Damages Under Employment Agreement Covered by EPL Policy
In Acradyne, Inc. v. Travelers Cas. & Sur. Co. of America (9th Cir. (Or.) Jan. 10, 2008) (unreported), the court held that claims for continuation of pay, compensation reduction, and misrepresentation were covered under an employment practices liability policy, while claims for intentional misrepresentation and unjust enrichment were not. Though the policy excluded severance pay or penalties, the court concluded that damages owed under the employment contract did not qualify as severance pay; continued salary payments did not depend on termination from employment. The court also held that an exclusion from damages for “sums sought solely on the basis of a claim for unpaid services under an express or implied agreement” did not apply to allegations that claimant’s salary was reduced in violation of the agreement, finding the term “unpaid services” was ambiguous. Claims for negligent misrepresentation were likewise covered, though claims for intentional misrepresentation and unjust enrichment were not. The intentional misrepresentation claim was barred by an exclusion for wrongful employment practices known before policy inception. Unjust enrichment was not one of the enumerated practices included in the policy's definition of a “Wrongful Employment Practice.” Since only some of the claims were covered, the case was remanded for the purpose of allocating the settlement between the insurer and insured.
