Golden Eagle Ins. Corp. v. Munoz

• Decision Date: 23 September 2016
• Docket Number: G052223
• Parties: GOLDEN EAGLE INSURANCE CORPORATION, Plaintiff and Respondent, v. ALANA MUNOZ, Defendant and Appellant,
• Court: California Court of Appeals Court of Appeals

GOLDEN EAGLE INSURANCE CORPORATION, Plaintiff and Respondent, v. ALANA MUNOZ, Defendant and Appellant,

G052223

COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE

September 23, 2016

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. 30-2014-00713009)

OPINION

Appeal from a judgment of the Superior Court of Orange County, Peter J. Wilson, Judge. Affirmed.

Law Office of John P. Yasuda and John P. Yasuda for Defendant and Appellant.

Edwards & Hunter, Richard P. Edwards and Ellen E. Hunter for Plaintiff and Respondent.

Alana Munoz appeals from the trial court's grant of Golden Eagle Insurance Corporation's (Golden Eagle) motion for summary judgment in Golden Eagle's declaratory relief action against Munoz, Sirous & Sons Rug Gallery, Inc. (S&S) and Saeid Maralan. In a separate action, Munoz sued S&S and Maralan seeking damages for personal injury caused by sexual assault and harassment (Munoz Action). Munoz contends Golden Eagle has a duty to defend S&S and Maralan because there is possibility of coverage for some of her claims against them. We conclude the trial court correctly decided there was no triable issue of fact and affirm the judgment.

FACTS

The following factual summary is taken from the operative complaint. S&S is a shop in Laguna Beach that sells Persian rugs. S&S knew Maralan was a registered sex offender and hired him anyway.

In August 2010 Munoz, a female minor, went to S&S looking for a job. Maralan offered Munoz employment, and she started work a few days later. When Munoz arrived for her first day, Maralan "hugged her and kissed her on both sides of the lips." He then "took her by the hand and asked if she would do something for him" and "again hugged her and kissed her on the lips." He "gave her a $100 bill and asked her to go get some ice cream" and "repeatedly told her how beautiful she was." A few days later, Munoz returned to work. While there, Maralan began "caressing her face, arms and her head." He gave her $100 to make some photocopies and told her to keep the change. He later told her to come into the vault where "he pulled her close to him and tried to kiss her . . . ."

Munoz brought a lawsuit against both Maralan and S&S for sexual harassment, and assault and battery. Munoz sued Maralan individually for false imprisonment and intentional infliction of emotional distress (IIED). She alleged the following causes of action against S&S: (1) negligence in hiring and supervising Maralan; (2) wrongful termination in violation of public policy; (3) constructivetermination; and (4) failure to take reasonable steps to prevent harassment from occurring pursuant to Government Code section 12940, subdivision (k).

Golden Eagle issued to S&S a Commercial General Liability policy (CGL policy), which was in effect from March 1, 2010, to March 1, 2011. The CGL policy provides coverage for sums the insured becomes legally obligated to pay as damages because of bodily injury only if the bodily injury is caused by an occurrence that takes place in the coverage territory. The policy defines occurrence to mean an accident, including continuous or repeated exposure to substantially the same general harmful conditions. The policy also includes an employment-related practices exclusion, which excludes coverage to bodily injury to a person arising out of termination of that person's employment or employment-related practices, policies, acts, or omissions, such as coercion, harassment, and humiliation. The exclusion applies whether the insured may be liable as an employer or in any other capacity. In addition, the policy contains a "Separation Of Insureds" clause stating the insurance applies separately to each insured against whom a claim is made.

In 2014 Golden Eagle filed a declaratory relief action (GE Action) to adjudicate whether Golden Eagle has an obligation to defend and/or indemnify any defendant in the Munoz Action. Golden Eagle named Munoz, Maralan, and S&S as defendants. In its complaint, Golden Eagle maintained there was no insurance coverage because the Munoz Action alleged intentional acts and allegations falling under several exclusions, including the employment-related practices exclusion (ERP exclusion).

Munoz filed a motion for summary judgment in the GE Action. She alleged Golden Eagle could not establish as a matter of law that no possibility of coverage existed in the underling Munoz Action.

Golden Eagle then filed its own motion for summary judgment asserting the ERP exclusion "is a broad exclusionary endorsement which excludes, without qualification, coverage for the harassment of Munoz." The court heard both motions andgranted Golden Eagle's motion for summary judgment, ruling "there [was] no potential for coverage under the policies of insurance issued by Golden Eagle." In the court's minute order, the court stated it declined to rule on Munoz's motion because it was procedurally defective. It added, Munoz's arguments in support of her motion were addressed in her opposition to Golden Eagle's motion and were therefore considered.

DISCUSSION

On appeal, Munoz makes the following arguments: (1) Golden Eagle erroneously included in its summary judgment motion mere allegations mentioned in her unverified third amended complaint to prove Maralan's actions were intentional and therefore precluded from coverage; (2) the term "occurrence" used in the CGL policy is ambiguous; (3) the "Separation of Insured" clause contained in the CGL policy requires a separate analysis of insurance coverage for S&S apart from Maralan; and (4) Golden Eagle did not meet its initial burden of proof and therefore the burden did not shift to Munoz. Noticeably absent from her opening brief is any discussion of the policy's ERP exclusion. We conclude all causes of action raised in the Munoz Action fell within this exclusion. The court correctly determined there was no potential for coverage under the policy.

A. Standard of Review

"We review de novo an order granting summary judgment. [Citation]. We need only address sufficient grounds to affirm. [Citation.] [¶] The meaning of the policy is a legal question. [Citation.] '"To prevail [on the issue of the duty to defend], the insured must prove the existence of a potential for coverage, while the insurer must establish the absence of any such potential. In other words, the insured need only show that the underlying claim may fall within policy coverage; the insurer must prove it cannot. . . ." [¶] Nevertheless, the obligation to defend is not without limits. "Rather, such a duty is limited by 'the nature and kind of risk covered by the policy.'" [Citations.] "'[T]he duty to defend derives from the insurer's coverage obligations assumed under theinsurance contract.' [Citation.] Thus, 'where there is no potential for coverage, there is no duty to defend.'"' [Citations.] [¶] In assessing coverage and exclusion issues, we look primarily to the allegations of the underlying complaint: Ambiguities are construed in favor of the insured. [Citation.]" (Uhrich v. State Farm Fire & Casualty Co. (2003) 109 Cal.App.4th 598, 607-608.)

B. The ERP Exclusion Applies

Insurers have authority to exclude policy coverage. "'Coverage may be limited by a valid endorsement. . . . But to be enforceable, any provision that takes away or limits coverage reasonably expected by an insured must be "conspicuous, plain and clear."' [Citation.]" (Esparza v. Burlington Ins. Co. (E.D.Cal. 2011) 866 F.Supp.2d 1185, 1201.)

In this case, the ERP exclusion provided as follows: "This insurance does not apply to: [¶] 'Bodily 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, act 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 . . . .

"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."

Several courts have interpreted the language of this exclusion as having a very broad scope. For example, in Jon Davler Inc. v. Arch Ins. Co. (2014) 229 Cal.App.4th 1025 (Jon Davler), the employer, Davler, brought an insurance coverage action against its insurer. Davler's manager, Yang, became enraged when she found a used sanitary napkin near the women's toilet and she forced every female employee to undergo inspection to determine if they were on their menstrual period and the possible source of the napkin. (Id. at p. 1029.) Several employees brought a false imprisonment and sexual harassment suit against Davler and Yang. (Ibid.) Davler tendered defense to its insurer under its commercial general liability policy that provided coverage for injuries "'arising out of'" "'[f]alse arrest, detention[,] or imprisonment.'" (Id. at p. 1030.) The insurer declined coverage because the policy also had an employment-related practices exclusion (almost identical to the one in the case before us.)

The ERP exclusion in the Jon Davler case stated, "that the coverage for personal and advertising injury did not apply to an injury arising out of any refusal to employ a person, termination of a person's employment, or [e]mployment-related practices, policies, acts or omissions such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination or malicious prosecution directed at that person . . . ." (Jon Davle...