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American Motorists Ins. Co. v. L-C-A Sales Co.6/15/1998
Argued March 16, 1998
On certification to the Superior Court, Appellate Division.
Plaintiff John Picciallo brought suit against his former employer L-C-A Sales Company (LCA) and certain individuals at LCA, alleging wrongful termination based on a violation of New Jersey's Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49. The thrust of plaintiff's claim against LCA was that he was forced out of his position because of his age. This appeal presents the issue whether an "employee exclusion" contained in a comprehensive general liability (CGL) insurance policy precludes a corporate policyholder from securing coverage for damages arising from a claim of wrongful termination.
I.
Picciallo worked as a salesman for LCA for over thirty years until his termination on December 31, 1991. Picciallo and LCA entered into several employment agreements during Picciallo's tenure at the company, the last of which was dated January 1, 1977. It superseded the prior employment agreements and provided that Picciallo would be given two weeks' written notice prior to termination.
According to Picciallo, Joel Schwartz, a partner at LCA, and Steven Hall, an employee, began to harass him in 1990 in an effort to force him into retirement. Picciallo alleged that a younger employee was hired in June 1991 to assume control over Picciallo's sales territory. Picciallo asserted that Hall began informing LCA customers that the new employee was replacing Picciallo because of his impending retirement. On December 17, 1991, Picciallo received a letter from Schwartz dated December 13, 1991, informing Picciallo of the termination of his employment effective two weeks after receipt of the letter. Pursuant to that letter, Picciallo's employment was terminated on December 31, 1991. At the time of his dismissal, Picciallo was sixty-seven years old.
In April 1992, Picciallo filed suit against LCA, Schwartz, Ellen Schwartz (another LCA partner), and Hall (collectively "LCA"). The gravamen of Picciallo's complaint was that LCA violated the LAD by terminating him simply because of his age. Picciallo also alleged causes of action based on breach of contract, breach of the implied covenant of good faith, wrongful discharge, negligence, tortious interference with contract, respondeat superior, and intentional infliction of emotional distress. During discovery, Picciallo asserted that as a result of his wrongful dismissal from LCA he suffered emotional distress with resulting heart palpitations, sleepwalking, loss of libido, decrease in frequency of sex, constipation, bloating, headaches, diarrhea and stomach pains. Picciallo also complained of a loss of appetite that precipitated weight loss, indigestion and loss of cognitive skills, and alleged that he also suffered a stroke.The events surrounding Picciallo's dismissal occurred at about the same time LCA changed its insurance carrier. From December 28, 1990, to December 28, 1991, LCA was insured under CGL and umbrella liability policies issued by Michigan Mutual Insurance Company (Michigan Mutual). From December 28, 1991, to December 28, 1992, LCA was insured under a CGL policy issued by American Motorists Insurance Company (American Motorists). During that same period, LCA was also insured under a commercial catastrophe policy issued by Lumbermens Mutual Casualty Insurance Company (Lumbermens). (Because both American Motorists and Lumbermens are part of the Kemper Companies, we refer to them collectively as "Kemper.") Both CGL policies issued by Michigan Mutual and Kemper contained a standard employee exclusion clause, providing that the insurance did not apply to "bodily injury" to " n employee of the insured arising out of and
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