Opinion ID: 1506689
Heading Depth: 1
Heading Rank: 1

Heading: Bodily Injury Coverage

Text: [¶ 6] The insurance policy at issue provides in pertinent part: SECTION I  COVERAGES COVERAGE A. BODILY INJURY . . . LIABILITY 1. Insuring Agreement. 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 . . . . . . . 2. Exclusions. 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 . . . . 3. Bodily injury means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time. . . . . 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 (emotional pain and suffering resulting from failure to pay for contracted services); Gibson, 673 A.2d at 1353 (harm resulting from trespass); Maine Bonding & Cas. Co. v. Douglas Dynamics, 594 A.2d 1079 (Me.1991) (emotional distress resulting from wrongful discharge). 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, ¶ 5, 688 A.2d 928, 930 ([I]njuries resulting from negligent conduct are considered `accidental' and not `expected or intended' and . . . those injuries are therefore caused by an occurrence within the language of an insurance] policy.). [¶ 10] Commercial Union next argues that, as a matter of public policy, all claims of unlawful sexual harassment and sexual discrimination based on disparate treatment, as opposed to disparate impact, should be within the exclusion for expected or intended injury  so called exclusion a  as a matter of law. In other words, it contends that an expectation of harm should be inferred from conduct constituting actionable sexual harassment and sexual discrimination. The Academy counters that the question is not whether there exists an expectation of harm, but rather whether there exists an expectation of bodily injury, and bodily injury is not necessarily expected or intended by the perpetrator of unwanted sexual advances and wrongful discharge. We agree. [¶ 11] Commercial Union's arguments on this issue are similar and related to its contentions regarding the scope of the coverage for bodily injury, and as such, they are similarly unavailing. Although Commercial Union attempts to distinguish our decision in Maine Bonding, as involving wrongful discharge rather than sexual harassment or discrimination, the principle of law outlined in that case is applicable here. In Maine Bonding, we held that an exclusion for expected or intended injury applies only if the insured subjectively intended harm or subjectively foresaw harm was practically certain to occur. Maine Bonding, 594 A.2d at 1081-82. Here it is at least possible that Martin could recover for injury that the insured parties neither subjectively intended nor foresaw and therefore the exclusion would not apply. Moreover, Commercial Union's arguments ignore that Martin could potentially recover for the wrongful discharge alleged in one count of her complaint; thus Maine Bonding is controlling, at least with respect to that count. Commercial Union's arguments also ignore that the policy may provide coverage for one of the insured parties whose negligence contributed to Martin's injuries. Crocker, 1997 ME 19, ¶¶ 6-9, 688 A.2d at 931-32.
[¶ 12] The Academy argues that because the language of the exclusion e mirrors the immunity provisions of the workers' compensation law, it should be construed in a similar fashion. Thus, it excludes only claims already covered by workers' compensation. The Academy contends the court erred by applying the exclusion here because various injuries alleged by Martin either did not arise out of her employment, or did not arise in the course of her employment. Commercial Union contends that nothing in exclusion e limits its application to claims covered by workers' compensation and that the presence of exclusion d regarding such claims supports rejection of the Academy's overly narrow interpretation. Commercial Union further contends that exclusion e applies in this case because all claims in the underlying complaint are based on wrongful acts occurring during the course of Martin's employment with MSAHD and there are no factual allegations unconnected with such employment. Although we agree that the Academy's interpretation of the exclusion is more narrow than warranted by the policy language, we disagree that exclusion e precludes coverage in this case. [¶ 13] Both parties rely on Bond Builders, Inc. v. Commercial Union Ins. Co., 670 A.2d 1388 (Me.1996), to support their interpretations of the exclusion at issue. In Bond Builders the underlying complaint consisted of an action brought by a former employee of the defendant, Bond Builders, Inc., against the company, its president, and another employee. The complaint contained allegations of, among other things, assault and battery, employment discrimination, and infliction of severe emotional distress. Id. at 1389. After concluding Bond Builders' workers' compensation insurer had no duty to defend, we concluded that the comprehensive general liability and umbrella insurers had such a duty despite the fact each policy contained an employee exclusion provision similar to the exclusion at issue here. We stated: [The insurers] fail to recognize that the complaint does not allege that [the plaintiff's] injuries arose out of and in the course of his employment. In fact the contrary is alleged. Id. at 1391. Similarly, in the instant case Martin does not allege in her complaint that all of her injuries arose out of and in the course of her employment, but rather claims merely that all the incidents occurred during the period of time that she was employed by MSAHD. Martin's notice pleading does not necessarily imply that all of the alleged actions leading to her injuries occurred at the work place, nor does it necessarily imply that her injuries arose while working. For example, based on the allegations in her complaint, at trial Martin may prove that inappropriate sexual advances occurred at her home, or at other locations or under circumstances that trigger coverage. Because Martin's complaint reveals at least the potential that the facts proved at trial may come within the policy coverage, the duty to defend exists. Vigna, 686 A.2d at 599. See also Gibson, 673 A.2d at 1352 (Given the possible existence of any legal or factual basis for payment under a policy, an insurer's duty to defend should be decided summarily in favor of the insured.).