Admiral Ins. Co. v. G4S Youth Service (United States District Court, Eastern District of Virginia, June 9, 2009)
The insurer brought a declaratory judgment action seeking a determination of its obligation to defend and indemnify the policyholder in an underlying matter arising from the shooting death of one of its employees that occurred on the work premises, but prior to the employee beginning her work shift. Specifically, the issue was whether the employee’s death on the policyholder’s premises “arises out of” and was “in the course of” her employment with the policyholder, thereby excluding the incident from coverage under the policy’s Employer’s Liability Exclusion. The insurer asserted that the exclusion barred coverage for the claims because, due to the manner in which the complaint was drafted, the underlying case can only succeed if plaintiff’s injury “arose out of” her employment, a fact that would exclude coverage under the exclusion.
Conversely, the policyholder argued that the exclusion’s language casts the killing outside of the exclusion and that the premises liability allegations in the underlying complaint were not based on the employer-employee relationship, and therefore fell within the policy coverage. After employing the “eight corners rule” (i.e., analyzing the complaint and the policy), the district court noted that the Employer’s Liability provision did not exclude coverage as the bodily injury suffered by plaintiff occurred as a result of a personal dispute and not as a result of plaintiff’s employment. The court further noted that while the exclusion did not apply, the insurer’s duty to defend only arises if the claims in the underlying case are covered by the policy. Under this aspect of the analysis the court held that the policyholder sufficiently plead a premises liability claim, and that it did not arise out of the plaintiff’s employment. Thus, since at least one claim in the underlying case was based on a duty not arising out of the employment relationship, the insurer owed a duty to defend the matter.
For a copy of the decision, click here
by Paul Steck