Odyssey not obligated to defend courier service
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An Odyssey Group Holdings Inc. unit is not obligated to defend a courier service being sued for failing to reimburse its delivery drivers for employment-related expenses under the terms of its coverage, says a federal appeals court, in affirming a lower court ruling.
Under California law, an insurer must defend its insured if the insured’s liability for damages are potentially covered, said Friday’s ruling by the 9th U.S. Circuit Court of Appeals in San Francisco in Unity Courier Service, Inc., Ali Sharifi v. Hudson Insurance Co.
However, that is not the case here, said a three-judge appellate court panel in affirming a ruling by the U.S. District Court in Pasadena.
The 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 policy for “employment practices wrongful act,” which includes an alleged breach of any obligation arising from an employee handbook or policy statement, the panel’s ruling said.
This is “because the underlying action did not allege the ‘breach’ of an obligation arising from an employee handbook or policy statement,” the ruling said.
“Rather, the underlying action alleged that Unity followed its own expense reimbursement policy. Under the plain language of the insurance policy, it is insufficient that the allegation merely arose from an employee handbook policy statement,” the ruling said, in affirming the lower court ruling that Hudson was not obligated to defend the San Leandro, California-based firm.
Hudson attorney Peter L. Garchie, a partner with Lewis Brisbois Bisgaard & Smith LLP in San Diego, said, “We believe our case was strongly supported by the facts and the law, and that was the correct result.”
Unity’s attorney did not respond to a request for comment.
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