A personal umbrella insurer had no duty to defend its insured against a suit alleging that the insured had sexually harassed and sexually battered the claimant. ( Shanahan v. State Farm General Insurance Company (2011) WL 806385)
Facts
Cheryl Skigin sued her former employer, John Shanahan, alleging various claims, including sexual harassment and sexual battery. Among other things, Skigin alleged that: (a) during a Christmas party at Shanahan’s house, Shanahan grabbed Skigin’s buttocks and commented that they were “firm”; (b) during that same Christmas party, Shanahan stated, “Don’t you want me to f— your brains out?”; (c) on numerous occasions thereafter, Shanahan repeatedly tried to convince Skigin to leave her husband; and (d) on at least one occasion, Shanahan sent flowers to Skigin’s residence along with a card suggesting that Skigin and Shanahan were involved in a romantic relationship.
Shanahan tendered defense of the lawsuit to his personal umbrella insurer, State Farm General Insurance Company. The State Farm umbrella policy provided that State Farm would indemnify Shanahan against damages because of either: (a) an “accident” causing “bodily injury” including “emotional distress or mental injury”; or (b) various “personal injury” offenses including “libel, slander, defamation of character or invasion of rights of privacy.” The policy further provided that State Farm would defend Shanahan against any suit seeking covered damages.
State Farm refused to defend Shanahan against Skigin’s lawsuit. Thereafter, Shanahan spent over $1 million in defending against Skigin’s claims, and he paid $700,000 in settlement of her claims.
Shanahan then sued State Farm for breach of contract and bad faith, alleging that State Farm had wrongfully failed to defend and indemnify him in the underlying action brought by Skigin. The trial court entered summary judgment in favor of State Farm. Shanahan appealed.
Holding
The Court of Appeal affirmed, finding that Skigin’s claims against Shanahan were not potentially covered under the State Farm personal umbrella policy, and that State Farm thus had no duty to defend Shanahan.
The court rejected the argument that Shanahan’s alleged act of grabbing Skigin’s buttocks was potentially covered under the “bodily injury” provisions of the State Farm policy. According to the court, even if Shanahan’s alleged act did cause Skigin to suffer bodily injury (i.e., emotional distress), any such injury was not the result of an “accident.” Absent an “accident,” the bodily injury coverage was not implicated.
Further, Shanahan’s alleged act of stating that Skigin wanted to have sex did not trigger the “slander” provisions of the “personal injury” coverage. Without ever addressing whether Shanahan’s alleged statement could be deemed to be a “false statement of fact,” the court simply noted that there was no allegation or extrinsic evidence suggesting that Shanahan’s alleged statement was ever “published” to a third party. Absent “publication,” there could not be a claim for “slander.”
Last, neither Shanahan’s alleged act of pressuring Skigin to leave her husband nor his alleged act of sending flowers and a romantic card to her home were potentially covered under the “invasion of privacy” provision of the “personal injury” coverage. According to the court, neither entreating an individual to leave his or her spouse, nor sending flowers and a card to the individual’s home, suggests a claim for “invasion of privacy.”
Since Skigin’s claims against Shanahan were not potentially covered under the State Farm personal umbrella policy, State Farm had no duty to defend.
Comment
This case follows a fairly consistent line of California cases in which courts have held that an insurer has no duty to defend an insured against claims of sexual harassment / sexual battery.
One notable aspect of this case is the manner in which the appellate court dealt with the argument that the claimant “potentially” sought damages from the insured because of one or more of the “personal injury” offenses listed in the policy. The court indicated that, unless the claimant alleges, or extrinsic evidence otherwise reveals, facts satisfying all elements of a listed “personal injury” offense, the insurer will have no duty to defend under that portion of the policy.