A nationwide mutual insurance entity was not required to defend a former restaurant owner in litigation filed by former employees during an employment-related exclusion in his coverage, a federal appellate court said on Wednesday, when it upheld a lower court decision.
Douglas Joseph Guillon, who was a shareholder, director and CEO of Crush Steakhouse and Bar in Ukiah, California, until its closure, purchased a business owner's liability insurance for Crush from the national unit AMCO Insurance Co. 2015, according to the judgment of the 9th U.S. Circuit Court of Appeals in San Francisco in Douglas Joseph Guillon v. AMCO Insurance Co.
After finding out a lawsuit filed against Crush by three former employees, Guillon contacted his insurance broker who is seeking coverage under his insurance. AMCO contested the claim and Guillon retained agents at his own expense. The underlying lawsuit culminated in a lawsuit and a verdict of more than $ 430,000.
A year later, Mr. Guillon filed a lawsuit against AMCO in the U.S. San Francisco District Court, accusing him of violating his policy. The court ruled in favor of the insurer and was upheld by a panel of three judges.
The panel pointed to a provision excluding employment-related practices in the policy which excluded coverage of allegations of "coercion, demotion, evaluation, redeployment, discipline, defamation, harassment, humiliation, discrimination or malicious prosecution."
The AMCO policy does not cover the allegations made in the underlying trial, as each of the plaintiffs in the (underlying) plaintiff's (underlying) plaintiff's allegations of discrimination, harassment and coercion is excluded "by the" clear language "of the exclusion, the verdict said.
"The appellants' battery claims ̵1; the only underlying allegations that Guillon now" potentially "required AMCO to defend him under the insurance – are excluded from the insurance (provision for exemption from employment-related practice) along with the other claims," the decision of the lower court confirmed.
Actors in the case did not respond to a request for comment.