Travelers Indemnity Co. v. Bloomington Steel & Supply, 2006 WL 2167293 (Minn. August 3, 2006) is a tough coverage fight that, from what I can discern in the opinion, was very well argued by the attorneys for both sides. I thought the court’s opinion made a leap in analysis that doesn’t fully make sense to me. However, I’m trying to give the court the benefit of the doubt because the opinion was written by Minnesota Supreme Court Justice Alan Page, who was a star player for the Minnesota Vikings in the 1970s, one of the greatest defensive tackles and kick-blockers in NFL history, and a guy I idolized and watched every Sunday as a kid, and who is perhaps second only to the incomparable Fran Tarkenton in the Viking hall of heroes. Still, as a coverage lawyer I must remain as objective as possible.
In the case, the issue was whether Travelers should provide coverage for the employer’s potential vicarious liability stemming from a manager’s assault on a worker. The manager, Reiners, told the worker to stop speaking Spanish. Later in the day, the manager found him again speaking Spanish and whacked him with a piece of wood, fracturing his skull. No surprise, the employee sued the company on the ground that it was vicariously liable for Reiners’ conduct. Travelers brought an action seeking a court declaration that no coverage existed because of the intentional acts exclusion. The parties stipulated that Reiners had a history of violence, and Travelers argued Bloomington Steel should be charged with this knowledge, especially because he was the head of the company and its shareholder. That is a powerful argument.
However, the court said the language of the Travelers policies showed that Reiners and the company must be considered separately: the exclusion applied to acts expected or intended from the standpoint of "the insured," not "any insured." But the court, somewhat mysteriously, concluded merely that the "language of the Travelers’ policies does not require that Reiners’ intent be automatically imputed to Bloomington Steel." The word "automatically" kind of fuzzes things up. Should it be imputed or not?
Apparently not, because the court then addressed the second Travelers argument: general corporate law principles charge a company with constructive knowledge of material facts its officers acquire in the course and scope of their employment. This sounds like a winner, because are you going to tell me Bloomington Steel shouldn’t be held to know that its main guy had a history of attacking people in a work setting? If they don’t know, the corporate logo should be one of those See No Evil, Hear No Evil, Speak No Evil monkeys. The trial court granted summary judgment to Travelers, and the Court of Appeals agreed, but the state Supreme Court reversed. The Supreme Court first said that corporate law principles can’t override the language of the insurance contract, but then backtracked and said maybe the company could be charged with knowledge of Reiners’ violence; however, the record contained insufficient admissible evidence of that violence. Excuse me? I thought the parties agreed the history of violence was undisputed. Isn’t that admissible evidence? The case was remanded, but for what? For further evidence of the violence to be developed? That would make about as much sense as rooting for the Green Bay Packers.