Intentional Infliction of Emotional Distress Claim Asserted Against Insured And Settled Before Trial Was Not Covered by CGL Policy

Blue Cross of Id. Health Serv., Inc. v. Atl. Mut. Ins. Co., Case No. 1:09-CV-246-CWD      
United States District Court, District of Idaho
Title of Opinion:
Memorandum Decision and Order re: (1) Defendants’ Motion for Partial Summary Judgment, etc.
Date Issued:   
January 19, 2011
Candy W. Dale, United States Chief Magistrate Judge
Whether an intentional infliction of emotional distress claim, which was settled by the insured before any factual findings were made about the insured’s mental state, was covered by CGL policy.
Summary of Ruling
The insured settled a claim for intentional infliction of emotional distress before trial and sought indemnification from its insurer pursuant to a commercial general liability (“CGL”) policy.  The insurer argued that the claim was outside the scope of the policy because the claim alleged intentional, rather than accidental, conduct.

Under the CGL policy, the insured was entitled to indemnity only if its conduct was accidental rather than intentional.  The CGL policy applied to “bodily injury” only if caused by an “occurrence,” which the policy defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”  Under Idaho Supreme Court precedent cited by the court, an “accident” is “an unexpected event which is the result of unintentional conduct or an intentional act which results in unexpected consequences.”  State Farm Fire & Cas. Co. v. Doe, 946 P.3d 1333, 1336 (Idaho 1997). 

The underlying case against the insured settled before trial, and therefore there were no factual findings about whether the insured’s conduct was accidental or intentional.  The insured argued that a finding of the insured’s intent was required before the insurer could establish that the conduct was not accidental, and thus not an “occurrence” under the CGL policy.

The court held that, where a case settles before any factual findings are made, the allegations in the complaint govern whether the insurer must indemnify the insured.  Under Idaho law, a claim for intentional infliction for emotional distress requires proof of intentional or reckless conduct.  Therefore, the court held that the CGL policy did not provide indemnity coverage for the intentional infliction of emotional distress claim alleged in the complaint.
Link to Opinion:
January 19, 2011 Opinion
Link to Court
Summary Author:
Wendy Gerwick Couture

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