Maine State Academy of Hair Design, Inc. v. Commercial Union Ins. Co., Docket No. C
| Decision Date | 12 August 1997 |
| Docket Number | Docket No. C |
| Citation | 699 A.2d 1153 |
| Parties | MAINE STATE ACADEMY OF HAIR DESIGN, INC., et al. v. COMMERCIAL UNION INSURANCE COMPANY, et al. um-96-435. |
| Court | Maine Supreme Court |
John G. Connor (orally), Portland, for plaintiffs.
Anne M. Carney (orally), James D. Poliquin, Norman, Hanson & DeTroy, Portland, for defendants.
Before WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, RUDMAN, DANA, and LIPEZ, JJ.
¶1 Maine State Academy of Hair Design, Inc. (MSAHD), Jeffrey Saleeby, and William Malloy (collectively the Academy) appeal from the summary judgment entered in the Superior Court (Cumberland County, Saufley, J.) in favor of Commercial Union Insurance Company on all five counts of the Academy's complaint seeking to have Commercial Union declared responsible to defend and indemnify the Academy in the actions brought against it by Amber Martin. The Academy argues the court erred in granting summary judgment because, contrary to the court's conclusion, there exists at least the potential that Martin's claims are covered by the Academy's insurance policy issued by Commercial Union. We agree and vacate the judgment in part.
¶2 In her underlying action in the Superior Court Martin alleges the following: She was an employee of MSAHD for about ten years prior to being fired in April 1993. Jeffrey Saleeby was the president of MSAHD at all times relevant to her claims, and William Malloy was the operations manager. During the course of her employment Saleeby and Malloy made comments and carried out acts of a sexual nature toward her and others associated with MSAHD. Such conduct was unsolicited and unwelcome, hindered her job performance, and created an offensive work environment. Martin was fired two days after she told a supervisor she was considering bringing charges of sexual harassment.
¶3 Martin further alleges the Academy 1) violated her rights under the Maine Human Rights Act by subjecting her to a hostile work environment, terminating her employment, and depriving her of employment, wages, and benefits on a sexually discriminatory basis; 2) negligently and intentionally discriminated against her in the terms and conditions of employment on a sexually discriminatory basis; 3) violated her civil rights, and maliciously and wrongfully terminated her employment; and 4) negligently inflicted severe emotional distress on her by its extreme and outrageous conduct and discriminatory actions, causing her to suffer the loss of, among other things, her professional reputation. Before filing her action in the Superior Court, Martin filed a sexual harassment complaint and a charge of discrimination with the Maine Human Rights Commission. The Commission issued a report in January 1994 finding reasonable grounds to believe that unlawful sexual harassment and constructive discharge had occurred.
¶4 During the events described in Martin's complaint, MSAHD was insured under a commercial general liability policy issued by Commercial Union. MSAHD requested that Commercial Union provide a defense and indemnify it against Martin's actions in the Superior Court and provide a defense against the proceedings before the Maine Human Rights Commission. Commercial Union refused. As a result the Academy brought the present action, a six-count complaint seeking (I) compensatory damages for breach of the insurance contract; (II) a declaratory judgment obligating Commercial Union to defend the Academy in Martin's actions in the Superior Court and before the Maine Human Rights Commission; (III) a declaratory judgment obligating Commercial Union to indemnify the Academy in Martin's action in the Superior Court; (IV) compensatory damages for misrepresentation; (V) compensatory damages on the theory of promissory estoppel; and (VI) punitive damages. After a hearing, the court granted Commercial Union's motion for a summary judgment on all counts. The Academy appeals.
¶5 A summary judgment is properly granted only when the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, show there is no genuine issue of material fact. M.R.Civ.P. 56(c); Olson v. Albert, 523 A.2d 585, 588 (Me.1987). On appeal we view the evidence in the light most favorable to the nonprevailing party to determine whether the record supports the conclusion there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See, e.g., Kandlis v. Huotari, 678 A.2d 41, 42 (Me.1996). Whether Commercial Union has a duty to defend in this case is a question of law; thus, the trial court's decision is reviewed de novo. Vigna v. Allstate Ins. Co., 686 A.2d 598, 599 (Me.1996). We determine the duty to defend by comparing the allegations in the underlying complaint with the provisions of the insurance policy. Id. "If a complaint reveals a 'potential ... that the facts ultimately proved may come within the coverage,' a duty to defend exists." Id. (quoting Travelers Indem. Co. v. Dingwell, 414 A.2d 220, 226 (Me.1980)). See also Gibson v. Farm Family Mut. Ins. Co., 673 A.2d 1350, 1352 (Me.1996) (). "Even a complaint which is legally insufficient to withstand a motion to dismiss gives rise to a duty to defend if it shows an intent to state a claim within the insurance coverage." Dingwell, 414 A.2d at 226. The Academy contends there exists at least the potential that the facts proved at trial may fall within the policy coverage for bodily injury or personal injury.
¶6 The insurance policy at issue provides in pertinent part:
SECTION I--COVERAGES
a. [Commercial Union] will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" ... to which this insurance applies. We will have the right and duty to defend any "suit" seeking those damages....
....
b. This insurance applies to "bodily injury" ... only if:
(1) The "bodily injury" ... is caused by an "occurrence" ...
....
This insurance does not apply to:
a. "Bodily injury" ... expected or intended from the standpoint of the insured....
....
d. Any obligation of the insured under a workers' compensation, disability benefits or unemployment compensation law or any similar law.
e. "Bodily injury" to:
(1) An employee of the insured arising out of and in the course of employment by the insured
....
This exclusion applies:
(1) Whether the insured may be liable as an employer or in any other capacity....
....
SECTION V--DEFINITIONS
....
....
9. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
The trial court concluded that the exclusion regarding bodily injury to an employee arising out of employment--so called exclusion "e"--applies to all the claims in the underlying complaint because no allegation in the complaint alleges conduct by MSAHD outside of Martin's employment.
¶7 As a preliminary matter, we address Commercial Union's contentions that the trial court's rationale need not be reached because it is entitled to a summary judgment on other grounds. Commercial Union argues that we need not reach the exclusions of the policy because the underlying claims are not within the coverage for bodily injury. It contends that due to the intentional nature of the unlawful conduct amounting to sexual harassment and discrimination, such conduct does not constitute an accident as a matter of law, and therefore, does not constitute an "occurrence" as defined and covered under the policy.
¶8 The Academy argues that any bodily injury to Martin (i.e., her claim of severe emotional distress) that resulted from the alleged sexual harassment and wrongful discharge constitutes an accident because the claimed bodily injury was at least potentially unanticipated. It contends, among other things, that sexual harassment can take a myriad of forms, including everything from excessive sexually-oriented "joking" to demands for sexual favors, and that Commercial Union's contentions reflect a narrow, unrealistic view of sexual harassment. The Academy contends that such allegations, as well as the allegations of emotional distress, trigger the duty to defend. We agree.
¶9 The accidental nature of an event for purposes of a liability insurance contract does not derive from the volitional nature of the act, but rather from the unintentional nature of the consequences flowing from the act. We have consistently found a duty to defend under policies containing language similar to the policy at issue, even though the underlying claims alleged intentional conduct, provided the alleged harms could constitute an accidental unintended consequence of the intentional conduct. See Vigna, 686 A.2d at 600-01 (); Gibson, 673 A.2d at 1353 (); Maine Bonding & Cas. Co. v. Douglas Dynamics, 594 A.2d 1079 (Me.1991) (). Here Martin's claimed bodily injury was, at least, potentially unanticipated. Moreover, Martin's claim of negligent infliction of emotional distress also triggers the duty to defend. See Hanover Ins. Co. v. Crocker, 1997 ME 19, p 5, 688 A.2d 928, 930 (...
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