Filed: February 24, 1998

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 96-2722

(CA-96-949-A)

Gates, Hudson & Associates, Incorporated,

Plaintiff - Appellant,

versus

The Federal Insurance Company,

Defendant - Appellee.

ORDER

The Court amends its opinion filed October 9, 1997, as

follows:

On the cover sheet, section 1 -- the status is changed from

UNPUBLISHED to "PUBLISHED."

On the cover sheet, section 6 -- the decision line is changed

to read "Affirmed by published opinion. Senior Judge Michael wrote

the opinion, in which Judge Widener and Judge Niemeyer joined ."

On page 2, section 1 -- the reference to use of unpublished

opinions as precedent is deleted.
-2-

On page 2, beginning of opinion -- "PER CURIAM" is changed to

read "M(CHAEL, Senior District Judge."

For the Court - By Direction

/s/ Patricia S. Connor

Clerk
PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

GATES, HUDSON & ASSOCIATES,

INCORPORATED,

Plaintiff-Appellant,

No. 96-2722

v.

THE FEDERAL INSURANCE COMPANY,

Defendant-Appellee.

Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Claude M. Hilton, District Judge.

(CA-96-949-A)

Argued: June 5, 1997

Decided: October 9, 1997

Before WIDENER and NIEMEYER, Circuit Judges, and

MICHAEL, Senior United States District Judge for the

Western District of Virginia, sitting by designation.

_________________________________________________________________

Affirmed by published opinion. Senior Judge Michael wrote

the opinion, in which Judge Widener and Judge Niemeyer

joined.

_________________________________________________________________

COUNSEL

ARGUED: Michael Letaw Shor, SWIDLER & BERLIN, Washington, D.C., for Appellant. Jonathan Adrian Constine, HOGAN &

HARTSON, L.L.P., Washington, D.C., for Appellee. ON BRIEF:

Peter Barnes, SWIDLER & BERLIN, Washington, D.C., for Appellant.

_________________________________________________________________
_________________________________________________________________

OPINION

MICHAEL, Senior District Judge:

I. Jurisdiction

Gates, Hudson & Associates, Inc. (GHA) is a Virginia corporation

with its principal place of business in Virginia. Defendant-Appellee

Federal Insurance Company ("Federal") is an Indiana corporation

with its principal place of business in New Jersey. Because the parties

had diverse citizenship and the amount in controversy exceeded the

statutory requirement, GHA brought this matter in the District Court

of the Eastern District of Virginia, pursuant to 28 U.S.C. § 1331(a)(1).

This court has jurisdiction over the appeal pursuant to 28 U.S.C.

§ 1291.

II. Introduction

This case arises out of a disagreement as to the coverage provided

by an insurance policy issued by Federal to GHA. GHA purchased a

Commercial Excess Umbrella Policy ("Policy") from Federal in May

1994. The Policy insured GHA for "damages when liability is

imposed on the insured [GHA] by law ... because of personal injury

... to which this coverage applies, caused by an offense committed

during the policy period." Joint Appendix (JA) at 58 (emphasis in

original). Further, Federal obligated itself to"assume charge of the

settlement or defense of any claim or suit against[GHA]" when

"damages are sought for bodily injury, personal injury, property damage, or advertising injury covered by this policy and to which no ...

other insurance applies." JA at 59 (emphasis in original). "Personal

injury" was defined to include "humiliation or discrimination." The

policy contained various exclusions; the one at issue in this litigation

("the employment exclusion") stated: "This policy will NOT apply ...

to any liability of [GHA] arising out of injury of an employee in the

course of employment by you ... whether [GHA] may be liable as an

employer or in any other capacity." JA at 62, 64 (emphasis added).

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During the period of coverage under the Policy, a former employee

of GHA, Valorie Brown, filed a charge with the Equal Employment

Opportunity Commission (EEOC) alleging that she had been subject

to sexual harassment by her supervisor at GHA, subject to a pattern

or practice of discrimination, and constructively discharged because

of said harassment and discrimination, all in violation of Title VII, 42

U.S.C. § 2000e et seq. GHA disputed the allegations. It hired counsel

and prepared a response to an Information and Records Request as

ordered by the Fairfax County Human Rights Commission which,

along with EEOC was conducting an investigation. Before the investigation was completed, Ms. Brown requested a "Notice of Right to

Sue," halting further investigations. She then sent a draft complaint to

GHA, seeking a monetary settlement. GHA conferred further with its

counsel and refused such settlement. Ms. Brown did not file suit

before the time for filing expired. GHA sought, beginning on March

17, 1995* and pursuant to the Policy, to induce Federal to defend or

indemnify the claim. Federal refused to defend or indemnify GHA

based on the employment exclusion in the policy. On July 12, 1996,

GHA filed a civil action seeking a declaratory judgment that Federal

had breached its contractual obligations under the Policy to defend

GHA, compensatory damages for the breach, and costs. Federal

moved for summary judgment claiming that it had no duty to defend

GHA as a matter of law. GHA cross-moved for summary judgment

claiming that, as a matter of law, Federal did indeed have a duty.

The district court found that the term "injury" was not ambiguous

in the context of the policy, and that the employment exclusion

relieved Federal of any obligation to defend GHA. The district court,

therefore, granted Federal's motion for summary judgment, denied

GHA's, and dismissed GHA's complaint with prejudice. This appeal

followed. This court reviews de novo the district court's grant of summary judgment and denial of the cross motion for summary judgment.

Benner v. Nationwide Mut. Ins. Co., 93 F.3d 1228, 1239-40 n.13 (4th

Cir. 1996).

_________________________________________________________________

* On March 17, 1995, Charles E. Hudson, Executive Vice President of

GHA, wrote to Robert P. Moltz, President of Weaver Brothers Insurance,

to ask him to alert Federal to the claims of Ms. Brown, pursuant to the

Policy.

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III. Discussion

The central issue in this case, therefore, is whether the term "injury" is ambiguous in the context of the insurance policy. Virginia

courts have made clear the manner in which a court should construe

a contract for insurance. The court must read the terms of the policy

as part of the document as a whole, not "in isolation." Nationwide

Mut. Ins. Co. v. Akers, 340 F.2d 150, 154 (4th Cir. 1965); Suggs v.

Life Ins. Co. of Va., 147 S.E.2d 707, 709 (Va. 1966); Quesenberry v.

Nichols, 159 S.E.2d 636, 638 (Va. 1968). Exclusions in particular are

read narrowly and "are enforceable only when the exclusions `unambiguously bring the particular act or omission within its [sic] scope.'"

Fuisz v. Selective Ins. Co. of America, 61 F.3d 238, 242 (4th Cir.

1995), citing Floyd v. Northern Neck Ins. Co., 427 S.E.2d 193, 196

(Va. 1993). If a term is ambiguous, Fuisz directs that the conflict be

resolved in favor of the insured. Id. at 242. Ambiguity is determined

from "the face of the policy" and exists if the language used "may be

understood in more than one way or when it refers to two or more

things at the same time." Smith v. Allstate Ins. Co., 403 S.E.2d 696,

697 (Va. 1991); see also Nationwide Mut. Ins. Co. v. Wenger, 278

S.E.2d 874, 877 (Va. 1981). A term is unambiguous only if, within

its context, it is not susceptible to more than one meaning.

Common sense suggests that "injury" is a broad term encompassing

many types of injury. A common sense reading of the policy at issue

in this matter suggests that its use of the term "injury" does not depart

from the "ordinary and accepted meaning" of the word. See Scottsdale

Ins. Co. v. Glick, 397 S.E.2d 105, 108 (Va. 1990). Rather, in the context of the policy and in accordance with its ordinary meaning, "injury" in the policy encompasses the subsets of "personal injury,"

"bodily injury," and "advertising injury." Although "injury" is not

defined by the policy, the other terms: "bodily injury," "personal

injury," and "advertising injury;" are carefully defined. Throughout

the policy, "injury" is used to refer to all covered injuries--bodily,

personal, or advertising. When the insurer intends in the policy to

limit the types of injury discussed it does so by adding qualifying

words and clauses. Federal's careful delineations of specific types of

injuries at other points in the policy suggest that the insurer knew how

to limit the term when it desired to do so. In the absence of such qualifiers at this point in the policy, this court interprets "injury" accord-

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ing to its plain meaning. Black's Law Dictionary defines injury as

"Any wrong or damage done to another, either in his person, rights,

reputation, or property." Black's Law Dictionary 785 (6th ed. 1990).

Webster's Third New International Dictionary defines "injury" as "a

violation of another's rights for which the law allows an action."

Webster's Third New Int'l Dictionary 1164 (1976). Even the dictionary cited by appellants defines "injury" as "wrong or damage done

to a person or his property, reputation or rights." Webster's II New

Riverside University Dictionary 629 (1984). As Appellee aptly points

out, if "personal injury" were not a subset of injury, an individual

could suffer personal injury, but no injury. Such an interpretation

does violence to the plain meaning of the word "injury."

Atlantic Life Insurance Co. v. Greenfield supports Appellee's position. In that case, the insurer agreed to provide insurance against

"loss," including "Loss of Life by Accident." The policy excluded

from coverage, however, "disability or loss resulting from ... illegal

acts of any person." 100 S.E.2d 717, 719 (Va. 1957). Despite the

exclusion, the insured's estate sought to recover for the insured's

death by manslaughter. The trial court held that the insured was entitled to coverage because the term "loss" in the exclusion was ambiguous as to whether it included death. The Virginia Supreme Court

disagreed.

It is perfectly plain then that the word "loss" as frequently

used throughout the policy, includes the death of the

insured. Indeed, the very basis of the plaintiff's claim is that

such death was a "loss" which was insured against by the

first line of the policy. If it is plain that "loss" means loss

of life or death under the insuring clause ... it is equally

plain that it means loss of life or death under the exclusion

clause.

Id. at 510 (emphasis added). The reasoning in Atlantic Life Ins. Co.

v. Greenfield applies squarely to the case before the court. To reject

the common sense definition of "injury" as appellant urges the court

to do abandons not only the unambiguous meaning of the policy but

would produce the anomalous result noted supra, that one could suffer "personal injury" but not "injury." The court cannot adopt the rea-

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soning of the appellant, where such reasoning would leave the court

with the anomalous result noted.

IV. Conclusion

For the reasons stated, the district court's grant of summary judgment to Federal Insurance Company is

AFFIRMED.

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