the policy as a whole.
Hoffman Construction Co.,
We turn to the particular context in which the term is used. Subsection (r)(1)(c) of the ERP exclusion enumerates examples of “employment-related practices, policies, acts or omissions” — coercion, demotion, evaluation, reassignment, discipline, defamation, hаrassment, humiliation, and discrimination. Plaintiff urges us to apply the rule of ejusdem generis to construe the term “employment-related” as limited to current employment. Plaintiff contends that, because most of the listed practices ordinarily occur with respect to persons who are currently employed, “defamation” also is limited to such persons.
The
ejusdem generis
rule provides that, “when general words follow an enumeration of specific persons or things, the general words are not construed in their widest extent, but are applied only to рersons or things of the same general kind or class as those specifically enumerated.”
McGrath v. Electrical Const. Co.,
In
Groshong v. Mutual ofEnumclaw Ins. Co.,
The principle’s utility is especially doubtful where, as now explained, it is at odds with other provisions that constitute particular context for the questioned term.
See Mayorga,
Two other phrases in the ERP exclusion buttress that conclusion. By its terms, the exclusion applies “[w]hether the insured may be liable as an employer or in any other capacity [.]” (Emphasis added.) That wording appears to encompass actions in which there is no existing employment relationship, and it could include situations like this one, where an employee has been terminated and the insured then engages in conduct toward the former employee for which the insured may be legally liable. Similarly, it is significant that the ERP exclusion uses the term “person,” not employee, throughout. The policy states that it does not apply to personal injury to “[a] person” arising out of employment-related practices “directed at that person.” (Emphasis added.) The use of the word “person” rather than “employee” suggests an intention to сreate a broadly applicable exclusion.
The context of the policy as a whole also renders plaintiffs interpretation implausible. Plaintiff directs us to the “Employer’s Liability” exclusion, arguing that it encompasses only current employment and that that fact somehow supports the limitation of the separate
“1) An ‘employee’ of the insured arising out of and in the course of:
“a) Employment by the insured; or
“b) Performing duties related to the conduct of the insured’s * *
In sum, when considered in context, plaintiffs proffered interpretation of the ERP exclusion as limited to conduct occurring during employment cannot “withstand scrutiny.”
Hoffman Construction Co.,
We turn to plaintiffs alternative theory that the allegedly defamatory statements were not employment-related because they did not involve Hagler’s performance as an employee but, instead, arose in a “competition or trade context.” As noted, defendants assert that that theory is unpreserved. We agree with defendants.
In its motion for summary judgment, plaintiff argued that the ERP exclusion was ambiguous because it “could be read by a reasonable person” as not applying to claims “brought by people who are еmployed by the insured at the time the alleged personal injury occurs.” Plaintiff reasoned that the exclusion therefore must be construed against defendants. In their response and cross-motion for summary judgment, defendants discussed an extensive body of case law from other jurisdictions, stating:
“Even when courts have declined to apply the exclusion, they have not given credence to the argument relied upon by [plaintiff], i.e., that the exclusion does not apply to claims of defamation against an insured occurring after the employee has left the employ of the insured. * * * [In a Ninth Circuit case applying California law, HS Services, Inc. v. Nationwide Mut. Ins. Co.,109 F3d 642 , 646 (9th Cir 1997),] thecourt did not apply the exclusion because it found that the purpose of the alleged defamatory remarks ‘was to protect [the insured] in the marketplace’ and that the remarks ‘related directly to competition between [the claimant and the insured] in the marketplace and the latter’s attempt to protect itself against a remark made by [the claimant], not as an ex-employeе, but as a present competitor.’ ”
(Some brackets in original.) Plaintiffs reply memorandum on summary judgment did not cite HS Services, Inc., or the principles discussed in that case. Instead, plaintiff argued that the cases on which defendants relied involved differently worded ERP exclusions and failed to follow Oregon’s interpretive methodology. Plaintiff reiterated its generalized arguments that an insurer has a duty to defend if a complaint against the insured alleges any basis for which the policy provides coverage and that the ERP exclusion was ambiguous.
In its summаry judgment order, the trial court addressed only plaintiffs theory that employment-related practices are, for purposes of the ERP exclusion, limited to current employees; the court quoted portions of cases cited by the parties concerning that theory, and it concluded that the exclusion was not ambiguous under Oregon law. The court did not cite HS Services, Inc., or otherwise indicate that it had considered the principles discussed in that case. Moreover, plaintiff did not refer in its opening brief on appeаl to the theory that the alleged defamation was not employment-related because it did not involve Hagler’s performance as an employee. Rather, only after defendants referred in their brief on appeal to cases from other jurisdictions in support of their argument that the ERP exclusion is not limited to practices directed at current employees did plaintiff rely on some of the cases cited by defendants to advance, for the first time in its reply brief, its alternative theory.
The question thus reduсes to whether defendants’ flagging of the theory, before the trial court and on appeal, in explaining why plaintiffs original theory must fail, was sufficient to preserve it, even though plaintiff itself advanced the theory for the first time in its reply brief on appeal. Traditionally, in order to preserve a ground for appeal, it has been deemed “essential” for a party to raise an “issue” at trial but less important to make a specific argument or identify a particular source.
State v. Stevens,
Although we could ponder, as sometimes has been done in preservation analyses based on
Hitz,
whether plaintiffs alternative theory constitutes an “issue” or an “argument,” that effort would not meaningfully advance the analysis here. The decisive question, rather, is whether plaintiff provided the trial court
Moreover, regardless of whether the alternative theory of error was preserved, plaintiff failed to raise it in its opening brief on appeal. We generally will not consider a basis as to why the trial court erred that was not assigned as error in the opening brief but was raised for the first time by way of reply brief.
Ailes v. Portland Meadows, Inc.,
Based on our conclusion that the phrase “employment-related practices” is not confined to practices directed at current employees, the trial court did not err in granting summary judgment in favor of defendants.
Affirmed.
Notes
Although plaintiff also named its former employee, Lori Hagler, as a defendant in this case, Hagler did not file a brief on appeal. We therefore refer to the insurers as “defendants.” Also, plaintiffs complaint named both Kemper Insurancе Companies and American Manufacturers Mutual Insurance Company as defendants. Defendants made no motion before the trial court with respect to the naming of both entities, and the issue is not before us on appeal.
The issue of whether those allegations are covered by the personal injury provisions of the policy is not before us. Rather, the sole question on appeal is whether the claim is subject to the ERP exclusion.
Plaintiff also relies on other policy provisions in support of its argument. For example, plaintiff directs us to the definition of “employee” in the policy, the definition of “employee” in the Employee Retirement Income Security Act (ERISA) employee dishonesty endorsement, and the use of the term “employee” in its “WHO IS INSURED” provision. Plaintiffs reliance on the definition or use of the term “employee” in various other parts of the policy is curious in light of the absence of that term in the ERP exclusion.
We do not rely on cases from other jurisdictions in reaching our conclusion that the ERP exсlusion applies where the practice occurred post-employment. None of those cases analyzed the exclusion in the manner that
Hoffman Construction Co.
requires, and, thus, they are of limited assistance here.
See American Hardware Ins. Group,
The court has been less strict in its preservation analysis where the issue involved the proper construction of a statute, see
Stull v. Hoke,