This appeal presents the issue of whether defendant insurance companies are obligated under policies issued by them to pay damages and costs awarded in a judgment obtained by plaintiffs against the insured.
Defendant Royal Insurance Company of America (“Royal”) issued a business liability insurance policy to defendant William F. Hedgecock, d/b/a/ Triad Business Forms (“Hedgecock”) for the period of 1 September 1988 to 1 September 1989. Defendant Great American Insurance Companies (“Great American”) issued a similar policy for the period of 1 September 1989 to 1 September 1990. On 21 January 1992, all plaintiffs obtained judgments for damages and costs against Hedgecock for intentional infliction of emotional distress resulting from sexual harassment committed by him while all were employed at Triad Business Forms. Plaintiffs Russ, Sides, Stafford, Brown, and Jeffreys also obtained judgments for damages and costs against Hedgecock for battery incident to this sexual harassment.
Both insurance companies refused to represent Hedgecock in the underlying action from which the judgments resulted. On 12 July 1993, plaintiffs filed this declaratory judgment action against both companies and Hedgecock seeking a declaration that the companies are obligated by their policies to pay for damages and costs awarded in the judgment and for costs awarded in order dated 13 November 1992. The case was heard on 11 April 1994 on plaintiffs’ motion and defendants’ cross-motions for summary judgment. On 9 May 1994, Judge James A. Beaty, Jr. denied plaintiffs’ motion for summary judgment and entered summary judgment in favor of defendants Great American and Royal. Plaintiffs appeal.
The central issue in this case is whether the injuries sustained by plaintiffs were bodily injuries covered by the Royal and Great American policies. The Royal policy provides coverage when
... a claim is made or Suit is bro'ught against an Insured for Bodily Injury or Property Damage caused by an Occurrence to which this coverage applies.
The policy then defines “occurrence,” in applicable part, as
an accident, including continuous or repeated exposure to the same conditions, which results in Bodily Injury . . . which the Insured neither expected nor intended to happen.
(Emphasis added).
The Great American policy provides coverage for “bodily injury” during the policy period and caused by an “occurrence” defined as an “accident.” The Great American policy also contains an exclusion for “bodily injury . . . expected or intended from the standpoint of the insured." (Emphasis added).
Neither policy defines “accident.” Our Supreme Court has held that when the term “accident” is not defined in an insurance policy, “accident” includes “injury resulting from an intentional act,
if the injury is not intentional or substantially certain to be the result of the intentional act." N.C. Farm Bureau Mut. Ins. Co. v. Stox,
Stox
dealt,
inter alia,
with coverage for a battery claim. Actions for battery protect against “intentional and unpermitted contact with one’s person.”
Dickens v. Puryear,
This case is quite different factually from Stox. The injuries sustained by plaintiffs here were the result of sexual harassment. When confronted with this issue, other states have held that acts of sexual harassment are so nearly certain to cause injury that intent to injure can be inferred as a matter of law.
E.g., Continental Ins. Co. v McDaniel,
We took a similar approach in a case concerning whether an insurance policy
exclusion
for expected or intended bodily injuries barred coverage for injuries arising out of sexual molestation of a
minor.
Nationwide Mutual Ins. Co. v. Abernathy,
We conclude that since sexual harassment is substantially certain to cause injury to the person harassed, intent to injure may be inferred as a matter of law from the intent to act for the purpose of determining coverage under an insurance policy. This inference applies despite the insured’s testimony, as here, that he did not intend injury. Thus, under both the Great American and Royal policies, the injuries sustained by plaintiffs as a result of Hedgecock’s acts of sexual harassment, as a matter of law, are not “accidents” and thus not bodily injuries caused by “occurrences.” In addition, we
This inference applies to preclude coverage under both policies even if the jury found intentional infliction of emotional distress based on a level of intent rising to reckless indifference. We reject plaintiffs’ argument to the contrary. In order to prevail on a claim for intentional infliction of emotional distress, a plaintiff must prove that the defendant engaged in “(1) extreme and outrageous conduct, (2) which is intended to cause and does cause (3) severe emotional distress to another.”
Dickens v. Puryear,
We also reject plaintiffs’ assertion that our courts have refused to infer intent to harm in sexual harassment cases. In support of this argument, plaintiffs cite
Waddle v. Sparks,
Plaintiffs also argue that they should recover pursuant to the “personal injury” coverage provided in both policies. Plaintiffs’ argument for personal injury coverage against both companies is based solely on their claims that Hedgecock violated their rights of privacy. The Great American policy covers damages the insured is legally obligated to pay for personal injury arising from certain enumerated offenses, including the tort for invasion of privacy. Specifically, this policy provides coverage for
sums the insured becomes legally obligated to pay as damages because of. .. Personal Injury ....
“Personal injury” is defined, in pertinent part, as
injury, other than “bodily injury”, arising our of one or more of the following offenses: . . . e. Oral or written publication of material that violates a person’s right of privacy.
(Emphasis added).
The Royal policy also covers damages the insured is legally obligated to pay pursuant to claims or suits for personal injury arising from certain enumerated torts, including that of invasion of privacy. Specifically, this policy provides coverage for damages for which the insured is legally liable
if a claim is made or a Suit is brought against an Insured for Personal Injury...
“Personal injury” is defined, in relevant part, as
injury which arises out of one or more of the following acts committed during the policy period:...invasion of privacy which is the result of a written or spoken statement....
(Emphasis added).
Courts in other jurisdictions have construed personal injury policy provisions that cover enumerated torts as providing coverage
only if plaintiffs have alleged or recovered for one of the enumerated torts.
These courts have held that sexual harassment is not “personal injury” in such policies.
For e.g. Lindsey v. Admiral Ins. Co.,
For the reasons stated, summary judgment in favor of defendants Royal and Great American is affirmed.