Acradyne Inc. v. Travelers Casualty & Surety Co. of America

MEMORANDUM **

AcraDyne and AIMCO (“the Corporations”) appeal the district court’s order granting Travelers Casualty & Surety Company of America (“Travelers”) summary judgment on the Corporations’ duty to indemnify claim. The district court held that Travelers had no duty to indemnify the Corporations for amounts paid to settle a lawsuit brought by its former employee, Mark Lehnert, because Lehnert’s lawsuit was not covered under the employment practices insurance policy (“the Policy”).

1. Lehnert’s Continuation Pay

Lehnert’s contract entitled him to be paid for six years so long as he was not terminated for cause within that time period. Because AcraDyne terminated Lehnert without cause prior to the completion of his six-year contract, AcraDyne was required to continue to pay Lehnert his salary for the remainder of the contractual period.

The Policy specifically excluded from its definition of damages “[sjeverance pay or penalties under an employment contract, or any agreement, policy or procedure providing for payment in the event of separation from employment —” Linguistically, “damages” cannot be “any agreement, policy or procedure.” So the sentence must refer to “severance…