(Article from Insurance Law Alert, January 2019)
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A New York court ruled that a primary and umbrella insurer were obligated to defend a talent agency and an individual agent in a suit brought by wrestler Hulk Hogan that alleged breach of privacy and infliction of emotional distress. Zurich American Ins. Co. v. Don Buchwald & Assocs., Inc., 2018 NY Slip Op. 33325(U) (N.Y. Sup. Ct. New York Cnty. Dec. 21, 2018).
After compromising video and audio recordings of Hogan were released to the public, Hogan sued website Gawker and radio personality Michael Calta. The suit also named as defendants Don Buchwald & Associates (“DBA”), the talent agency that represented Calta, as well as Tony Burton, Calta’s personal agent at DBA. The initial complaint alleged breach of privacy and intentional infliction of emotional distress based on an alleged conspiracy to publish recordings that involved sexual and racist content. An amended complaint added negligence claims relating to DBA’s hiring and supervision of Burton. DBA’s primary and umbrella insurers refused to defend on several bases, including that the underlying suit did not allege a covered occurrence. The court disagreed and granted partial summary judgment in DBA’s favor.
The primary insurer argued that the underlying suit did not allege a covered “occurrence” because it alleged only intentional conduct. The court rejected this assertion, holding that even if Burton’s conduct was intentional, the resulting damage may have been unexpected and unintended from the perspective of DBA, the policyholder. Further, the court explained that an intentional tort may be deemed “accidental” for coverage purposes if the elements of the tort can be established in the underlying action without proving intentional or knowing conduct. Here, because applicable Florida law permits Hogan to establish intentional infliction of emotional distress by demonstrating reckless conduct, the court held that the claim triggered the potential for coverage.
The court also ruled that the negligent retention claim against DBA alleged an occurrence even though the complaint alleged that Burton intended to harm Hogan. The court stated that in assessing whether a negligent retention claim alleges an occurrence, “the question for courts to answer is not whether the employee acted intentionally, but whether, from the standpoint of the employer, the employee’s acts were unexpected and unforeseen.”
As to the umbrella policy, the court ruled that the underlying suit potentially triggered coverage under the “personal and advertising injury” provision based on the invasion of privacy claim. The court rejected the insurer’s assertion that such coverage was unavailable because neither DBA nor Burton published the audio or video recordings themselves, noting that the policy contained no such requirement.