E-Z Loader Boat Trailers, Inc. v. Travelers Indem. Co.

• Decision Date: 09 October 1986
• Docket Number: E-Z,No. 51865-3,51865-3
• Citation: 726 P.2d 439,106 Wn.2d 901
• Parties: , 45 Empl. Prac. Dec. P 37,772 LOADER BOAT TRAILERS, INC., Appellant, v. The TRAVELERS INDEMNITY CO. and Highlands Insurance Co., Respondents.
• Court: Washington Supreme Court

Page 901

106 Wn.2d 901

726 P.2d 439, 45 Empl. Prac. Dec. P 37,772

E-Z LOADER BOAT TRAILERS, INC., Appellant, v. The TRAVELERS INDEMNITY CO. and Highlands Insurance Co., Respondents.

No. 51865-3.

Supreme Court of Washington,

En Banc.

Oct. 9, 1986.

Robert Anderson, Van Camp, Bennion & Kelleher, Dustin Deissner, Spokane, for appellant

L. William Houger Law Offices, Suzanne Manning, Bruce Spanner, Spokane, for respondent Travelers Indem. Co.

Karr, Tuttle, Koch, Campbell, Mawer & Morrow, James Dickens, Seattle, for respondent Highlands Ins Bryan Harnetiaux, Winston & Cashatt, Robert Whaley, Richter, Wimberley, Ericson & Woods, P.S., Daniel Huntington, David Grant, Spokane, amici curiae for appellant Washington Trial Lawyers Ass'n.

Co.

Burgess, Kennedy, Fitzer & Strombom, P.S., Timothy R. Gosselin, Tacoma, amicus curiae for respondent Washington Ass'n of Defense Counsel.

CALLOW, Justice.

E-Z Loader Boat Trailers, Inc., a trucking company, sued two of its liability insurers for their failure to defend it against a discrimination suit by an employee. The trial court ruled that the insurance contracts did not cover liability for sex discrimination actions. E-Z Loader appealed. We affirm.

Mr. and Mrs. Williamson and Mr. Stillman, plaintiffs in the discrimination action, were long-time employees of E-Z Loader as long-haul truck drivers. In mid-1980, Mr. Williamson requested a temporary lay-off. E-Z Loader granted it, but also temporarily laid off Mrs. Williamson, despite her seniority and against her will. E-Z Loader stated that it laid off Mrs. Williamson because no other driver would team travel with her. Mr. Stillman protested this conduct, and was also laid off.

In July 1980, both parties sued E-Z Loader. Williamson claimed sex discrimination and Stillman claimed age discrimination and retaliatory practices. Their pleadings relied in part on the United States Civil Rights Act of 1964, 42 U.S.C. § 2000a et seq. (1982), and its state counterpart, Washington's "law against discrimination", RCW 49.60.

The claims were consolidated for trial. The jury was instructed that the plaintiffs had to prove intentional discrimination in order to prevail. The trial court rejected a proposed instruction which stated that neither intent to injure or intent to violate the law were involved in the underlying action. The trial court also rejected a proposed instruction which stated that it was not necessary for the plaintiffs to prove that the defendant specifically intended to discriminate against women. The jury awarded the At the time of the lawsuits, E-Z Loader carried two business insurance policies. For primary insurance coverage, E-Z Loader had purchased Travelers' standard comprehensive general liability coverage, as well as additional protection in the form of Travelers' "Broad Form Comprehensive General Liability Endorsement." E-Z Loader purchased secondary insurance coverage from Highlands Insurance Company.

                plaintiffs $148,974.99 for lost wages, mental anguish, suffering, and humiliation.   This award included $43,074.99 for attorney's fees and costs
                

Both policies protected E-Z Loader from liability stemming from an "occurrence" that causes "bodily injury" or "personal injury". Travelers defined an "occurrence" as

an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected or intended from the standpoint of the Insured; ...

Highlands Insurance defined "occurrence" as

an accident or a happening or event or a continuous or repeated exposure to conditions which unexpectedly and unintentionally results in personal injury, property damage or advertising liability during the policy period.

The Travelers policy insured E-Z Loader against "bodily injury" caused by an occurrence. Travelers defined "bodily injury" as

bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom; ...

Highlands Insurance defined "personal injury" as:

(1) bodily injury, sickness, disease, disability or shock, including death arising therefrom, or, if arising out of the foregoing, mental anguish and mental injury; (2) false arrest, false imprisonment, wrongful eviction, wrongful detention, or malicious prosecution; or (3) libel, slander, defamation of character, humiliation or invasion of the rights of privacy, unless arising out of advertising activities; and (4) racial or religious discrimination not committed by or at the direction of the Insured or any A year after Williamson and Stillman instituted their actions against E-Z Loader, the insured had its agent obtain an addendum to the Highlands policy to include sex discrimination. The Highlands umbrella policy covers E-Z Loader for losses that the Travelers does not cover, and for losses that exceed the $500,000 limits of Travelers' policy.

executive officer, director or stockholder thereof, but only with respect to the liability other than fines and penalties imposed by law.

E-Z Loader tendered the defense of the Williamson/Stillman action to Travelers. Travelers declined to defend or cover the insured. Highlands also declined coverage.

After the trial, E-Z Loader sued Travelers and Highlands for the costs of defense, for coverage and for damages for bad faith. The insurers moved for a summary judgment of dismissal which was granted. The trial court found that the discrimination having been intentional, the claim was not included within the policies' definitions of "occurrence".

The issue presented is whether either company had a duty to defend E-Z Loader against the claim or cover the loss under either of the policies when neither policy mentioned sex or age discrimination as a covered risk.

INTERPRETATION OF POLICIES

The Travelers comprehensive general liability policy covered the insured employer for all sums the insured became obligated to pay because of bodily injury to an employee which arose out of or occurred in the course of employment. The Travelers policy definition of "occurrence" specified that an occurrence could include an injury which was caused by an accident, but could not encompass an injury intentionally caused. The complaints filed by the Williamsons and Robert Stillman against E-Z Loader alleged direct and intentional violations of Chapter 49.60 of the Revised Code of Washington. The Williamsons alleged that Mrs. Williamson was "refused the opportunity to continue working because other males would not drive with her" and, that Mrs. Williamson was terminated against her The coverage provided by the policies and limited to occurrences does not include coverage for intentional wrongful acts. The resulting discrimination which took place here, as found by the jury, need not have been directly intended by the insured, E-Z Loader, if the results could have been expected from the acts. Palouse Seed Co. v. Aetna Ins. Co., 40 Wash.App. 119, 697 P.2d 593 (1985); Medina v. Transamerica Ins. Co., 37 Wash.App. 360, 680 P.2d 69 (1984); Harrison Plumbing & Heating, Inc. v. New Hamp. Ins. Group, 37 Wash.App. 621, 681 P.2d 875 (1984). The judgments awarded to the plaintiffs Williamson and Stillman had to have been based upon the unfair practices of E-Z Loader in discharging these plaintiffs. Termination of an employee is not unintentional and does not result from a chance occurrence. St. Paul Fire & Marine Ins. Co. v. Superior Court, 161 Cal.App.3d 1199, 208 Cal.Rptr. 5 (1984). The plaintiffs were discharged; an intentional, not an accidental, act of E-Z Loader.

                will.   See RCW 49.60.180.   Mr. Stillman alleged that he was discharged because of an opinion of E-Z Loader that he was too old to work and that he was discriminated against because he opposed E-Z Loader's violation of the laws against discrimination.   See RCW 49.60.180 and RCW 49.60.210.   It was on the basis of these claimed intentional torts that the jury returned the verdict on behalf of the plaintiffs
                

The claim against E-Z Loader would have been covered by Travelers policy only if plaintiffs had (a) sustained bodily injury, (b) an accident caused such bodily injury, and (c) the accident (including continuous or repeated exposure to conditions) resulted in bodily injury neither expected nor intended by the insured. The insured was required to prove the existence of each of these three elements to recover under the policy. Waite v. Aetna Cas. & Sur. Co., 77 Wash.2d 850, 467 P.2d 847 (1970).

Likewise the concept of retaliation as prohibited by RCW 49.60.210 can only come about by the performance of an intentional act. Retaliatory conduct involves both We find no ambiguity in the policies. Neither provided coverage for intentional acts of discrimination. As stated in Morgan v. Prudential Ins. Co. of America, 86 Wash.2d 432, 434-35, 545 P.2d 1193 (1976):

                motive and intent.   Kinney v. Bauch, 23 Wash.App. 88, 596 P.2d 1074 (1979)
                

In construing the language of an insurance contract, the entire contract is to be construed together for the purpose of giving force and effect to each clause. A contract of insurance should be given a fair, reasonable, and sensible construction, consonant with the apparent object and intent of the parties, a construction such as would be given the contract by the average man purchasing insurance. Ames v. Baker, 68 Wn.2d 713, 415 P.2d 74 (1966). The contract should be given a practical and reasonable rather than a literal interpretation; it should not be given a strained or forced construction which would lead to an extension or restriction of the policy beyond what is fairly within its terms, or which would lead to an absurd conclusion, or render the policy nonsensical or ineffective. Philadelphia Fire & Marine Ins. Co. v. Grandview, 42 Wn.2d 357, 255 P.2d 540 (1953); 44 C.J.S. Insurance § 296 (1945).

The pertinent rules are simple enough. If the policy language is clear and unambiguous, the court may not...