Court Opinion

ID: 73887
Source: CourtListenerOpinion
Date Created: 2010-04-26 08:26:30+00
Date Added: 2024-06-11T11:50:33.781765
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PUBLISH

              IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT         FILED
                         ________________________ U.S. COURT OF APPEALS
                                                          ELEVENTH CIRCUIT
                                                              07/20/99
                                 No. 98-9069
                                                           THOMAS K. KAHN
                          ________________________             CLERK

                       D. C. Docket No. 4:97-CV-124-HLM

SCI LIQUIDATING CORPORATION f.k.a.
SUNRISE CARPET INDUSTRIES, INC.,
                                                                Plaintiff-Appellee,
     versus

HARTFORD FIRE INSURANCE COMPANY
a Connecticut Corporation, HARTFORD
CASUALTY INSURANCE COMPANY, a
Connecticut Corporation,
                                                        Defendants-Appellants.

                          ________________________

                 Appeal from the United States District Court
                    for the Northern District of Georgia
                      _________________________
                              (July 20, 1999)

Before TJOFLAT, DUBINA and HULL, Circuit Judges,

HULL, Circuit Judge:
      Hartford Fire Insurance Company and Hartford Casualty Insurance

Company appeal the district court’s summary judgment order finding insurance

coverage exists for sexual harassment claims made against their insured, SCI

Liquidating Corporation. After review, we reverse.

                                I. BACKGROUND

      On October 3, 1994, three former female employees sued Sunrise Carpet

Industries, Inc. (“Sunrise”) and Larry Hankins, one of Sunrise’s managers, alleging

causes of action for sexual harassment, retaliation, assault, battery, intentional

infliction of emotional distress, and negligent hiring and retention. SCI

Liquidating Corporation (“SCI”) is the successor to Sunrise.

      For the relevant time period, Hartford Fire Insurance Company (“Hartford”)

had issued to Sunrise a commercial general liability insurance policy (the “CGL

policy”) and Hartford Casualty Insurance Company (“Hartford Casualty”) had

issued a separate umbrella liability insurance policy (the “Umbrella policy”).

Hartford and Hartford Casualty initially defended the lawsuit under a reservation

of rights. On February 17, 1995, Hartford and Hartford Casualty denied coverage

and SCI was forced to retain counsel. A jury verdict for four thousand dollars was

                                           2
rendered in the employees’ favor against SCI.1 The trial court also awarded

attorneys’ fees against SCI. After negotiations, on March 5, 1997, SCI paid a total

of $81,109.18 to the employees to satisfy the verdict and award of attorneys’ fees,

costs, and interest. SCI incurred its own attorneys’ fees and expenses of

$111,222.03 in defending the employees’ lawsuit.

      On May 1, 1997, SCI filed this coverage case against Hartford and Hartford

Casualty. SCI seeks to recover the attorneys’ fees for its defense counsel as well as

the money SCI paid to the plaintiff employees in the underlying lawsuit, plus

interest. All parties filed motions for summary judgment. On January 26, 1998,

the district court granted SCI’s motion and denied Hartford’s and Hartford

Casualty’s joint motion, finding that the insurance policies covered the underlying

sexual harassment lawsuit. On August 12, 1998, the district court entered final

judgment in SCI’s favor for $187,972.21 plus prejudgment interest against the

Defendants jointly and severally, for an additional $4,359 plus prejudgment

interest against Hartford, and for $3,384 in costs against both Defendants.

      On August 17, 1998, Hartford and Hartford Casualty filed a joint Notice of

Appeal. On appeal, all parties agree that no material facts are in dispute regarding

the insurance coverage issues here.

      1
             The general verdict did not specify upon which claims liability was based.

                                             3
                             II. STANDARD OF REVIEW

      We review de novo the district court’s rulings on motions for summary

judgment. Maniccia v. Brown, 171 F.3d 1364, 1367 (11th Cir. 1999).

                                 III. DISCUSSION

A.    CGL Policy

      Because this appeal turns on the policy language, we first review in detail

the two policies in issue.

      Coverage A of the CGL policy provides for coverage of “bodily injury”

liability that results from an “occurrence”:

      1.     Insuring Agreement.
             a.    We 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” or “property damage” is caused by
                          an “occurrence” that takes place in the “coverage
                          territory;”.

The CGL policy defines “occurrence” in section V and “bodily injury” in an

endorsement, as follows:

      9.     “Occurrence” means an accident, including continuous or repeated
             exposure to substantially the same general harmful conditions.

      .      .      .

                                          4
      17. MENTAL ANGUISH
      The definition of “bodily injury” in the DEFINITIONS section is replaced
      by the following:

      “Bodily injury” means bodily injury, sickness or disease sustained by a
      person, including mental anguish or death resulting from any of these.

However, the CGL policy excludes coverage for “bodily injury” in several

circumstances, such as:

      SECTION I - COVERAGES

      COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE
      LIABILITY
      .   .      .
      2.  Exclusions.
          This insurance does not apply to:
          a.     “Bodily injury” . . . expected or intended from the standpoint of
                 the insured.
          .      .      .
          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;

In addition to “bodily injury”, the CGL policy, in Coverage B, covers “personal

injury” liability caused by an “offense” arising out of the insured’s business:

                                          5
      1.     Insuring Agreement
             a.    We will pay those sums that the insured becomes legally
                   obligated to pay as damages because of “personal injury” . . . to
                   which this coverage part applies. We will have the right and
                   duty to defend any “suit” seeking those damages.
             .     .      .
             b.    This insurance applies to:
                   (1) “Personal injury” caused by an offense arising out of
                          your business, excluding advertising, publishing,
                          broadcasting, or telecasting done by or for you;

The CGL policy defines “personal injury” to cover one or more of the following

five offenses:

      10.    “Personal injury” means injury, other than “bodily injury,” arising out
             of one or more of the following offenses:
             a.    False arrest, detention, or imprisonment;
             b.    Malicious prosecution;
             c.    The wrongful eviction from, wrongful entry 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.

An endorsement to the CGL policy expands the definition of “personal injury” to

include certain discrimination, but only if that discrimination is unrelated to the

employment:

      1.     PERSONAL INJURY
             a.  The following is added to the “personal injury” definition:

                                           6
                   f.     Discrimination or humiliation that results in injury to the
                          feelings or reputation of a natural person, but only if such
                          discrimination or humiliation is:
                          (1) Not done intentionally by or at the direction of:
                                 (a) The insured; or
                                 (b) Any executive officer, director, stockholder,
                                        partner or member of the insured; and
                          (2) Not directly or indirectly related to the
                                 employment, prospective employment or
                                 termination of employment of any person or
                                 persons by any insured.

B.    Umbrella Policy

      The Umbrella policy also provides coverage for both “bodily injury” and

“personal injury”, and requires both types of injury to be caused by an

“occurrence” in order to be covered:

      A.     Umbrella Liability Insurance
             We will pay those sums that the “insured” must legally pay as
             “damages” in excess of the “underlying insurance,” or of the “self-
             insured retention” when no “underlying insurance” applies, because of
             “bodily injury,” “property damage,” “personal injury” or “advertising
             injury” to which this insurance applies caused by an “occurrence.”

The Umbrella policy’s definitions of “bodily injury” and “personal injury” are

different from those in the CGL policy; plus, the Umbrella policy defines

“occurrence” differently for “bodily injury” versus “personal injury,” as follows:

      C.     “Bodily injury” means bodily injury, sickness, or disease sustained by
             a person which occurs during the “policy period,” including death
             resulting from any of these at any time.
      .      .      .
      H.     “Occurrence” means

                                          7
            1.     With respect to “bodily injury” or “property damage:” an
                   accident, including continuous or repeated exposure to
                   substantially the same general harmful conditions, which results
                   in “bodily injury” or “property damage” neither expected nor
                   intended from the standpoint of the “insured” and includes the
                   use of reasonable force to protect persons or property; and
            2.     With respect to “advertising injury” and “personal injury”
                   respectively: an offense described in one of the numbered
                   subdivisions of those definitions in this policy.

      I.    “Personal injury” means injury, other than “advertising injury” or
            “bodily injury,” arising out of one or more of the following offenses
            committed during the “policy period” in the conduct of your business:
            1.    False arrest, detention or imprisonment;
            2.    Malicious prosecution;
            3.    The wrongful eviction from, wrongful entry into, or invasion
                  ofthe [sic] right of private occupancy of a room, dwelling or
                  premises that a person occupies by or on behalf of his or her
                  owner, landlord or lessor;
            4.    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;
            5.    Oral or written publication of material that violates a person’s
                  right of privacy; or
            6.    Discrimination or humiliation not intentionally committed by or
                  at the direction of the “insured” or any “executive officer,”
                  director, stockholder, partner or member thereof, but only with
                  respect to injury to the feelings or reputation of a natural
                  person.

Lastly, the Umbrella policy excludes coverage for “bodily injury” and “personal

injury” to employees “arising out of and in the course of their employment”:

      B.    Exclusions
            This policy does not apply:
            .     .      .

                                          8
             16.   With respect to coverage afforded any of your employees to
                   “bodily injury” or “personal injury:”
                   a.    To other employees arising out of and in the course of
                         their employment;
                   b.    To you or, if you are a partnership or joint venture, any
                         of your partners or members;
                         or
                   c.    Arising out of the providing or failing to provide
                         professional health care services.

Even if the employees’ claims involve “bodily injury” or “personal injury” caused

by an “occurrence”, the Defendants contend that this exclusion precludes coverage.

C.    Georgia Law

      In this diversity action, Georgia’s substantive law governs the interpretation

of the CGL and Umbrella policies here. Provau v. State Farm Mut. Auto. Ins. Co.,

772 F.2d 817, 819 (11th Cir. 1985). In determining insurance coverage, we look to

the allegations in the complaint in the underlying lawsuit and to the terms of the

insurance policies. Elan Pharm. Research Corp. v. Employers Ins. of Wausau, 144
F.3d 1372, 1375 (11th Cir. 1998); Great Am. Ins. Co. v. McKemie, 244 Ga. 84, 85-

86 (1979); Colonial Oil Indus. v. Underwriters Subscribing to Policy Nos.

T031504670 & T031504671, 268 Ga. 561 (1997).

      Ambiguities in insurance contracts are construed against the insurer.

Claussen v. Aetna Cas. & Sur. Co., 259 Ga. 333, 334-35 (1989). In contrast,

“unambiguous terms of an insurance policy require no construction, and the plain

                                          9
meaning of such terms must be given full effect, regardless of whether they might

be beneficial to the insurer or detrimental to the insured.” Continental Cas. Co. v.

HSI Fin. Servs., Inc., 266 Ga. 260, 262 (1996). “[E]xclusions from coverage

sought to be invoked must be strictly construed.” Tifton Mach. Works, Inc. v.

Colony Ins. Co., 224 Ga. App. 19, 20 (1996).

      We also review several Georgia cases involving similar claims and similar

policy terms. In Presidential Hotel v. Canal Ins. Co., 188 Ga. App. 609 (1988), the

Georgia Court of Appeals held that a corporate defendant was not entitled to

insurance coverage for a sexual harassment claim. In that case, the hotel’s

employees in the underlying sexual harassment lawsuit alleged that their

supervisor, acting individually and as an agent of the hotel, used his position and

authority to sexually harass them. 188 Ga. App. at 609. The employees alleged

that they were damaged both mentally and monetarily. Id. Similar to the CGL and

Umbrella policies here, the insurance policy in Presidential Hotel covered “bodily

injury” which resulted from an “occurrence”. Id. at 610. The policy defined

“bodily injury” as “bodily injury, sickness or disease sustained by any person

which occurs during the policy period, including death at any time resulting

therefrom.” Id. The policy defined “occurrence” as “an accident, including

continuous or repeated exposure to conditions, which results in bodily injury or

                                         10
property damage neither expected nor intended from the standpoint of the insured.”

Id.

      The Georgia Court of Appeals held that the employees did not allege claims

seeking damages for “bodily injury” under the policy because they sought only

monetary and “mental damages”, and not damages for actual physical harm. Id. at

611. In addition, the Georgia Court held that even if the employees asserted claims

for “bodily injury”, the intentional conduct of sexual harassment is not an

“occurrence” because that term is defined as an accident resulting in bodily injury

unintended by the insured:

             Assuming, arguendo, plaintiffs do assert claims for bodily
             injury, we must conclude nevertheless that the policy issued by
             [the defendant insurer] does not afford coverage to the
             [insured]. The policy covers damages for bodily injury
             resulting from an “occurrence.” That term is defined in the
             policy as an “accident . . . which results in bodily injury or
             property damage neither expected nor intended from the
             standpoint of the insured.” Thus, intentional acts are not
             covered under the policy. Georgia Farm Bureau, etc., Ins. Co.
             v. Meriwether, 169 Ga. App. 363, 312 S.E.2d 823 (1983);
             Georgia Farm Bureau, etc., Ins. Co. v. Ray, 148 Ga. App. 85,
             251 S.E.2d 34 (1978).

             It is alleged by plaintiffs that the hotel, by and through its
             agents, sexually harassed and defrauded plaintiffs. Given
             these allegations of intentional conduct, it cannot be said
             that any resulting bodily injury to plaintiffs was
             unintended. Accordingly, the assertions of liability by
             plaintiffs do not fall with the policy’s definition of an

                                          11
             “occurrence.” Georgia Farm Bureau, etc., Ins. Co. v.
             Meriwether, 169 Ga. App. 363, 312 S.E.2d 823.

188 Ga. App. at 611.

      In O’Dell v. St. Paul Fire & Marine Ins. Co., 223 Ga. App. 578 (1996), the

Georgia Court of Appeals found that similar liability policies did not cover a

lawsuit by a company’s employee for sexual harassment, assault, battery,

intentional infliction of emotional distress, and negligent retention of employment.

In O’Dell, the Georgia Court found that these allegations did not constitute “bodily

injury” under the liability policies, and that intentional sexual harassment does not

constitute a triggering “event” defined as an “accident” under the insurance

policies:

             Moreover, even assuming that Gilleland’s complaint alleged
             bodily injury as contemplated by the policies, all policies recite
             that coverage applies if bodily injury arises out of an “event.”
             They define event as “an accident, including continuous or
             repeated exposure to substantially the same general harmful
             conditions.” . . . Although the policies do not define accident,
             “in Georgia an accident is defined as an event which takes place
             without one’s foresight or expectation or design. An accident
             refers to an unexpected happening rather than one occurring
             through intention or design. Acts could not be unexpected
             unless they were accidental.” [Citations and punctuation
             omitted.] Given the allegations that O’Dell committed sexual
             harassment and assault and battery, which are by their nature
             intentional, we cannot conclude that bodily injury, if any, was
             caused by an accident. [Citation omitted.] Consequently, the
             allegations of bodily injury do not fall within the policies’
             definitions of “events” and are not covered.

                                          12
223 Ga. App. at 580. The Georgia Court concluded that the plaintiff’s negligent

retention claims also were not covered, because, among other things, the plaintiff

“did not allege that those injuries were caused by an accident and thus were

brought about by an ‘event.’” Id.

      In the instant case, the district court relied on Crook v. Georgia Farm Bureau

Mut. Ins. Co., 207 Ga. App. 614 (1993), which involved coverage for a wrongful

death claim under a homeowner’s insurance policy. The plaintiffs in the

underlying lawsuit sued the insured, Crook, for the wrongful death of their son,

who intentionally committed acts causing his own death. The homeowner’s

insurance policy obligated the insurer to defend Crook in a lawsuit to recover

damages for personal injury that was “caused by an occurrence.” 207 Ga. App. at

614. The policy defined “occurrence” as “an accident”, but “accident” was not

otherwise defined. Id. The Georgia Court found that “‘[a]ccident’ means an event

which takes place without one’s foresight or expectation or design.” Id. Using this

definition, the Georgia Court reasoned that the lawsuit against the insured Crook

was covered, as the deceased’s actions did not take place within the insured’s

“foresight or expectation or design”:

             In the underlying tort action, there are no allegations that Crook
             intentionally caused the death with “foresight or expectation or
             design.” Indeed, the undisputed evidence of record shows that
             the death occurred entirely without Crook’s intentional

                                         13
             “foresight or expectation or design.” Accordingly, insofar as
             Crook, in his capacity as an insured, is concerned, the death of
             the [plaintiffs’] son was clearly an “accident,” because it was an
             unintentional event which took place without his “foresight or
             expectation or design.”

             That the [plaintiffs’] son may have caused his own death is
             obviously not a ground for the Insurer’s present refusal to
             defend Crook in the underlying tort action.
207 Ga. App. at 614-15. We observe that the parties did not cite the Presidential

Hotel case before the district court, which appears why the district court relied

heavily on Crook. We now apply this Georgia law to this case.

D.    CGL Policy

      Presidential Hotel and O’Dell answer directly the coverage issues under

SCI’s CGL policy. Under Presidential Hotel and O’Dell, allegations of intentional

sexual harassment, assault, battery, and negligent retention do not constitute an

“occurrence”, as defined by SCI’s CGL policy. The policies in both Presidential

Hotel and here define “occurrence” as “an accident”, and do not cover the

intentional conduct of Hankins.

      SCI argues that Presidential Hotel should be read with Crook, and that,

together, these cases indicate that the allegations in an underlying lawsuit should

be observed from the viewpoint of the insured, as opposed to the actor. There is

some difficulty in reconciling the different approaches taken in Crook and

                                          14
Presidential Hotel. However, we find Presidential Hotel squarely discusses sexual

harassment allegations in the context of a liability policy where “occurrence” is

defined as “an accident,” just as in the CGL policy here, and thus, we must follow

it. Moreover, the Presidential Hotel policy includes additional language in its

definition of “occurrence”, specifying that the “accident” must “result[] in bodily

injury or property damage neither expected nor intended from the standpoint of the

insured.” Despite this language, the Georgia court explicitly ruled that there was no

occurrence with regard to the hotel’s insurance policy, where a supervisor had

allegedly sexually harassed other employees. Thus, even if viewed from the

standpoint of the insured, Presidential Hotel holds that there is still no

“occurrence”. Finally, Crook is distinguishable, in that it involves coverage issues

for a wrongful death claim under a homeowner’s policy against the insured

homeowner, as opposed to a liability policy and the actions of an employee of the

insured. Because the allegations of the underlying sexual harassment lawsuit are

not an “occurrence” under the CGL policy, that lawsuit was not covered under the

CGL policy’s coverage for “bodily injury” caused by an “occurrence”.

      Furthermore, the parties do not contend that the allegations of the underlying

lawsuit come within the definition of “personal injury” in the CGL policy. We

note that the endorsement to the CGL policy expands the definition of “personal

                                           15
injury” to include certain discrimination, but denies coverage where the

discrimination is “directly or indirectly related to the employment . . . of any

person or persons by any insured.”

      Accordingly, we hold that the CGL policy nowhere provides SCI coverage

for the underlying lawsuit.

E.    Umbrella Policy

      Coverage for “bodily injury” under the Umbrella policy is also limited to

“occurrences” defined exactly as the liability policy in the Presidential Hotel

decision. Accordingly, under the above reasoning, we hold that the Umbrella

policy’s “bodily injury” provisions do not provide coverage to SCI for the

underlying sexual harassment lawsuit.

      However, the Umbrella policy defines “personal injury” differently than the

CGL policy. Specifically, the Umbrella policy does not as strictly limit the range

of discrimination included in its definition of “personal injury.” The Umbrella

policy includes as “personal injury”:

             Discrimination or humiliation not intentionally committed by or
             at the direction of the “insured” or any “executive officer,”
             director, stockholder, partner or member thereof, but only with
             respect to injury to the feelings or reputation of a natural
             person.

                                          16
The employees’ complaint in the underlying lawsuit alleges discrimination, among

other things, as follows:

                      49. The unwelcome and offensive actions by defendant
               Hankins against plaintiffs and other Sunrise employee [sic],
               which actions, Sunrise knew or should have known of, created a
               sexually-charged, hostile working environment which
               substantially affected plaintiffs’ conditions of employment and
               discriminated against plaintiffs because of their sex in violation
               of Title VII.
                      50. Defendant Hankins made known to plaintiffs that if
               they would succumb to his sexual solicitations and advances
               they would receive preferential treatment at the workplace.
               Hankins’ behavior in making plaintiffs’ submission to his
               advances an express and implied condition of employment
               constitutes quid pro quo sexual harassment against plaintiffs
               because of their sex in violation of Title VII, for which both
               Sunrise and Hankins are liable.

The employees’ allegations of discrimination under Title VII appear to be covered

by the plain language of the sixth offense listed as “personal injury” in the

Umbrella policy.2

       2
               We note that discrimination “intentionally committed by or at the direction of the
‘insured’” would not fit within the definition of “personal injury”. However, the parties do not
argue that Hankins, the alleged harassing supervisor, would be an “insured” under the terms of
the Umbrella policy. Further, the Umbrella policy limits its definition of “insured” to
“employees, other than your ‘executive officers,’ but only for acts within the scope of their
employment by you.” We note that “[t]he general rule is that sexual harassment by a supervisor
is not conduct within the scope of employment.” Burlington Indus. v. Ellerth, 524 U.S. 742, 118
S. Ct. 2257, 2267 (1998); see also, Faragher v. City of Boca Raton, 524 U.S. 775, 118 S. Ct.
2275, 2286-90 (1998); B.C.B. Co. v. Troutman, 200 Ga. App. 671, 672 (1991).
        The parties also do not argue that we need to disaggregate those claims in the underlying
sexual harassment complaint which appear to be covered from those which are not. Therefore,
as the employees’ Title VII discrimination claim appears to be covered by the Umbrella policy,
                                                                                     (continued...)

                                                17
       In addition, the Umbrella policy’s definition of “occurrence” with respect to

“personal injury” is different from the definition of “occurrence” with respect to

“bodily injury”. “Occurrence” with respect to “personal injury” simply refers back

to the six listed offenses within the definition of “personal injury”: “‘Occurrence’

means . . . With respect to . . . ‘personal injury’ . . . an offense described in one of

the numbered subdivisions of [that] definition[] in this policy.” Accordingly, as

plaintiffs’ claim for discrimination and sexual harassment under Title VII is

included within the offenses listed in the definition of “personal injury”, the Title

VII claim also qualifies as an “occurrence” for purposes of “personal injury” under

the Umbrella policy.

       However, the Umbrella policy then excludes from coverage “personal

injury” caused by employees “arising out of and in the course of their

employment.” Thus, the question arises regarding whether, for purposes of a

liability insurance policy, sexual harassment by a coworker is conduct “arising out

of and in the course of their employment.” No Georgia Supreme Court or Georgia

Court of Appeals decision has decided this issue.

       2
        (...continued)
we need not discuss the employees’ assault, battery, intentional infliction of emotional distress,
or negligent hiring and retention claims.

                                                18
      A Georgia workers’ compensation decision has held that injuries from

sexual harassment by another employee occur “in the course of” employment, but

do not arise “out of” that employment, and thus an employee’s sexual harassment

claim is not barred by the Workers’ Compensation Act. Murphy v. ARA Servs.,

Inc., 164 Ga. App. 859, 861-62 (1982); see also O.C.G.A. § 34-9-1(4). In Murphy,

the Georgia Court of Appeals reasoned that “‘[a]n injury arises in the course of

employment, . . . when it occurs within the period of employment, at a place where

the employee may be in the performance of his duties, and while he is fulfilling

those duties or engaged in doing something incidental thereto.’” Id. at 861

(quoting New Amsterdam Cas. Co. v. Sumrell, 30 Ga. App. 682 (1923)). The

Georgia Court found, however, that injuries caused by sexual harassment do not

arise “out of” the employment because the “causative danger of the injury” was not

“reasonably incidental to the character of [the plaintiff’s] employment.” Id. at 862.

In 1992, the Georgia Court of Appeals cited Murphy with approval in Rogers v.

Carmike Cinemas, Inc., 211 Ga. App. 427 (1993), and held without discussion that

the sexual harassment injuries there did not arise “out of” the plaintiff’s

employment. 211 Ga. App. at 429.

      Nonetheless, under Georgia law, the result in the workers’ compensation

context may be different from the liability insurance context generally. See Jones

                                          19
v. Aldrich Co., Inc., 188 Ga. App. 581, 584 (1988) (pointing out that workers’

compensation presents its own problems and rules regarding “scope of

employment”). In fact, one state supreme court has specifically discussed why this

same language in an insurance exclusion necessarily must be read differently than

similar language in a state workers’ compensation act and why it excludes injuries

from sexual harassment claims. McCleod v. Tecorp Int’l Ltd., 865 P.2d 1283,

1286-88 (Or. 1993). In McCleod, the Oregon Supreme Court observed that

general liability policies include a separate exclusion for workers’ compensation

claims and that construing the “arising out of and in the course of employment”

exclusion to have the same meaning as the workers’ compensation exclusion

effectively reads a provision out of the policy. SCI’s Umbrella policy has the same

exclusion for workers’ compensation claims as the policy in McCleod, and thus the

issue arises regarding how the two exclusions should be read together.

      In addition, other jurisdictions have held that sexual harassment by a

coworker at the workplace necessarily “arises out of and in the course of

employment”, and have therefore excluded coverage of sexual harassment claims

based on the same exclusion present here. See, e.g., Aberdeen Ins. Co. v. Bovee,

777 S.W.2d 442, 444 (Tx. Ct. App. 1989); Western Heritage Ins. Co. v. Magic

Years Learning Ctrs. and Child Care, Inc., 45 F.3d 85, 89-90 (5th Cir. 1995)

                                         20
(applying Texas law). Also, even though intentional sexual harassment may not be

within “the scope of employment,” a sexual harassment claim under Title VII may

arguably arise “out of” employment. Indeed, to be viable, a sexual harassment

claim under Title VII requires an employment relationship between the supervisor

harasser and injured employee.

      Thus, regarding the Umbrella policy, we face an issue of unsettled Georgia

law that is determinative of the final issue in this appeal. We, therefore, certify this

question for resolution by the Georgia Supreme Court.

      CERTIFICATION FROM THE UNITED STATES COURT OF
      APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME
      COURT OF GEORGIA PURSUANT TO O.C.G.A. § 15-2-9 (1994).

      TO THE SUPREME COURT OF GEORGIA AND ITS
      HONORABLE JUSTICES:

      Because this appeal depends on resolution of this question of unsettled

Georgia law, we certify the following question to the Supreme Court of Georgia:

      DOES SEXUAL HARASSMENT OR RETALIATION BY A
      SUPERVISOR TRIGGER EXCLUSION SIXTEEN ON PAGE
      THREE OF THE UMBRELLA INSURANCE POLICY IN THIS
      CASE, WHERE THE INSURANCE POLICY EXCLUDES:
      “COVERAGE AFFORDED ANY OF [THE INSURED’S]
      EMPLOYEES TO ‘BODILY INJURY’ OR ‘PERSONAL INJURY’ .
      . . TO OTHER EMPLOYEES ARISING OUT OF AND IN THE
      COURSE OF THEIR EMPLOYMENT”?

                                          21
      The phrasing used in this certified question should not restrict the Supreme

Court’s consideration of the problem posed by this case. This extends to the

Supreme Court’s restatement of the issues and the manner in which the answer is

given. In order to assist the Supreme Court’s consideration of the case, the entire

record, along with the briefs of the parties, shall be transmitted to the Supreme

Court of Georgia.

      REVERSED in part; QUESTION CERTIFIED.

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