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Air Line Pilots Association v. Twin City Fire Insurance Company

July 25, 2002


Appeal from the Superior Court of the District of Columbia (CA-1722-98) (Hon. Herbert B. Dixon, Jr., Trial Judge)

Before Farrell, Ruiz and Washington, Associate Judges.

The opinion of the court was delivered by: Washington, Associate Judge

Argued December 14, 2000

Appellant, Air Line Pilots Association (ALPA), appeals the trial court's granting of a motion for summary judgment ruling that appellee, Twin City Fire Insurance Company (Twin City), did not have a duty under the applicable insurance policy to defend appellant in litigating the case of Zumbrun v. Delta Airlines (No. 95-4787) (C.D. Cal. June 24, 1996) (Zumbrun). Appellant further raises the issue of whether ALPA is entitled to the reasonable market value of the defense provided by its in-house counsel in the Zumbrun case, if reversal of the trial court's grant of summary judgment is appropriate. We affirm.


ALPA, a labor union, is the exclusive collective bargaining representative for the pilots of Western Airlines and Delta Airlines. ALPA negotiates collective bargaining agreements and represents the pilots in grievance arbitration proceedings before the System Board of Adjustments (System Board). *fn1 In September 1993, David Zumbrun, a former Western Airlines pilot, filed a grievance against Delta for refusing to reinstate him as a pilot following a leave of absence due to an injury. *fn2 Zumbrun was represented by ALPA in the grievance procedure, but ultimately he was not reinstated. In July 1995, Zumbrun filed a complaint against ALPA and Delta alleging: 1) that ALPA breached its duty to represent him fairly by conspiring with Delta to permit his discharge, and 2) intentional infliction of emotional distress by both defendants. *fn3 ALPA contacted Twin City in August of 1995 to notify them of the Zumbrun suit and request legal representation. Twin City refused to provide a defense for ALPA. ALPA's in-house counsel defended against Zumbrun's action, which was dismissed on summary judgment grounds in favor of ALPA and Delta. ALPA then filed a breach of contract complaint in Superior Court against Twin City alleging that pursuant to their insurance agreement, Twin City had a duty to provide legal representation for claims covered by the insurance contract. Both parties filed motions for summary judgment, and the trial court granted Twin City's motion. ALPA filed a timely notice of appeal to this court.


This court reviews the grant of a motion for summary judgment by the trial court de novo. We review the facts in the record in the light most favorable to the nonmoving party, and summary judgment is appropriate as a matter of law if there is no issue of material fact. We also apply a de novo standard of review to the interpretation of an insurance contract. See In re Estate of Corriea, 719 A.2d 1234, 1238-39 (D.C. 1998).

Both parties in this case agree that we must determine Twin City's duty to defend under the contract in accordance with Virginia law. Under Virginia law, an insurer has a duty to defend if it would be liable under its contract for any judgment based on the allegations by a complainant. Travelers Indem. Co. v. Obenshain, 245 S.E.2d 247, 249 (Va. 1978). Indeed, "[o]nly where `it appears clearly that [the insurance company] would not be liable under its contract for any judgment based upon the allegations,' does the company have no duty to defend." Parker v. Hartford Fire Ins. Co., 278 S.E.2d 803, 804 (Va. 1981) (quoting Travelers Indem. Co., 245 S.E.2d at 249). Virginia courts have articulated that it is the burden of the insured to prove that the claim is covered by the policy, see Furrow v. State Farm Mut. Auto. Ins. Co., 375 S.E.2d 738, 740 (Va. 1989), while it is the burden of the insurer to prove the applicability of an exclusion. See Johnson v. Insurance Co. of N. Am., 350 S.E.2d 616, 619 (Va. 1986). "Where language in an insurance policy is susceptible of two constructions," Virginia courts have construed the language in an insurance policy "liberally in favor of the insured and strictly against the insurer," in a manner that promotes coverage for the insured. Jefferson-Pilot Fire & Cas. Co. v. Boothe, Prichard & Dudley, 638 F.2d 670, 674 (4th Cir. 1980) (citations omitted). In addition, ambiguities that exist in the language of the insurance policy should be resolved in favor of the insured policy holder. See Fuisz v. Selective Ins. Co., 61 F.3d 238, 242 (4th Cir. 1995) ("if there is any ambiguity regarding potential coverage, the insurer must provide a defense").

1. Whether a Cause of Action was Plead for "Humiliation"

Here, ALPA argues that summary judgment was not properly granted by the trial court because the insurance policy issued by Twin City covered actions for "discrimination or humiliation," and Zumbrun's action sought damages from ALPA and Delta for "embarrassment, humiliation and mental anguish." Twin City responds that Zumbrun's complaint did not allege a personal injury cause of action covered by the policy.

In this case, the Twin City policy provided personal injury liability coverage for ALPA. The policy lists covered "offenses" that constitute personal injury, of which "discrimination or humiliation" is one. The Special Broad Form of the policy provides coverage for "[d]iscrimination or humiliation that results in injury to the feelings or reputation of a natural person . . . ." As explained, Zumbrun's complaint alleged two causes of action against ALPA: 1) breach of duty of fair representation and 2) intentional infliction of emotional distress. Specifically, Zumbrun alleged that ALPA's representation of him was "unfair, tepid, hesitant, unprepared and incompetent and that ALPA and Delta had conspired to deny his grievance . . . ." The gist of the complaint concerns the inadequate representation provided by ALPA, not any type of humiliation suffered as a result. We conclude that Virginia law does not require coverage in these circumstances.

Although Virginia construes insurance policies liberally in favor of coverage, the courts have consistently held that an insurance company's duty to defend is based on the substantive cause of action specifically plead in the complaint. In American & Foreign Ins. Co. v. Church Schools, 645 F. Supp. 628 (E.D. Va. 1986), a middle school student complained that her art teacher had "squeezed her buttocks in a sexually suggestive manner." Id. at 630. She and her mother alleged that when they reported the incident to the director and headmaster of the school, the school engaged in a cover-up without fairly investigating the incident. They further claimed that they were humiliated and harassed at a meeting, and that the school "humiliated [the student] at a schoolwide assembly by giving a sermon about how a jealous little school girl had ruined the life of a schoolteacher by falsely claiming sexual abuse." Id. The student and her mother filed a claim for assault, battery, and intentional infliction of emotional distress against the private school and certain teachers and staff members. In an amended complaint, while adding no new counts to their previous claims, they did add further allegations of negligent improper sexual contact and negligent infliction of emotional distress. Church Schools contended that these claims were covered under the "personal injury" section, which covered injuries arising out of a publication or utterance of a "libel, slander, or other defamatory or disparaging material," or which was "in violation of an individual's right of privacy." Id. at 631. In that case, the court held that even if the complaint contained allegations of libel, slander, defamation, or disparagement, the "mere fact that the factual allegations of a complaint contain the words `libel' or `disparaging' cannot form the basis for coverage under this provision . . . [C]overage must be determined based on the claims under which relief is sought." Id. at 634. The court further stated that although the complaint did contain factual allegations relating to an invasion of privacy claim, those allegations merely supported their assault and battery and intentional infliction of emotional distress claims (which were not covered), since the complaint raised no independent substantive claim for invasion of privacy. See id. at 634-35.

Another case that addressed this issue was Town Crier, Inc. v. Hume, 721 F. Supp. 99, 104-05 (E.D. Va. 1989), aff'd, 907 F.2d 1140 (4th Cir. 1990). In that case, Town Crier, a corporation engaged in the real estate business, acted as a broker for the sales of apartments in a real estate cooperative. The state plaintiffs, who had ownership interests in various apartments in the cooperative, filed a claim against Town Crier and seven others, seeking relief for various intentional acts, including fraud, unconscionability, and conspiracy to injure their business, trade or profession. In their complaint, the state plaintiffs alleged that they were lured into buying the cooperative apartments by misrepresentations made by the defendants. Once served, Town Crier notified its insurance provider of the state suit. The insurance provider denied any duty to defend because the policy covered only "negligent acts, errors, or omissions," while the state suit alleged intentional acts. In response, the insured argued that some allegations in the complaint included elements of unintentional torts. Specifically, they argued that the allegations of fraud included the elements of the tort of negligent misrepresentation. The court ruled in favor of the insurance provider, stating that "[o]nly claims or causes of action give rise to relief and then only if all the elements of a claim are proved. Allegations are components of claims or causes, but are not, by themselves, a ...

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