Opinion ID: 1973264
Heading Depth: 1
Heading Rank: 2

Heading: The Claim Against Employers.

Text: The claim of Talen and the Vinton bank against Employers is predicated on a general-liability policy issued by Employers insuring the Vinton bank as named insured and executive officers of the bank, such as Talen, to the extent that the claim arises from their performance of duties as a bank officer or director. The Employers policy obligates it to pay those sums the insureds become legally obligated to pay because of personal injury. Personal injury is defined so as to include: [I]njury, other than bodily injury, arising out of . . .: . . . . d. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; or e. Oral or written publication of material that violates a person's right of privacy. The contract states that the insurance does not apply to: Personal injury arising out of the willful violation of a penal statute or ordinance committed by or with the consent of the insured; or for which the insured has assumed liability in a contract or agreement. This exclusion does not apply to liability for damages that the insured would have in the absence of the contract or agreement. An endorsement to the Employers policy provides: This insurance does not apply to: Personal injury to: (1) A person arising out of any: (a) Refusal to employ that person; (b) Termination of that person's employment; or (c) Employment-related practices, policies, acts or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation or discrimination directed at that person. . . . This exclusion applies: Whether the insured may be liable as an employer or in any other capacity. A. The initial breach-of-contract claim. When Employers was presented with Pearson's initial action, it denied coverage on the ground that the claim was for liability assumed in a contract or agreement. Employers continues to urge that the allegations of that petition in no way presented any claim other than a breach-of-contract action. We agree with this contention. The gravamen of the claim in Pearson's original petition was an alleged breach of an express written agreement. The alleged injury sustained was described as follows: As a result of the breaches of contract by Defendants, Plaintiff has lost and has been deprived of opportunities for employment and has suffered monetary damages and loss. The petition prayed for judgment as a result of that loss and for no other reason. Because the liability insurance afforded under Employers' policy did not extend to obligations assumed in a contract or agreement, it had no obligation to defend Talen or the Vinton bank against the original petition filed by Pearson. Talen and the Vinton bank, relying on Employers Mutual Casualty Co. v. Cedar Rapids Television Co., 552 N.W.2d 639 (Iowa 1996), urge that under Iowa law a liability insurer's duty to defend depends on the facts alleged and not the legal theory espoused. This is not entirely correct. Insurance coverage is a contractual matter and is ultimately based on policy provisions. State Farm Auto. Ins. Co. v. Malcolm, 259 N.W.2d 833, 835 (Iowa 1977). Insurers may and frequently do extend liability coverage to only specific torts. We described this practice in Kibbee v. State Farm Fire & Casualty Co., 525 N.W.2d 866 (Iowa 1994), in which we observed: The policy defines the term personal injury in two ways. It lists specific types of damages that are personal injury such as bodily harm and mental anguish. It also lists specific tortssuch as false arrest, slander and assault and batterythat qualify as personal injury. Kibbee, 525 N.W.2d at 868 (footnote omitted). Employers' policy, at issue here, limits personal-injury coverage to: a. False arrest, detention or imprisonment; b. Malicious prosecution; c. The wrongful eviction from, wrongful entrance into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor; d. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products, or services; or e. Oral or written publication of material that violates a person's right of privacy. The issue in the Cedar Rapids Television case was whether the facts alleging a tortious interference with a contract could implicate liability insurance coverage afforded against a malicious-prosecution claim. A divided court concluded that they could, based, in part, on the following analysis by a leading commentator: The bulk of the cases involving interference . . . also involved the commission of some independent tort. . . . Thus in many cases interference with contract is not so much a theory of liability in itself as it is an element of damages resulting from the commission of some other tort. . . . W. Page Keeton, Prosser & Keeton on the Law of Torts ch. 24, § 129, at 992 (5th ed.1984). We choose not to extend the holding of Cedar Rapids Television beyond the facts of that case. It is clear in the present case that nothing alleged in Pearson's initial petition implicated any tort claim. It was based entirely on an alleged breach of contract, a type of claim that Employers' policy specifically excluded.