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The actions of a vacuum cleaner company’s independent dealer who was charged with multiple instances of abusing women should be considered a single occurrence, with a single deductible, says a federal appeals court in overturning a lower court’s ruling in favor of a Zurich Insurance Group Ltd. unit.
Three women filed a lawsuit against The Scott Fetzer Co. in 2013, charging that John Fields, who worked for a factory distributor of the company’s Kirby vacuums, had sexually assaulted them on numerous occasions between May 2012 and January 2013, according to Tuesday’s ruling by the 6th U.S. Circuit Court of Appeals in Cleveland in The Scott Fetzer Co. v. Zurich American Insurance Co.
The ruling said Cleveland-based Fetzer conducted only a limited background check on Mr. Fields, which showed he had lied about his past criminal record, although a national search would have discovered a “much more substantial” criminal record. It also said Fetzer approved him as a distributor trainee despite the fact it knew he had lied about his criminal record. He later became a factory distributor for the company.
The ruling said Mr. Fields resumed selling the vacuum cleaners even after he served prison time for forcible rape and the company learned he had defrauded elderly customers.
Although Fetzer did not directly employ Mr. Fields, it settled the three women’s litigation. The company then requested reimbursement from Zurich under its two general liability insurance policies.
Zurich agreed to pay $2 million per “occurrence” of bodily injury, with Fetzer responsible for paying the first $1 million for each occurrence.
But the insurer contended that Mr. Fields’ “actions against each individual woman were all separate occurrences, meaning there were three occurrences, and Fetzer was responsible for paying three separate deductibles.”
The U.S. District Court in Cleveland ruled in Zurich’s favor, which was overturned by the unanimous three-judge appeals court panel.
“All Fetzer must do to prevail is show there is ambiguity in the contract and provide a fair interpretation of the ambiguity under which it qualifies for coverage,” said the ruling. Fetzer has “amply demonstrated” this is the case, it said.
Fetzer “cites ample case law showing that some courts have interpreted the word ‘occurrence’ to refer to the insured party’s negligent hiring and supervision even when multiple parties have been harmed,” said the ruling.
“If the relevant ‘occurrence’ is negligent supervision, there is only one occurrence,” said the ruling in reversing the lower court’s ruling and remanding the case with instructions to enter judgment for Fetzer on its motion for summary judgement.
Fetzer’s attorney had no comment, while Zurich’s attorney did not respond to a request for comment.
Last month, an Illinois appeals court overturned a lower court ruling case and held that units of CNA Financial Corp. and Allstate Insurance Co. must view asbestos-related claims against an automobile parts manufacturer as separate, based on location, rather than as one claim for coverage purposes.
Zurich Insurance Group units are not obligated to defend or indemnify a financial services firm charged with violating the Telephone Consumer Protection Act and the Fair Debt Collection Practices Act based on exclusions in the insurers’ commercial general liability and umbrella policies, says a federal court in Thursday’s ruling.