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(Article from Insurance Law Alert, May 2019)

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Reversing an Ohio district court decision, the Sixth Circuit ruled that sexual assault and harassment claims by three women against a co-worker arose out of the single occurrence of negligent hiring and supervision.  Scott Fetzer Co. v. Zurich American Ins. Co., 2019 WL 1925550 (6th Cir. Apr. 30, 2019).

Three women sued Fetzer, a vacuum manufacturer, and a Fetzer employee, alleging that he harassed and assaulted them and that Fetzer negligently hired and supervised him.  After the parties settled the suit, Fetzer sought reimbursement from Zurich under general liability policies.  The policies provided $2 million of coverage per occurrence, with a $1 million per-occurrence deductible.  Of the three settlements, only one exceeded the per-occurrence deductible.  Zurich paid the amount in excess of the deductible but refused to pay anything for the other two settlements.  In ensuing litigation, the parties disputed whether the underlying claims arose out of a single occurrence or multiple occurrences.  An Ohio district court found that the claims alleged multiple occurrences. 

The Sixth Circuit reversed, finding that “occurrence” was subject to more than one reasonable interpretation in this context.  The court explained that while “occurrence” could refer to the separate acts of assault against each woman, it could also refer to Fetzer’s overall negligent supervision.  Construing this ambiguity in Fetzer’s favor, the court held that the operative occurrence was the company’s negligent supervision.  In doing so, the court noted that Ohio’s cause-oriented approach to number-of-occurrence disputes supported this result.  The court explained that although three women incurred separate injuries as a result of the alleged harassment, their injuries arose from one proximate cause.