SUPREME COURT OF ARIZONA

En Banc

EMPLOYERS MUTUAL CASUALTY ) Arizona Supreme Court 

COMPANY, an Iowa corporation, ) No. CV-07-0280-PR 

 ) 

 Plaintiff/Counterdefendant/ ) Court of Appeals 

 Appellant, ) Division One 

 ) No. 1 CA-CV 05-0702 

 v. ) 

 ) 

DGG & CAR, INC., d/b/a METROL ) Maricopa County 

SECURITY SERVICES, an Arizona ) Superior Court 

corporation, ) No. CV2003-004967 

 ) 

 Defendant/Counterclaimant/ ) 

 Appellee. ) 

 ) 

 ) O P I N I O N 

_________________________________ ) 

Appeal from the Superior Court in Maricopa County 

The Honorable Paul A. Katz, Judge

REVERSED AND REMANDED

________________________________________________________________

Memorandum Decision of the Court of Appeals, Division One

Filed Dec. 14, 2006

VACATED

________________________________________________________________

RAYMOND, GREER & SASSAMAN, P.C. Phoenix

 By Randy L. Sassaman

 Michael J. Raymond

Attorneys for Employers Mutual Casualty Company

FEOLA & TRAICA, P.C. Phoenix

 By Steven Feola

 Robert J. Traica 

And 

Richard A. Alcorn Phoenix 

Attorneys for DGG & CAR, Inc., d/b/a 

Metrol Security Services 
2

________________________________________________________________

R Y A N, Justice 

¶1 Businesses sometimes buy employee fidelity or 

commercial crime insurance policies to protect them against loss 

from employee theft. In this case we must determine whether a 

standard form insurance policy treats the loss from a series of 

thefts by a single employee as one occurrence. 

I 

A 

¶2 The facts crucial to our decision are not in dispute. 

In 2002, DGG & CAR, Inc., doing business as Metrol Security 

Services (“Metrol”), discovered that John Wallace Brown, an 

accounting employee, had embezzled more than $500,000 during a 

five-year period by forging company checks. 

¶3 Metrol had purchased employee fidelity policies from 

Employers Mutual Casualty Co. (“EMC”) covering two plan years, 

2000-2001 and 2001-2002. Under the policies, EMC agreed that it 

would “pay for loss of, and loss from damage to, Covered 

Property resulting directly from the Covered Cause of Loss.” 

Covered property included money; the “Covered Cause of Loss” was 

“Employee dishonesty.” The policy defined “Employee dishonesty” 

as “dishonest acts committed by an ‘employee’ . . . with the 

manifest intent to” cause loss and obtain a financial benefit. 
3

¶4 The EMC policy promised that EMC would “pay . . . for 

loss that you sustain through acts committed or events occurring 

at any time and discovered by you during the Policy Period.” 

Such coverage was limited, however, to a set amount per 

occurrence of loss. Under the policy, “[t]he most [EMC] will 

pay for loss in any one ‘occurrence’” was $50,000, with a $250 

deductible. In turn, the policy defined “Occurrence” as meaning 

“all loss caused by, or involving, one or more ‘employees,’ 

whether the result of a single act or series of acts.” This 

latter provision became the focus of the dispute between Metrol 

and EMC. 

B 

¶5 Metrol filed a claim with EMC seeking reimbursement 

for the full amount of the company’s loss, arguing that each act 

of theft was a separate occurrence. EMC countered that Brown’s 

series of thefts constituted a single occurrence and thus Metrol 

was entitled only to $50,000. 

¶6 EMC filed a declaratory judgment action seeking a 

ruling that it owed only $50,000. Metrol counterclaimed, 

alleging breach of contract, bad faith, and other claims. 

Cross-motions for summary judgment grappling with the definition 

of occurrence followed. The superior court concluded that the 

policy was ambiguous as to whether each act of theft 

attributable to Brown was itself an occurrence, or whether all 
4

acts of theft were a single occurrence. The court concluded 

Metrol was entitled to recover up to $50,000 for each theft. 

The parties eventually agreed to a stipulated judgment in favor 

of Metrol, conditioned on EMC’s right to appeal the superior 

court’s resolution of the cross-motions for summary judgment. 

¶7 In a memorandum decision, the court of appeals 

reversed. Employers Mut. Cas. Co. v. DGG & CAR, Inc., 1 CA-CV 

05-0702, ¶ 1 (Ariz. App. Dec. 14, 2006) (mem. decision). The 

court reasoned that a series of thefts committed by one employee 

constituted one occurrence. Id. at ¶ 19. Consequently, the 

court concluded that Metrol’s recovery was subject to the policy 

limit of $50,000 for the series of thefts. Id. at ¶ 33. 

¶8 We granted Metrol’s petition for review because this 

case concerns a matter of first impression in Arizona and 

because the definition of “occurrence” in the policy commonly 

appears in employee fidelity or commercial crime insurance 

policies.1

 See ARCAP 23(c)(3). We have jurisdiction under 

Article 6, Section 5 of the Arizona Constitution and Arizona 

Revised Statutes, (“A.R.S.”) section 12-120.24 (2003).

II 

¶9 The interpretation of an insurance contract is a 

question of law we review de novo. Sparks v. Republic Nat’l 

 

1 See Edward Gallagher, Limit of Liability, in Commercial 

Crime Policy 451 (Randall I. Marmor & John J. Tomaine, 2d ed. 

2005). 
5

Life Ins. Co., 132 Ariz. 529, 534, 647 P.2d 1127, 1132 (1982). 

In interpreting an insurance policy, we apply “a rule of common 

sense” thus, “when a question of interpretation arises, we are 

not compelled in every case of apparent ambiguity to blindly 

follow the interpretation least favorable to the insurer.” 

State Farm Mut. Auto. Ins. Co. v. Wilson, 162 Ariz. 251, 257, 

782 P.2d 727, 733 (1989) (stating ambiguity exists when policy 

“presents conflicting reasonable interpretations”). “[N]either 

language nor apparent ambiguity alone is dispositive.” Id. 

Rather, even if a policy is apparently ambiguous, a decision to 

require coverage follows after consideration of “legislative 

goals, social policy, and examination of the transaction as a 

whole.” Id. at 258, 782 P.2d at 734. Moreover, “[t]he 

‘ambiguity’ rule applies only after the court is unable to 

determine how the language of the policy applies to the specific 

facts of the case.” Preferred Risk Mut. Ins. Co. v. Lewallen, 

146 Ariz. 83, 85, 703 P.2d 1232, 1234 (App. 1985). Accordingly, 

the core question is whether the policy language is, in fact, 

ambiguous under the facts of this case. 

A 

¶10 The EMC policy treats “all loss” caused by or 

involving an employee, resulting from a “series of acts,” as a 

single occurrence. John Brown’s embezzlement, although 

including a number of thefts, was a “series of acts,” each one 
6

following the other. The policy plainly considers the loss 

resulting from the embezzlement of a single employee an 

occurrence, with an attendant $50,000 policy limit. The 

majority of courts in interpreting similar policy language in 

corresponding factual situations have so concluded. E.g.,

Glaser v. Hartford Cas. Ins. Co., 364 F. Supp. 2d 529, 535-37 

(D. Md. 2005) (holding, under identical definition, that a 

single occurrence arose when an employee committed a series of 

dishonest acts, despite the employee’s use of different means to 

defraud at different times); Wausau Bus. Ins. Co. v. U.S. Motels 

Mgmt., Inc., 341 F. Supp. 2d 1180, 1183-84 (D. Colo. 2004) 

(rejecting company’s attempt to distinguish single employee’s 

various embezzlements because occurrence is determined by cause 

and the cause of all loss was the employee’s dishonesty); 

Bethany Christian Church v. Preferred Risk Mut. Ins. Co., 942 F. 

Supp. 330, 333-35 (S.D. Tex. 1996) (holding policy language 

identical to that in EMC’s policy made all defalcations a single 

occurrence); Diamond Transp. Sys., Inc. v. Travelers Indem. Co., 

817 F. Supp. 710, 712 (N.D. Ill. 1993) (holding loss over 

several years a single occurrence under same language); Reliance 

Ins. Co. v. Treasure Coast Travel Agency, Inc., 660 So. 2d 1136, 

1137 (Fla. Dist. Ct. App. 1995) (holding, based on definition 

identical to that of the EMC policy, that “although this 

employee’s embezzlements occurred over a four year period, they 
7

constitute a single occurrence”); Jefferson Parish Clerk of the 

Court v. Fid. & Deposit Co., 673 So. 2d 1238, 1245 (La. Ct. App. 

1996) (“This language is inclusive of any scheme to cause loss 

to the insured, and therefore we agree with the trial court that 

only one occurrence of employee dishonesty can be found under 

this definition.”); see also Bus. Interiors v. Aetna Cas. & Sur. 

Co., 751 F.2d 361, 362-63 & n.1 (10th Cir. 1984) (“[T]he cause 

of Business Interiors’ loss was the continued dishonesty of one 

employee . . . . [T]he employee’s fraudulent acts constituted a 

single loss.”). Metrol argues that these cases are 

distinguishable, yet in each case, under policy language 

identical or similar to EMC’s, a court rejected the contention 

that dishonest acts of a single employee against the company can 

be parsed as Metrol contends. 

B

¶11 Metrol nonetheless maintains that the policy is 

ambiguous. For example, it argues that the phrase “all loss” in 

the definition of occurrence is unclear because it uses the word 

“loss” in the singular. To clearly encompass the entire loss 

attributable to Brown, Metrol claims that the policy needed to 

refer to losses. But using the singular “loss” does not mean 

that the phrase “all loss” somehow can be read as “each loss.”

¶12 Metrol makes a second, equally unpersuasive, argument 

to suggest the word loss is ambiguous. It argues that any time 
8

the term “loss” is used in employee fidelity or commercial crime 

policies the term refers to each individual theft in a series of 

thefts. See Lincoln Technical Inst. v. Fed. Ins. Co., 927 F. 

Supp. 376, 378-79 (D. Ariz. 1994) (stating there was a “loss 

sustained” “each time” an employee stole money). Metrol argues 

that to treat “all loss” attributable to one employee as one 

occurrence is inconsistent with the district court’s opinion in 

Lincoln Technical. 

¶13 For three reasons, this argument does not help Metrol. 

First, in their effort to secure coverage for loss that occurred 

before an increase in the applicable policy limits took effect, 

the plaintiffs in Lincoln Technical argued that the term “loss 

sustained” in a commercial crime policy was ambiguous. Id. at 

378. Thus, the critical issue was when the loss was 

“sustained.” Id. at 378-79. The issue here is the construction 

of the defined term “occurrence.” 

¶14 Second, even assuming that a “loss” occurred each time 

Brown embezzled from Metrol, the policy here expressly groups 

“all loss” attributable to an employee’s act or series of acts 

into a single “occurrence.” 

¶15 Third, Metrol’s alternate reading of the definition of 

“occurrence” is unpersuasive. Metrol argues that the policy 

definition of “[o]ccurrence” - “all loss caused by, or 

involving, one or more ‘employees,’ whether the result of a 
9

single act or series of acts,” - should be interpreted only as 

preventing an insured business from claiming that the number of 

occurrences is determined by the number of employees involved in 

a single theft or the number of acts leading up to a single 

theft. But because the policy only covers “loss,” not acts, the 

number of employees or acts involved is irrelevant in 

determining the amount of the “loss.” See Wilson, 162 Ariz. at 

258, 782 P.2d at 734. 

C 

¶16 Metrol next asserts that we should reject the plain 

meaning of the phrase “all loss” in the definition of occurrence 

because it would treat all dishonest acts of employees resulting 

in multiple instances of loss as a single occurrence. Metrol 

argues that because all covered losses necessarily result from 

either an act or a series of acts by employees, a literal 

reading of the policy would limit coverage to a total of $50,000 

even when the thefts were unrelated. Metrol complains that such 

an interpretation would “nullif[y]” coverage. But this case 

does not present us with a situation involving unrelated thefts 

by multiple employees. Because the plain language of the policy 

covers the situation in this case, we need not consider whether 

the policy is ambiguous as applied to other circumstances. See 

Preferred Risk Mut. Co., 146 Ariz. at 85, 703 P.2d at 1234. Nor 

can we conclude that a policy that provides up to $50,000 in 
10

coverage for an employee’s series of thefts is illusory. 

¶17 Citing A.B.S. Clothing Collection, Inc. v. Home 

Insurance Co., 41 Cal. Rptr. 2d 166, 174 (Cal. Ct. App. 1995) 

(finding the same policy language as EMC’s ambiguous), and Karen 

Kane, Inc. v. Reliance Insurance Co., 202 F.3d 1180, 1185 (9th 

Cir. 2000) (relying on A.B.S. Clothing), Metrol counters that 

the policy itself suggests that multiple occurrences may be 

covered in a plan year. The policy states, “[t]he most we will 

pay for loss in any one ‘occurrence’ is the applicable Limit of 

Insurance shown in the Declarations,” suggesting the possibility 

of more than one occurrence. (Emphasis added.) Yet the policy 

language defines “occurrence” to include “all loss” attributable 

to any employee or employees. Because these two provisions 

conflict, Metrol argues, a policyholder cannot determine when 

“any one” occurrence ends and another begins. Although there 

may be more than one “occurrence” per year under the policy, it 

does not follow that losses resulting from a single employee’s 

embezzlement scheme are themselves separate occurrences. See 

Wausau, 341 F. Supp. 2d at 1183-84 (“The cause of [the 

insured’s] loss was the dishonesty of one employee. Although 

the employee appears to have been particularly creative in 

finding ways to bilk [the insured], her intent throughout 

undoubtedly was the same: to steal [the insured’s] money;” 

therefore the employee’s “embezzlement scheme” constituted one 
11

occurrence.) (citations omitted); see also Glaser, 364 F. Supp. 

2d at 529.2

D 

¶18 Metrol also contends that the phrase “series of acts” 

in the definition of occurrence is ambiguous. It argues that 

the phrase could apply to a series of thefts or a series of acts 

leading up to a theft. See Karen Kane, 202 F.3d at 1187 

(suggesting same). The policy, however, defines occurrence in 

terms of “all loss” that results from “a single act” or “series 

of acts.” Accordingly, only acts from which loss results – the 

acts of theft – are considered part of the occurrence. Further, 

even if preparatory acts are part of a “series of acts,” the 

language is nevertheless broad enough to encompass not only a 

series of preparatory acts leading up to a theft, but also each 

series of preparatory acts leading up to each theft. There is 

no ambiguity. 

E 

¶19 Metrol asserts that because certain courts have found 

this policy language ambiguous it must be subject to more than 

 

2

 The court of appeals indicated that “[t]he term ‘series’ 

implies some sort of relationship between the acts, and not 

merely the fact that the same person committed them.” Employers 

Mut., 1 CA-CV 05-0702, slip op. at ¶ 31. Because the acts in 

this case were caused by Brown’s dishonesty, we need not decide 

whether the same policy would treat a series of unrelated acts 

by the same employee as a single occurrence. 
12

one reasonable interpretation. Varying judicial 

interpretations, however, do not automatically render an 

insurance policy ambiguous. Wilson, 162 Ariz. at 257-58, 782 

P.2d at 733-34. Further, the cases Metrol relies upon - A.B.S. 

Clothing, Karen Kane, and Auto Lenders Acceptance Corp. v. 

Gentilini Ford, Inc., 854 A.2d 378, 397 (N.J. 2004) - are not 

persuasive in light of the plain language in EMC’s policy. 

¶20 A.B.S. Clothing, for example, addressed similar policy 

language in a distinct scenario. There, the issue was whether 

an insured business was entitled to a policy-limit recovery each 

year for an employee’s embezzlements when the insured business 

maintained a policy with the insurance company for a number of 

years. 41 Cal. Rptr. 2d at 167-68. This issue is distinct from 

whether an insured business is entitled to multiple recoveries 

in a single plan year for the acts of one employee discovered 

that year. 

¶21 Karen Kane, which cited and relied upon A.B.S. 

Clothing, is similarly distinguishable. Karen Kane, 202 F.3d at 

1185-88. Karen Kane said nothing about whether the policy 

contemplated multiple recoveries for multiple acts discovered in 

a single plan year. See id. at 1187. To the contrary, the 

court stated that “[i]f ‘occurrence’ is construed as limited by 

policy period, then [the employee’s] approximately 150 

individual acts of theft, spanning over three years, constitute 
13

three separate ‘series of acts,’ one for each of the three 

policy periods and recoverable within each period as such.” Id. 

(emphasis added). Moreover, to the extent the Ninth Circuit 

panel relied on A.B.S. Clothing, it did so because, as a federal 

court sitting in diversity, it was bound to follow what it 

perceived to be California law. Id. at 1183. 

¶22 In addition, Metrol argued before this Court that it 

is entitled to recover for close to 300 “acts,” but it has not 

argued that it is entitled to recover for two “series of acts” 

in two plan years. 

¶23 Finally, the New Jersey Supreme Court held that, under 

at least some circumstances, language like that employed by EMC 

may be subject to a different construction. In Gentilini Ford, 

the court found multiple occurrences, allowing for multiple 

recoveries, when an employee used fraudulent credit applications 

to sell individual cars to individual car buyers. 854 A.2d at 

397. The court explained that with each sale the employee 

“caused a separate, direct loss of property to [the dealer] by 

inducing it to part with an automobile in exchange for a faulty 

installment sales contract.” Id. “In these circumstances,” the 

court continued, “in which each purchaser and the terms of each 

sale are unique, the similarity of the acts do not transform 

them into one continuous event subject to a single recovery 

under the policy.” Id. at 398. The court expressly noted, 
14

however, that the case before it did not involve an embezzlement 

scheme. Id. Moreover, to reach its conclusion, the court 

specifically declined to “adhere to the text’s literal 

limitation because to do so here would nearly vitiate the 

coverage that both parties clearly contemplated.” Id. at 397. 

Metrol has never suggested that it reasonably expected coverage 

broader than the literal language of the policy.3

III 

¶24 When “the provisions of the contract are plain and 

unambiguous upon their face, they must be applied as written, 

and the court will not pervert or do violence to the language 

used, or expand it beyond its plain and ordinary meaning or add 

something to the contract which the parties have not put there.” 

D.M.A.F.B. Fed. Credit Union v. Employers Mut. Liab. Ins. Co., 

96 Ariz. 399, 403, 396 P.2d 20, 23 (1964); see also Pawelczyk v. 

Allied Life Ins. Co., 120 Ariz. 48, 52, 583 P.2d 1368, 1372 

(App. 1978) (“Courts must give effect to agreements as they are 

written, however, and ambiguities will not be found or created 

where they do not exist in order to avoid a harsh result.”). 

¶25 In any event, Metrol has not suggested any public 

 

3

 Metrol never argued to this Court that cases addressing the 

reasonable expectations of consumers subject to standard form 

contracts apply here. See, e.g., Darner Motor Sales, Inc. v. 

Universal Underwriters Ins. Co., 140 Ariz. 383, 389-90, 682 P.2d 

388, 394-95 (1984) (recognizing the doctrine of reasonable 

expectations in contract law).
15

policy that supports its construction of the contract. Under 

Metrol’s interpretation, a dishonest employee would dictate the 

terms of the employer’s recovery by the amount he chose to steal 

each time during the policy period. In fact, Metrol’s 

interpretation actually hurts insureds who suffer small – often 

less detectable – losses during the policy period because a 

number of small thefts – each less than the policy deductible – 

would be treated separately, preventing an insured from 

recovering at all in such cases. See Am. Commerce Ins. Brokers 

v. Minn. Mut. Fire and Cas. Co., 551 N.W.2d 224, 229-30 (Minn. 

1996) (concluding that an insured’s similar interpretation of a 

comparable policy was “problematic as a matter of public 

policy”); cf. EOTT Energy Corp. v. Storebrand Int’l Ins. Co., 52 

Cal. Rptr. 2d 894, 900-01 (Cal. Ct. App. 1996) (holding that 

“[a]s used in the policy, the term ‘occurrence’ reasonably 

contemplates that multiple claims could, in at least some 

circumstances, be treated as a single occurrence or loss. It 

appears reasonable to us that the term ‘occurrence’ . . . is 

effectively referring to a loss” and thus not subject to a 

separate deductible, which, because each theft was less than the 

deductible would in effect result in no recovery).4

 Accordingly, 

 

4

 The parties and the appeals court spent time analyzing 

Arizona Property and Casualty Insurance Guaranty Fund v. Helme, 

153 Ariz. 129, 735 P.2d 451 (1987). But Helme involved a policy 

defining an occurrence as “any incident, act or omission, or 
16

Metrol’s interpretation of the policy would visit harsh results 

on other subscribers to similar policies. 

IV 

¶26 For the foregoing reasons, we vacate the court of the 

appeals’ decision, reverse the judgment of the superior court 

and remand for proceedings consistent with this opinion. 

 _______________________________________ 

 Michael D. Ryan, Justice 

CONCURRING:

_______________________________________ 

Ruth V. McGregor, Chief Justice 

_______________________________________ 

Rebecca White Berch, Vice Chief Justice 

_______________________________________ 

Andrew D. Hurwitz, Justice 

_______________________________________ 

W. Scott Bales, Justice 

 

series of related incidents, acts or omissions resulting in 

injury,” id. at 134, 735 P.2d at 456, and simply concluded that 

two separate instances of malpractice by physicians that led to 

a patient’s death were separate occurrences because they were 

unrelated. This case involves different policy language and a 

very different issue.