Unpublished Disposition, 900 F.2d 262 (9th Cir. 1990)

No. 88-6741.

United States Court of Appeals, Ninth Circuit.

Before DAVID R. THOMPSON and TROTT, Circuit Judges, and MALCOLM F. MARSH, District Judge^** .

MEMORANDUM^*** 

This is an action brought by Brooks Industries, Inc. ("Brooks") against its insurer, Gulf Insurance Corp. ("Gulf"), for wrongful failure to defend a wrongful termination case, breach of the covenant of good faith and fair dealing, and violation of the Unfair Practices Act of the California Insurance Code Sec. 790. The district court granted Gulf's motion to dismiss. It concluded that wrongful termination was an intentional act and therefore not covered under the policy. Brooks appeals. We affirm.

STANDARD OF REVIEW

A dismissal for failure to state a claim pursuant to Federal Rules of Civil Procedure 12 is a ruling on a question of law and as such is reviewed de novo. Fort Vancouver Plywood v. United States, 747 F.2d 547, 552 (9th Cir. 1984).

FACTS

In 1984 Gulf issued a catastrophe liability policy of insurance ("the policy") to Brooks. In 1985 James Kindt ("Kindt"), a former salesman for Brooks, filed an action against Brooks in which he set forth a number of claims. One of these claims was for damages for negligent infliction of emotional distress arising from Brooks' alleged wrongful termination of Kindt. Brooks asked Gulf to defend the lawsuit and indemnify it against any liability. Gulf refused. Brooks settled the Kindt action and then filed the present suit against Gulf.

DISCUSSION

The insurance policy between Brooks and Gulf provides coverage for (a) personal injury, (b) property damage, and (c) advertising liability caused by or arising out of an occurrence happening anywhere in the world. The policy defines an occurrence as:

An accident, including continuous or repeated exposure to conditions which result in personal injury, property damage or advertising liability neither expected nor intended from the standpoint of the insured....

Clearly from such language the word accident applies to personal injury. The policy also defines "personal injury" as:

(1) Bodily injury, sickness, disease, disability or shock, including death anytime arising therefrom, and, if arising out of the foregoing, mental anguish and mental injury;

(2) False arrest, false imprisonment, wrongful eviction, wrongful entry, wrongful detention, or malicious prosecution;

(3) Libel, slander, defamation of character, humiliation, or invasion of the rights of privacy, unless arising out of advertising activities;

From the foregoing definition of "personal injury" it is clear that "accident" as used in the policy includes the intentional torts listed in sections (2) and (3). Brooks argues that because of this, the word "accident" must be read to provide coverage for an intentional act (the firing of Kindt) which causes unintended results (Kindt's alleged injury). We disagree. Wrongful termination is not one of the intentional torts listed in sections (2) and (3). The act of terminating Kindt was an intentional act. The fact that Kindt may have suffered unintended injury as a result is of no consequence. If this were not the case, any intentional act, although not among those specifically listed as covered by the policy, would result in coverage, so long as the actor did not intend the consequences of his act. That is not what the policy says, and it is not a reasonable interpretation of the policy. See Foremost Ins. Co. v. Eanes, 134 Cal. App. 3d 556, 184 Cal. Rptr. 635, (1982) (an insured's expectation of coverage must be reasonable).

Because Kindt's wrongful termination action is not covered by the policy's extension of liability to the particular intentional torts listed, if coverage is to be found at all it must be found within the policy's definition of "accident." In St. Paul Mercury Ins. Co. v. Ralee Engineering Co., 804 F.2d 520 (9th Cir. 1986), we construed language in a policy which read "your general liability protection covers you ... against claims for bodily injury ... resulting from an accidental event.... [F]or us to pay a claim, the accidental event must take place while this agreement is in effect and must be something you didn't expect or intend to happen." We concluded in St. Paul Mercury that the policy did not cover a wrongful termination.

In St. Paul Fire & Marine Ins. Co. v. Superior Court, 161 Cal. App. 3d 1199, 208 Cal. Rptr. 5 (1985), the insurance policy provided coverage for claims "resulting from an accidental event." The California Court of Appeal, relying on Webster's Ninth New Collegiate Dictionary (1983), concluded that the termination of the plaintiff's employment was not an unintentional, unexpected chance occurrence and that as a result there was no coverage under the policy. The California Court of Appeal in Royal Globe Ins. Co. v. Whitaker, 181 Cal. App. 3d 532, 537, 226 Cal. Rptr. 435 (1986), also held that the word "accident" did not cover intentional acts. Finally, in Commercial Union Ins. Co. v. Superior Court, 196 Cal. App. 3d 1205, 242 Cal. Rptr. 454 (1987), the court again ruled that an intentional termination of an employee was not an occurrence under the policy which triggered coverage because it is not an "accident."

CONCLUSION

We conclude that the district court did not err in granting Gulf's motion to dismiss. Kindt's wrongful termination claim is not covered by the Gulf policy.

AFFIRMED.