South-Western Legal Studies in Business

Commercial Insurer Has Duty to Defend Store Employee Accused of Sexual Molestation
Description High court of SW Legal Virginia held that a commercial general liability insurer has a duty to defend not only the store-employer but also an employee of the store who was accused of sexually molesting a customer.
Topic Insurance
Key Words Commercial General Liability; Intentional Injury; Sexual Assault
C A S E   S U M M A R Y
Facts Tackett worked at a Gadzooks store in Huntington, SW Legal Virginia. He was accused of sexually molesting a 15-year-old girl customer, who sued him and Gadzooks. American Motorists Insurance (AMI), which provided a commercial general liability insurance policy, provided counsel to represent Gadzooks in defense of the lawsuit, which resulted in a settlement, but refused to defend Tackett, who hired his own attorney. Tackett sued AMI for failing to cover his legal expenses. The trial court dismissed his suit, noting that the policy contained an “intentional injury” exclusion. The court held that the action here was intentional, so not covered. Tackett appealed.
Decision

Reversed. Any question concerning an insurer’s duty to defend under an insurance policy must be construed liberally in favor of an insured. Tackett, as an employee of Gadzooks, was covered by the policy that covered “acts within the scope of their employment.” The policy covers bodily injury. “In an insurance liability policy, purely mental or emotional harm that arises from a claim of sexual harassment and lacks physical manifestation does not fall within the definition of ‘bodily injury’.” However, the policy also covers “personal injury,” a broader concept that can include mental injury as claimed by the sexual molestation victim. Hence, AMI had a duty to defend Tackett.

Citation Tackett v. American Motorists Insurance Co., --- S.E.2d --- (2003 WL 1089306, Sup. Ct. of App., W.Va., 2003)

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