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Michael Parish, An Individual v. United States Liability Insurance Company

December 28, 2010


The opinion of the court was delivered by: Honorable Ronald E. Bush U. S. Magistrate Judge

(Docket No. 13)


Currently pending before the Court is Defendant's Motion for Summary Judgment (Docket No. 13). Having carefully reviewed the record, participated in oral argument, and otherwise being fully advised, the Court enters the following Memorandum Decision and Order:


As an employee of Integra Information Technologies ("Integra"), Plaintiff Michael Parish was paid a base salary and commissions on sales. This action relates in no small part to these sales commissions. Specifically, Plaintiff claims that, prior to his May 25, 2007 termination, he was owed upwards of $37,500.00 in commissions - even entering into a "memorandum regarding the termination of his employment" (the "termination agreement") with an Integra representative, outlining the schedule for such commissions to be paid. Plaintiff ultimately did not receive his commissions and, on August 29, 2007, filed suit against Integra in Idaho state court.

At the time of the alleged unpaid commissions, Integra was insured under an Employment Practices Liability Policy ("EPL Policy"), issued by Defendant United States Liability Insurance Company. On September 11, 2007, Integra sought coverage under its EPL Policy for defense and indemnification related to Plaintiff's claims in state court. Defendant denied coverage on September 21, 2007, claiming that Plaintiff's claims related to Integra's handling of any commissions owing to Plaintiff and were not covered under the EPL Policy.*fn1

On November 6, 2008, Plaintiff reached a financial settlement with Integra, resolving the state court lawsuit. Relevant here, as part of that settlement Plaintiff was assigned all of Integra's claims against Defendant as to Defendant's above-mentioned decision to deny coverage. This lawsuit followed and, with it, claims against Defendant for (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) bad faith, and (4) declaratory relief.

After removing this action from Idaho state court, Defendant argues that Plaintiff's underlying claims against Integra (and, likewise, the genesis of the claims assigned to Plaintiff and now asserted against Defendant) were predicated on Integra's alleged failure to pay Plaintiff his commissions - nothing more. According to Defendant, an employer's failure to fulfill payment obligations (salary, commissions, or otherwise) is not among the employment-related acts covered within its EPL Policy. As a result, Defendant claims that it owed no duty to defend and/or indemnify Integra, thus concluding in its Motion for Summary Judgment that there could be no breach of the EPL Policy to substantiate Plaintiff's claims.


A. The Summary Judgment Standard

One of the principal purposes of the summary judgment "is to isolate and dispose of factually unsupported claims . . . ." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). It is "not a disfavored procedural shortcut," but is instead the "principal tool [ ] by which factually insufficient claims or defenses [can] be isolated and prevented from going to trial with the attendant unwarranted consumption of public and private resources." Id. at 327. "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).

The evidence, including all reasonable inferences which may be drawn therefrom, must be viewed in a light most favorable to the non-moving party and the Court must not make credibility findings. See id. at 255. Direct testimony of the non-movant must be believed, however implausible. Leslie v. Grupo ICA, 198 F.3d 1152, 1159 (9th Cir. 1999). On the other hand, the Court is not required to adopt unreasonable inferences from circumstantial evidence. McLaughlin v. Liu, 849 F.2d 1205, 1208 (9th Cir. 1988).

The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001). To carry this burden, the moving party need not introduce any affirmative evidence (such as affidavits or deposition excerpts) but may simply point out the absence of evidence to support the nonmoving party's case. Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 532 (9th Cir. 2000).

This shifts the burden to the non-moving party to produce evidence sufficient to support a jury verdict in his favor. See id. at 256-57. The non-moving party must go beyond the pleadings and show "by [his] affidavits, or by the depositions, answers to interrogatories, or admissions on file" that a genuine issue of material fact exists. Celotex, 477 U.S. at 324.

However, the Court is "not required to comb through the record to find some reason to deny a motion for summary judgment." Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1029 (9th Cir. 2001) (quoting Forsberg v. Pac. Northwest Bell Tel. Co., 840 F.2d 1409, 1418 (9th Cir. 1988)). Instead, the "party opposing summary judgment must direct [the Court's] attention to specific triable facts." Southern California Gas Co. v. City of Santa Ana, 336 F.3d 885, 889 (9th Cir. 2003). Statements in a brief, unsupported by the record, cannot create an issue of fact. Barnes v. Independent Auto. Dealers, 64 F.3d 1389, 1396 n. 3 (9th Cir. 1995).

B. Policy Coverage

To the parties' credit, there is little disagreement concerning the facts giving rise to the instant action. See, e.g., Pl.'s Mem. in Opp. to Mot. for Summ. J., p. 2 (Docket No. 16) ("The facts relevant to this motion are fully set forth within the Defendant's Memorandum in Support of Motion for Summary Judgment.").*fn2 Suffice it to say, the parties disagree over the interpretation of those facts - namely, the meaning of the term "wrongful termination" and, in turn, the application of the EPL Policy's coverage provisions.

As mentioned above, Defendant argues that the EPL Policy does not cover an insured's failure to fulfill payment obligations and, because each of Plaintiff's underlying claims against Integra speaks to an alleged failure to pay, it has no duty to defend/indemnify and, as such, is incapable of any related breach. Regardless, Defendant alternatively claims that its alleged breaches do not amount to Plaintiff's wrongful termination, which is a specifically covered event under the EPL Policy. Plaintiff naturally disagrees, arguing that in addition to originally bringing claims for unpaid wages against Integra, he also asserted a covered wrongful termination claim against Integra via his claim for breach of the implied covenant of good faith and fair dealing as to his employment contract with Integra (distinct from the termination agreement). At the very least, Plaintiff contends that the EPL Policy's definition of wrongful termination is ambiguous or, even, illusory.

Therefore, in resolving Defendant's Motion for Summary Judgment, this Court must decipher certain terms within the EPL Policy and, if necessary, apply such defined terms to the parties' conduct here.

1. Standard for Interpreting Insurance Contracts

Generally, Idaho courts construe insurance contracts in accordance with their plain, unambiguous language; but where the insurance contract is ambiguous, it must be construed in a light most favorable to the insured and in a manner providing full coverage for the indicated risks, rather than narrowing its protection. See Axis Surplus Ins. Co. v. Lake CDA Dev., 2008 WL 4238966, *2 (D. Idaho 2008) (citing Cascade Auto Glass, Inc. v. Idaho Farm Bureau Ins. Co., 141 Idaho 660 (Idaho 2005)). "In construing an insurance policy, the Court must look to the plain meaning of the words to determine if there are any ...

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