Dr. Dоuglas Rogers and his wife, Ed-wardine Reis-Rogers, (collectively, “Dr.Rogers”) 1 brought suit against Emergency Medical Services, Inc., Islands Emergency Medical Service, Inc. (“Islands”), and Dr. Edward B. Kinports, Jr. (collectively, “EMS”) in Hawaii state court (“the Underlying Lawsuit”), alleging several business torts, negligent and/or intentional infliction of emotional distress, and medical malpractice. EMS settled the Un *1002 derlying Lawsuit with Dr. Rogers, and tendered a claim to its insurer, St. Paul Mercury Insurance (“St.Paul”), alleging coverage under the Commercial General Liability insurance policy (“the Policy”). St. Paul refused to reimburse EMS for the cost of its defense, and EMS brought a breach of contract suit in state court. After St. Paul removed the case to federal court, the parties filed cross-motions for partial summary judgment. The district court 2 granted EMS’s motion, determining that St. Paul had a duty to defend EMS in the Underlying Lawsuit and that St. Paul breached this duty. The district court granted EMS’s request for attorney fees expended in defending the instant lawsuit, but declined to award prejudgment interest to EMS. St. Paul appeals, arguing that the district court erred because EMS’s claim is not covered by the Policy, that it was prejudiced by EMS’s failure to provide timely notice of the Underlying Lаwsuit, and that attorney fees were not proper or were unreasonable in this case. EMS appeals the denial of its claim for prejudgment interest. For the following reasons, we affirm.
1. Background
Emergency Medical Services, Inc. is a Missouri corporation and Islands is a Hawaii corporation. During the time period relevant to this appeal, Dr. Kinports was the president, CEO, and director of both corporations. St. Paul is an insurance company authorized to do business in Missouri. On May 31, 1999, EMS entered into an agreement with St. Paul whereby St. Paul would provide insurance coverage to EMS. EMS was the named insured under the Policy. In relevant part, the Policy reads:
WHAT TO DO IF YOU HAVE A LOSS
You or other protected persons are required to perform the duties described below when a property loss that may be covered under this policy happens or an accident or incident happens that could result in liability damages covered under this policy....
When This Policy Provides Liability Protection
If an accident or incident happens that may involve liability protection provided in this policy, you or any other protected person involved must:
2. Tell us or our agent what happened as soоn as possible. Do this even though no demand for damages has been made against you or any other protected person, but you or another protected person is aware of having done something that may later result in a demand for damages....
3. Send us a copy of all written demands. Also send us a copy of all legal documents if someone starts a lawsuit.
What This Agreement Covers
Bodily injury and property damage liability.
We’ll pay amounts any protected person is legally required to pay as damages for covered bodily injury and property damage that:
• happens while this agreement is in effect; and
• is caused by an event.
Bodily injury means any physical harm, including sickness or disease, to thе *1003 physical health of other persons. It includes any of the following that results at any time from such physical harm, sickness, or disease:
• Mental anguish, injury, or illness.
• Emotional distress.
• Care, loss of services, or death.
Property Damage means:
• physical damage to tangible property of others, including all resulting loss of use of that property; or
• loss of use of tangible property of others that isn’t physically damaged....
Event means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
From 1981 until December 2000, Dr. Rogers provided medical services to Hawaii patients on behalf of Islands. On May 7, 2001, an attorney representing Dr. Rоgers sent a demand letter to EMS. The letter discussed potential medical malpractice and business tort claims against EMS. On March 15, 2001, Dr. Rogers filed suit against EMS in Hawaii state court.
The original complaint alleged the following six counts: (I) promissory estop-pel as to partnership representations; (II) negligent and/or intentional misrepresentations as to partnership representations; (III) promissory estoppel as to tax representations; (IV) negligent and/or intentional misrepresentations as to tax representations; (V) accounting; and (VI) negligent and/or intentional infliction of emotional distress. On August 8, 2002, Dr. Rogers filed his first amended complaint, which added a medical malpractice claim. Each claim was alleged alternatively and each was asserted as a separate, stand-alone claim.
Relevant to this appeal, the complaint alleged that in early summer of 1991, Dr. Rogers helped Dr. Kinports retain Islands’s contract to provide emergency services for Kona Hospital, where Dr. Rogers was the Chairman of the Emergency Department. Dr. Kinports represented to Dr. Rogers that from that point forwаrd Dr. Rogers was an equal partner in Islands operations and would be compensated as such. The complaint stated that Dr. Rogers’s partnership status was confirmed on subsequent occasions, including a September 13, 2000 press release that was attached to the complaint as an exhibit. Also, in addition to the business-related injuries in the complaint, Dr. Rogers also alleged that on June 22, 2000, Dr. Rogers suffered the first of a series of neurologic events known as transient ischemic attacks, or “mini-strokes.” According to the complaint, Dr. Rogers’s condition grew increasingly worse because of the actions and demands of Dr. Kinports. By January 19, 2001, a number of significant cerebral vascular accidents had left Dr. Rogers permanently unable to practice medicine, either as an emergency physician or as an administrator.
Count VI of Dr. Rogers’s first amended complaint, entitled “Intentional and/or Negligent Infliction of Emotional Distress,” alleged that “[EMS] inflicted pain, suffering, mental and emotional distress, anguish and humiliation on [Dr. Rogers] and their conduct and omissions in doing so were either negligent and/or intentional.” The claim for negligent infliction of emotional distress (“NIED”) incorporated by reference allegations made in all of the previous paragraphs of the complaint.
On September 16, 2002, EMS’s controller sent an email to Aon Risk Services (“AON”), which was EMS’s insurance broker and the company listed as St. Paul’s agent in the Policy. The email was a follow-up to a telephone conversation the controller had approximately a week earlier with an AON representative. During *1004 this conversation, the controller requested that the AON representative put EMS’s general liability carrier on notice of the Underlying Lawsuit. Sevеral days after receiving the email, AON notified Hartford Fire Insurance Company (“Hartford”), but not St. Paul, of EMS’s claim and demand for coverage and a defense. Hartford denied coverage in a letter dated March 17, 2003.
On April 10, 2003, the Hawaii state court approved a settlement of the Underlying Lawsuit between EMS and Dr. Rogers. The parties filed a stipulated dismissal of the Underlying Lawsuit, with prejudice, on June 16, 2003.
Once Hartford had denied coverage and during settlement negotiations with Dr. Rogers, EMS investigated its right to coverage and a defense from St. Paul. In a letter dated May 28, 2003, EMS provided direct notice of the Underlying Lawsuit to an employee of St. Paul for the first time. St. Paul refused to reimburse EMS for any of its losses incurred in defending the Underlying Lawsuit. On October 2, 2003, EMS filed this suit against St. Paul in Missouri state court, seeking defense costs and indemnity relating to the Underlying Lawsuit. St. Paul removed the case to the United States District Court for the Western District of Missouri.
On September 10, 2004, the parties filed cross-motions for partial summary judgment. The district court granted EMS’s motion, determining that because Dr. Rogers’s NIED claim was potentially within the Policy’s coverage, St. Paul had a duty to defend EMS. 3 The court also found that EMS’s notice to AON satisfiеd the Policy’s notice requirement, but that in any case, St. Paul was not prejudiced by the delay in receiving notice. The parties then filed a joint stipulation as to the amount of reasonable defense costs owed to EMS as a result of St. Paul’s breach of its duty to defend. In entering its judgment, the district court granted EMS’s request for $143,807.09 in attorney fees and denied its request for prejudgment interest.
St. Paul appeals, arguing that the district court erred in finding that it had a duty to defend EMS under the Policy. First, St. Paul contends that the allegations of emotional distress made by Dr. Rogers in his first amended complaint do not constitute “bodily injury” as defined by the Policy, and that the first amended complaint did not include allegations that any bodily injury Dr. Rogers suffered was “caused by an event.” Second, St. Paul argues that Dr. Rogers’s claims fell within exclusions contained in the Policy, an employee exclusion and an “expected or intended bodily injury” exclusion. Third, St. Paul argues that the district court erred when it found that EMS provided timely notice to St. Paul of the Underlying Lawsuit and that St. Paul was not prejudiced by the lack of notice. Fourth, St. Paul claims that the district court erred by finding that EMS was entitled to attorney fees, or in the alternative, that the amount of attorney fees granted was unreasonable. EMS cross-appeals the district court’s denial of its claim for prejudgment interest. We review each of the parties’ arguments in turn.
II. Standard of Review
“[W]e review the district court’s grant of summary judgment de novo, viewing the facts and inferences to be drawn from them in the light most favorable to the nonmoving party....”
Conolly v. Clark,
Under Hawaii law, which the parties have agreed governs this dispute, insurance policies are subject to the general rules of contract construction, and their terms “should be interpreted according to their plain, ordinary, and accepted sense in common speech unless it appears from the policy that a different meaning is intended[.]”
Dairy Rd. Partners v. Island Ins. Co.,
92 Hawai’i 398,
An insurer’s duty to defend is brоad and “arises wherever there is the mere
potential
for coverage.”
Tri-S Corp. v. Western World Ins. Co.,
110 Hawai’i 473,
“The burden is on the insured to establish coverage under an insurance policy,”
State Farm Fire & Cas. Co. v. Gorospe,
III. Analysis
A. Coverage Issues
St. Paul first argues that the district court erred in holding that Dr. Rogers’s NIED claim is subject to a duty to defend under the Policy. Specifically, St. Paul argues that the allegations of emotional distress made by Dr. Rogers do not constitute “bоdily injury” under the Policy and that the complaint does not include allegations that any bodily injury he suffered was “caused by an event” as required under the Policy. We agree with the district court that Dr. Rogers’s claim of NIED is covered by the Policy.
As quoted above, under the Policy, “bodily injury” means “any physical harm, including sickness or disease, to the physical health of other persons.” It includes any “mental anguish, injury, ... illness [,] [e]motional distress[,][c]are, loss of services, or death” that “results at any time from such physical harm, sickness, or disease^]” St. Paul argues that the emotional distress Dr. Rogers suffered is not the “rеsult[ ]” of “physical harm, sickness, or disease[.]” Instead, St. Paul argues, the emotional distress Dr. Rogers suffered was the result of the business torts or the medical malpractice alleged in the complaint. We disagree. Dr. Rogers’s NIED claim is a stand-alone claim, which incorporates by reference the physical injuries alleged at the beginning of the complaint. EMS and the district court’s interpretation is the only plausible reading of the complaint because “physical injury to a person” is generally required under Hawaii law in order to state a claim for NIED.
Calleon v. Miyagi
76 Hawai’i 310,
*1006
St. Paul’s reliance on
CIM Ins. Corp. v. Masamitsu,
St. Paul also contends that Dr. Rogers’s complaint does not include аllegations that any bodily injury he suffered was “caused by an event” as defined by the Policy. We find this argument unpersuasive as well. The Policy defines “event” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” To be an “accident,” EMS’s conduct must be unexpected. We do not believe that the “expected result” of EMS’s conduct was the extensive neurological injuries that Dr. Rogers suffered.
Cf. Hawaiian Ins. and Guar. Co. v. Blanco,
EMS has met its burden of proving a possibility of coverage under the Policy.
B. Exclusion Issues
St. Paul also appeals the district court’s determination that the employee exclusion and the “expected or intended bodily injury” exclusion do not apply in this case. We agree with the district court that Dr. Rogers’s claim does not fit within either exclusion at issue. 4
The Policy excludes “bodily injury to an employee of the [insured] arising out of and in the course of his or her: employment by the [insured]; or рerformance of duties related to the conduct of the [insured’s] business.” St. Paul argues that the Policy’s employment exclusion applies because Dr. Rogers was an employee of EMS. St. Paul points to instances in the first amended complaint that refer to Dr. Kinports as Dr. Rogers’s “employer” and the W2 forms Dr. Rogers attached to his complaint. St. Paul contends that Dr. Rogers was treated like an employee, and *1007 is therefore an employee for purposes of this exclusion. EMS argues that because Dr. Rogers’s complaint alleged he was an equal partnеr with Dr. Kinports, the employee exclusion does not apply.
The complaint alleges that Dr. Rogers was hired by EMS in September of 1981. On March 1, 1985, Dr. Rogers became Medical Director for Islands. There is no doubt that Dr. Rogers was an employee of EMS during this time period. The complaint then alleges, however, that in early summer of 1991, Dr. Kinports told Dr. Rogers that he “was an equal partner with him in the [Islands] operations and that he would be compensated for that to the same extent as Dr. Kinports.” The complaint also alleges that “Dr. Rogers’s partnership status was thereafter confirmed on various occasions” by EMS. One of those occasions was a press release, attached to the complaint as an exhibit.
We recognize that the complaint does refer to Dr. Kinports as Dr. Rogers’s employer a number of times, and that Dr. Rogers filed W2 forms. However, because the complaint alleges that Dr. Rogers became a partner in 1991, the employee exclusion does not apply in this case. For purposes of determining whether a duty to defend exists, we resolve all doubts in favor of the insured.
Tri-S Corp.,
St. Paul also argues that the Underlying Lawsuit contains allegations of conduct on the part of EMS that resulted in “expected or intended bodily injury,” which is expressly excluded under the policy. As we noted above, Dr. Rogers’s complaint included a claim for NIED and alleged facts supporting that claim. Therefore, St. Paul’s argument that any bodily injury was “expected or intended” has no merit.
St. Paul has not met its burden of proving that any of the policy exclusions apply in this case.
C. Notice
St. Paul also argues thаt the district court erred in finding that EMS met the Policy’s notice requirement and alternatively that St. Paul was not prejudiced by the delay. We agree with the district court that St. Paul was not prejudiced.
The Policy requires the insured to “[t]ell [St. Paul] or [i]ts agent what happened as soon as possible” “[i]f an accident or incident happens that may involve liability protection provided” in the Policy. The Policy also requires the insured to “[s]end [St. Paul] a copy of all written demands” and to “send [St. Paul] a copy of all legal documents if someone starts a lawsuit.”
As discussed above, a little ovеr one month after Dr. Rogers filed his first amended complaint, an EMS representative sent an email to AON, following-up on his request that AON put EMS’s general liability carrier on notice of the Underlying Lawsuit. After receiving the email, AON notified Hartford, but not St. Paul, of EMS’s claim for coverage. EMS did not directly notify a St. Paul employee until after the Underlying Lawsuit was settled, in late May of 2003. EMS argues that its initial notice to AON satisfies the Policy’s notice requirement. The Policy provides that if the insured fears potential liability, it should “[t]ell [St. Paul] or [its] agent what happened as soon as possible.” As the district court noted, the first page of the Policy lists “AON Risk Services” as the “AGENT.” AON is labeled as the “Agent” or “Authorized Representative” in other areas throughout the Policy. AON is the only entity the Policy refers to as St. Paul’s “agent.” St. Paul argues that it was only coincidental that AON was both EMS’s insurance broker and St. Paul’s agent according to the Policy, thus notice *1008 to AON in this case does not constitute notice to St. Paul.
We decline to further assess the sufficiency of EMS’s notice to St. Paul because even if it were insufficient under the Policy, St. Paul cannot show prejudice due to the lack of notice. As a federal court sitting in diversity we apply substantive Hawaii law as “declаred by its Legislature in a statute or by its highest court in a decision.”
Erie R.R. Co. v. Tompkins,
St. Paul claims it was prejudiced by EMS’s untimely notice because it “denied St. Paul the opportunity to investigate the facts of the underlying case, to enter into its own settlement negotiations, to hire its own defense counsel, to choose a trial strategy, to challenge liability, to dispute the amount of damages[,] and to control defense costs.” St. Paul’s main authority for this proposition, Interstate Cleaning Corp., can be distinguished. In that case, the insured, who was suing for a breach of the duty to defend and indemnification, did not tell the insurer about the underlying lawsuit until after the suit had gone to trial and a jury award had been rendered. Id. at 1029. EMS, on the other hand, dismissed with prejudice its claim for indemnification. It is not asking to be reimbursed for the amount it paid to settle the Underlying Lawsuit. St. Paul, therefore, cannot argue that it was prejudiced by an inability choose a trial strategy or challenge liability.
EMS’s only request is that St. Paul pay for the attorney fees and costs associated with defending against Dr. Rogers’s state-court claim. While it is true that St. Paul may have been unable to hire its own defense counsel, enter into its own settlement negotiations, dispute the amount of damages, or control defense costs, St. Paul stipulated as to a reasonable amount of attorney fees and costs for settling the Underlying Lawsuit. That amount, $475,000, is what EMS is seeking to be reimbursed because of the district court’s decision that St. Paul breached its duty to defend. St. Paul has not shown that it would have spent less money in defending against Dr. Rogers’s claims than EMS did. Therefore, we affirm the district court’s decision that St. Paul has not shown prejudice in this case.
D. Attorney Fees
The district court granted EMS’s request for attorney fees in the instant lawsuit in the amount of $143,807.09. St. Paul argues that attorney fees are not proper under Hawaii law because the duty to defend is not a “benefit” as defined by Haw. *1009 Rev.Stat. § 431:10-242, and that, even if the duty to defend is a benefit, the fees the district court awarded are unreasonable. Both of these arguments are without merit.
Wе review a district court’s grant of attorney fees for abuse of discretion.
Hanig v.
Lee,
Unless specifically provided by a contract or statute, “a litigant has no inherent right to have his attorney[] fees paid by his opponent.”
Mikelson v. United Servs. Auto. Ass’n,
108 Hawai’i 358,
Where an insurer has contested its liability under a policy and is ordered by the courts to pay benefits undеr the policy, the policyholder ... shall be awarded reasonable attorney[ ] fees....”
Haw.Rev.Stat. § 431:10-242.
St. Paul argues that § 431:10-242 does not apply here because the district court has not ordered it to “pay benefits.” It contends that the district court’s order to pay for the defense is not a “benefit” under the statute the way an order of indemnification would be. According to St. Paul, because EMS dismissed with prejudice its claim for indemnification, § 431:10-242 should not apply. We disagree. A court order of indemnification is not required under § 431:10-242.
See Sentinel Ins. Co. v. First Ins. Co. of Hawai’i,
76 Hawai’i 277,
In the alternative, St. Paul argues that the amount of attorneys fees awarded is unreasonable.
See Sharp v. Hui Wahine, Inc.,
Additionally, the district court did not abuse its discretion by refusing to deduct the hours spent on the dismissed indemnification claim. As the court pointed out, “the indemnification claim involved many of the same issues as the duty to defend claim.” The court’s award of $143,807.09 is reasonable.
E. Prejudgment Interest
The district court denied EMS’s request for prejudgment interest, stating “that a court may deny prejudgment interest where an extraordinary damage award has already adequately compensated the plaintiff, or the defendant’s conduct did not cause any delay in the proceedings.”
See Metcalf v. Voluntary Employees’ Benefit Ass’n of Hawai’i,
99 Hawai’i 53,
Hawaii law provides for discretionary awards of prejudgment interest. Haw.Rev.Stat. § 636-16;
see Tri-S Corp.,
In awarding interest in civil cases, the judge is authorized to designate the commencement date to conform with the circumstances of each case, provided that the earliest commencement date ... in cases arising by breach of contract, it may be the date when the breach first occurred.
Haw.Rev.Stat. § 636-16. EMS argues that a different statute, § 478-2,
5
which it argues mandates an award of interest in certain cases, should apply here. To the extent that § 478-2 applies in this case, EMS’s argument fails because the Hawaii Supreme Court has clearly stated in
Tri-S Corp.,
and other cases that Hawaii law authorizes an award of pre-judgment interest at the discretion of the court.
Id.
at 106; see
Eastman v. McGowan,
86 Hawai’i 21,
EMS argues in the alternative that if Haw.Rev.Stat. § 636-16 applies, the district court abused its discretion by “failing to find a legally permissible basis to deny an award.” It is within the discretion of the court to deny interest pursuant to § 636-16 “where appropriate, for example, where: (1) the defendant’s conduct did not cause the delay in the proceedings; (2) the plaintiff himself has caused or contributed to the delay in bringing the action to trial; or (3) an extraordinary damage award has already adequately compensated the plaintiff.”
Roxas v. Marcos,
89 Hawai’i 91,
IV. Conclusion
For the foregoing reasons, we affirm the district court’s judgment in this case.
Notes
. Edwardine Reis-Rogers is named as a plaintiff in three of the six counts in the underlying state-court suit at issue here. However, because the conduct that led to that cause of action was directed toward Dr. Rogers, we will refer only to him in our discussion.
. The Honorable Dean Whipple, United States District Judge for the Western District of Missouri.
. On October 15, 2004, EMS dismissed with prejudice its claim for indemnification.
. With regard to the employee exclusion, we note that our inquiry into whether Dr. Rogers was an employee or a partner is limited by the facts alleged in the complaint.
See Dairy Rd. Partners,
. Haw.Rev.Stat. § 478-2 provides: "When there is no express written contract fixing a different rate of interest, interest shall be allowed at the rate of ten percent a year....”