An Odyssey Group Holdings Inc. unit is not required to defend a courier service that is sued for not compensating its delivery drivers for employment-related expenses under the terms of its coverage, says a federal appeals court, confirming a lower court.
Under California law, an insurance company must defend its insured if the insured's liability may be covered, said Friday's decision by the 9th U.S. Circuit Court of Appeals in San Francisco. Unity Courier Service, Inc., Ali Sharifi v. Hudson Insurance Co. .
However, this is not the case here, said a three-judge panel of judges, confirming a decision by the U.S. District Court in Pasadena.
District Court Properly Determined the Duty of Hudson, a unit of Stamford Connecticut-based Odyssey Holdings Corp., was not covered by a provision in its "misconduct" policy, which includes an alleged breach of all obligations arising from An Employee handbook or policy statement, said the panel's decision.
This is "because the underlying measure did not allege" breach "of an obligation arising from an employee handbook or policy statement," the decision said.
"Rather, the underlying measure claimed that Unity followed its own repayment policy. In the clear language of insurance, it is insufficient that the claim only stems from an employee's manual policy, the decision says, confirming the lower court's decision that Hudson was not required to defend San Leandro, a California-based company.
Hudson's attorney Peter L. Garchie, a partner with Lewis Brisbois Bisgaard & Smith LLP in San Diego, said: "We believe our case was strongly supported by facts and law, and it was the right result." [1