Date: 12-04-2001

Case Style: Golden Eagle Insurance Corp. v. Rocky Cola Cafe, Inc., et al.

Case Number: B146869

Judge: Boland

Court: California Court of Appeals, Second Appellate District

Plaintiff's Attorney: Hawkins, Schnabel, Lindahl & Beck and Timothy A. Gonzales, for Plaintiff and Appellant.

Defendant's Attorney: Steven W. Murray, for Defendants and Respondents.

Description: Krista Bollman sued Rocky Cola Café, Wally Curry, a partner in the business, and shift managers Christopher Vitolo and Angela Henderson. Her complaint asserted causes of action for sexual harassment, retaliation for reporting sexual harassment, intentional infliction of emotional distress, defamation, wrongful termination and negligent hiring and supervision.

The complaint alleged that a sexual relationship developed between Bollman and her supervisor, defendant Christopher Vitolo. A month or so later, Bollman told Vitolo she no longer wished to have sexual relations with him. Vitolo then began to make insulting comments and engage in unwelcome touching of Bollman’s body. The complaint alleges that, by abuse of his supervisorial position and “on-the-jobsite verbal and physical abuse,” Vitolo coerced Bollman into engaging in sporadic sexual activity with him, including sex on the jobsite. Bollman eventually resigned. The complaint included allegations that, after Bollman informed Vitolo she would no longer have sex with him, he followed her to a gym and in the presence of others humiliated her with coarse and abusive remarks about her body.

Bollman’s cause of action for defamation included allegations that Vitolo communicated to numerous other persons “words to the effect that [Bollman] was a ‘sexually promiscuous and calculating bitch’ who had, by use of sexually aggressive tactics, maneuvered him into an unwanted sexual relationship in order to obtain on-thejob favors from him.” The complaint also alleged that Vitolo’s false statements “were adopted and republished by all of the remaining Defendants, for the intent of unlawfully exculpating themselves from liability for [Bollman]’s injuries.”

On November 20, 1998, Rocky Cola and its officers and employees tendered the defense of the Bollman lawsuit to Golden Eagle Insurance Corporation, which provided Rocky Cola’s commercial general liability insurance coverage. Golden Eagle initially rejected the tender by letter dated December 17, 1998. Golden Eagle asserted that its coverages for bodily injury and personal injury were subject to exclusions for employment-related practices, policies, acts and omissions, so that there was no coverage under the policy.

Rocky Cola’s counsel wrote to Golden Eagle on March 3, 1999, challenging its refusal to defend. Counsel pointed out that Bollman’s claim for defamation fell within the scope of the policy’s “personal injury” coverage, and that Vitolo’s alleged defamatory statement that Bollman was a “sexually promiscuous and calculating bitch” was not an “employment-related” practice within the meaning of the exclusion. Counsel cited case precedent supporting a narrow interpretation of the employment-related practices exclusion, and pointed out that since applicability of the exclusion was doubtful at best, the potential for coverage required Golden Eagle to defend.

Golden Eagle reconsidered its position and on April 27, 1999 agreed to defend Rocky Cola Café, Curry and Henderson under a reservation of rights.1 Golden Eagle declined to defend or indemnify Vitolo on several grounds, including that he was not an insured because his conduct fell outside the scope of his employment for Rocky Cola Café. In December 1999, the Bollman suit was concluded with a judgment against Bollman and in favor of Rocky Cola Café and all the other defendants.

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Click the case caption above for the full text of the Court's opinion.

Outcome: The judgment is affirmed. Rocky Cola Café is to recover its costs on appeal.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: Reported by Kent Morlan