Opinion ID: 2639532
Heading Depth: 4
Heading Rank: 1

Heading: Taft falls within the CGL policy's definition of insured.

Text: WWI contends, correctly, that [i]n order for [WWI] to have a duty to defend or to indemnify Mr. Taft in the underlying case, he must first be an insured with respect to the claim made against him. TSC-Taft responds that Taft was an insured by virtue of his status as an executive officer of Tri-S. The circuit court concluded that Taft was sued in his capacity as an executive officer of Tri-S. Taft is thus an insured within the mea[n]ing of the policy as to the underlying action. For the reasons set forth below, we hold that the circuit court's conclusion was correct. As noted above, Section II.1.c of the CGL policy provides that the executive officers of Tri-S are insureds, but only with respect to their duties as [Tri-S's] officers.  (Emphasis added.) It is undisputed that Taft was an executive officer of Tri-S. Section II.2.a adds that Tri-S employees,  other than [Tri-S] executive officers, [are also insureds,] but only for acts within the scope of their employment by [Tri-S]. . . . However, no `employee' is an insured for . . . `Bodily injury'. . . to a co-`employee'[.] (Emphases added.) It is also undisputed that Rapoza, an employee of Tri-S, suffered a bodily injury, that Taft was an employee of Tri-S and thus a co-employee of Rapoza, and that both were acting within the scope of their employment at the relevant times. Accordingly, Taft is an insured for purposes of the underlying suit if: (1) he was sued with respect to performance of his duties as a Tri-S officer, and (2) the bodily injury exception does not apply to executive officers. The first question is dealt with below in Section III.A.2, while the second is addressed herein. WWI argues that the phrase no employee means that no employee  whether executive officer or otherwise  is insured with respect to the bodily injury of a co-employee. TSC-Taft replies that while the phrase no employee, when taken alone, might suggest that the bodily injury exception applies to all co-employees, it must be read in context with the previous sentence carving out executive officers from other employees generally. Although WWI is able to cite a favorable case directly on point, we nevertheless conclude that TSC-Taft has the more persuasive argument. WWI refers us to Zaiontz v. Trinity Universal Ins. Co., 87 S.W.3d 565 (Tex.App. 2002). There, the court considered policy language identical to that in the Tri-S CGL policy and held that the phrase `no employee' must be interpreted to mean `no employee'  whether or not the employee is an executive officer. Id. at 570 (citation omitted). The Zaiontz court reasoned that executive officers are also employees and that if the second sentence in section II.2.a.(1) had been intended to deny insured status only to employees who were not executive officers, it would have used the phrase `these employees,' not `no employee.' Id. (citation omitted). While the reading adopted by the court in Zaiontz is persuasive when the sentence is examined in isolation, this court is bound to interpret an insurance contract in its entirety. Dairy Rd. Partners, 92 Hawai`i at 411-12, 992 P.2d at 106-07. As such, the second sentence must be considered in connection with the first, as well as in the context of the separation of executive officers (insured under Section II.1) from other employees (insured under Section II.2) in the policy. When read in this way, the definition of employee for purposes of the phrase no employee does not include executive officers. This interpretation, as TSC-Taft notes, is supported by the placement of the clauses  Taft claims insured status under Section II.1.c, which governs insured status for officers and directors, while the bodily injury exception is located in Section II.2.a, a completely different subsection pertaining to non-executive corporate employees. That the insured status of executive employees with respect to their executive duties was intended to be governed only by subsection 1 is indicated by the carve-out of executive officers in the first sentence of Section II.2.a. Accordingly, the bodily injury exception to insured status does not apply to Taft as an executive officer.