The California Court of Appeal, Fourth Appellate District, affirmed a grant of summary judgment to an insurer who refused to defend its insured against claims of sexual battery, slander, and invasion of privacy. Because the plaintiff did not allege "physical injury" there was no potential for coverage under the renter's policy. There was no duty to defend under the umbrella policy because the plaintiff complained only of intentional acts, no evidence that the allegedly slanderous statements were published, and no authority to support an invasion of privacy claim.
Cheryl Skigin ("Skigin") sued her employer, John Shanahan ("Shanahan") and companies owned by him for, inter alia, sexual harassment, sexual battery, and wrongful termination. Skigin alleged that in 2003, at a Christmas party at Shanahan's house, Shanahan grabbed Skigin's buttocks, made comments about her body, and lewdly suggested she have sexual intercourse with him. At her deposition, Skigin testified that although another person was seated next to her when Shanahan made these suggestions, that person did not hear Shanahan. Skigin also alleged that in 2005 Shanahan again "groped" her as she was leaving a dinner meeting. Skigin also alleged Shanahan repeatedly pressured Skigin to leave her husband and once sent to the Skigin house flowers and a card that suggested their relationship was more personal than professional. Shanahan denied Skigin's allegations.
Shanahan tendered his defense to State Farm under both his renter's policy and his umbrella policy. The renter's policy insured Shanahan against personal liability "[i]f a claim is made or a suit is brought because of bodily injury?to which this coverage applies, caused by an "occurrence? ." Excluded from the definition of "bodily" injury were "emotional distress, mental anguish, humiliation, mental distress, mental injury, or any similar injury unless it arises out of actual physical injury to some person."
The umbrella policy insured Shanahan against any "loss," defined as "an accident which results in bodily injury or property damage during the policy period. ?; or ?the commission of an offense, or series of similar or related offenses, which result in personal injury during the policy period." "Bodily injury" specifically included "emotional distress or mental injury to a person" and did not condition coverage upon an actual physical injury. "Personal injury" specifically included injuries caused by "libel, slander, defamation of character or invasion of rights of privacy." The policy excluded from coverage loss caused by "illegal discrimination" as well as from any "willful and malicious act" of Shanahan.
State Farm refused to defend, and Shanahan sued State Farm for breach of contract and bad faith. On its motion for summary judgment, State Farm argued it had no duty to defend Shanahan because Shanahan's policies excluded coverage for business pursuits and because sexual battery is an intentional tort. The trial court granted State Farm's motion.
On appeal, the Court determined there could be no coverage under the renter's policy because Skigin did not allege any "actual physical injury" as required by that policy.
With regard to the umbrella policy, Shanahan first argued that although sexual battery is an intentional act, and therefore not covered, Skigin could have amended the complaint or a jury could have found he negligently touched her. The appellate court rejected this argument. Because Skigin testified she was not offended by any of Shanahan's negligent touchings there was no potential for liability on a negligence theory.
The Court also rejected Shanahan's argument that Skigin's complaint supported possible claims for slander and invasion of privacy, claims covered by the umbrella policy. The Court found that there was no evidence that slanderous statements were published to any third person. Moreover, no one was present when Shanahan allegedly commented on Skigin's body and made lewd suggestions. Because Shanahan cited no authority for the proposition that entreating a person to leave his or her spouse or sending flowers to their home gives rise to a cause of action for invading that individual's right of privacy, the Court rejected that argument as well.
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