TVN Entertainment Corp. v. General Star Indemity Co.

MEMORANDUM **

Plaintiff-appellant TVN Entertainment, Inc. (TVN) appeals from a district court order granting defendant-appellee General Star Indemnity’s (General Star’s) motion for summary judgment. We agree with the district court and affirm.

General Star issued TVN an employment practices liability insurance policy (Policy) that provided coverage for losses TVN suffered because of “wrongful employment acts” such as discrimination, defamation, harassment and breach of an implied employment contract. The Policy excluded from coverage (1) “damages determined to be owing under a written or express contract of employment” and (2) losses in the form of “commissions, bonuses, profit sharing or benefits pursuant to a contract of employment.” While the Policy was in effect, TVN terminated one of its employees, Michael Wex (Wex), who responded by taking TVN to arbitration. In the arbitrator’s final award, he ruled TVN had “materially breached the express and implied terms of [Wex’s] Employment Agreement and the covenant of good faith and fair dealing” and concluded that Wex was entitled to $13,218,588.63 in damages “proximately caused by [TVN’s] breach of the Employment Agreement.” When…

concurring in part and dissenting in part.

I respectfully dissent. Although General Star argues that the policy excludes damages caused by any breach of an employment contract, the policy nowhere so states.

The relevant exclusion states: Inappropriate Employment Decision shall not include damages determined to be owing under a written or express contract of employment or obligation to make payments, including but not limited to severance payments, in the event of the termination of employment, however, this provision does not apply to defense costs.

The sentence is ambiguous. First, it is not grammatical: It attempts to delineate certain types of “decisions” by reference to certain types of “damages.” More importantly, it is unclear whether the modifying phrase “to make payments ... in the event of the termination of employment” modifies only the term “obligation” or modifies both the term “obligation” and the term “contract of employment.” If the latter was intended, then the exclusion relating to express contracts is limited to “damages determined to be owing under a written or express contract of employment ... in the event of the termination of employment.” As such, the…