A federal court in Alabama granted summary judgment to an insurer finding no duty to defend or indemnify under either a CGL or an umbrella policy where the policies excluded coverage for intentional, discriminatory acts. Auto-Owners Ins. Co. v. McMillan Trucking Inc., 2017 WL 992181 (N.D. Ala. Mar. 15, 2017).

The insured, a trucking company, operated at a wood chip mill and was charged with assigning wood chip loads to truckers. The insured was sued by two contract truckers who alleged that the insured’s employee assigning loads “devised a plan to require African American truckers” to pay a cash kickback for certain loads, and that the insured’s other employees helped to implement the plan. The complaint alleged that the kickbacks aided the insured’s business, and caused the plaintiffs to suffer loss of business, income, and property, and mental anguish, hardship and emotional distress. The insured tendered its defense under its CGL and umbrella policies. The insurer accepted the defense subject to a reservation of rights and sued for a declaratory judgment that it owed no defense or indemnity. The insured had a CGL policy providing coverage for bodily injury caused by an “occurrence,” defined in the policy as “an accident, or repeated exposure to the same harmful conditions.” The umbrella policy provided coverage for injury to which that insurance applied caused by an “incident,” defined as “either an occurrence or offense, whichever is the basis of coverage,” but contained an exclusion that barred coverage for personal injuries “caused by or at the direction of any insured with the knowledge that the act would violate the rights of another or would inflict personal injury.”

On summary judgment motion, the court found that although the underlying lawsuit alleged claims for bodily injury, the claims did not arise from an “occurrence” as defined under the CGL policy, noting that the undefined term “accident” has been defined by the Alabama Supreme Court as an unintended and unforeseen injurious occurrence, which has made clear that the “crux” of the occurrence inquiry should be whether the conduct was intentional. The court found that the underlying complaint alleged only intentional conduct. Similarly, the district court found no coverage under the umbrella policy based on the exclusion that barred coverage for personal injury caused by or at the direction of any insured with the knowledge the act would result in harm.