Vermont Supreme Court Rules Intentional Sexual Harassment Not Covered Under Liability Policies

July 12, 2004

The Vermont Supreme Court on July 9 rejected an effort by two women to collect from insurance companies covering the home and business of a man they said sexually harassed them.

Cindy Serecky and Shannon Gioia were employees of a store called The Grab Bag in Bradford when the incidents of harassment allegedly occurred.

They sued the business and their supervisor, Robert Harlow, saying he “made inappropriate sexual remarks and engaged in inappropriate and offensive touching during working hours,” the high court’s decision said.

The harassment claim was settled with a stipulation that the women would collect $100,000. But the three insurance companies covering Harlow and the business refused to pay, saying their policies covered accidents, but not intentional sexual harassment.

The insurance companies, National Grange Mutual Insurance, Union Mutual Insurance and Cooperative Insurance, all used the defense that Harlow’s behavior was not an accident.

Judge Stephen Martin, sitting in Orange County Superior Court, granted the three companies summary judgment, finding that the case against them didn’t merit going to trial.

The woman appealed to the Supreme Court, which affirmed Martin’s decision.

The decision, written by the court’s newest member, Associate Justice Paul Reiber, agreed with the insurance companies’ reasoning.

“Because we conclude that Harlow’s intent to harm can be inferred as a matter of law from the nature of his acts, the harm that resulted from his acts does not constitute an ‘accident’ within the meaning of defendants’ policies,” Reiber wrote.

Karen Borgstrom, the lawyer for the two women, said she had not thoroughly read the court’s decision and could not comment in detail. But she said she wanted it clear that the court’s ruling wasn’t about sexual harassment. “It was really a coverage issue” relating to the insurance companies, she said.

In arguments before the high court, Borgstrom had alleged that the insurance companies acted in bad faith by not honoring their policies.

The court rejected that claim as well.

Reibert wrote that “the undisputed evidence shows that defendants did not act in bad faith, but rather justifiably denied coverage because their policies do not cover intentional acts of sexual harassment.”

Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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