ANNAPOLIS – The Maryland Court of Special Appeals Thursday told an insurance company it must pay for the cost of defending a client against a complaint of sexual harassment.
A Baltimore City circuit judge had ruled the client could not recoup its legal expenses because sexual harassment is an intentional act and therefore not covered under its insurance policy. The Court of Special Appeals overturned that decision, saying the client was entitled to coverage for any negligence it showed in responding to the complaint.
Helen and Rostyslaw Slywka, a married couple, sued Haas Tailoring Co. of Baltimore in 1991, but were unsuccessful in court. Helen Slywka alleged that she was sexually harassed by one of her supervisors, and that when the harassment continued despite her complaint to the company, she quit. Her husband, who also worked at Haas, quit when he was harassed for defending his wife, court records show.
The issue before the Court of Special Appeals was whether Royal Insurance Co. of America, which insured Haas against commercial general liability, should have defended Haas against the Slywkas.
In refusing, Royal said harassment could not be construed as an accident. Royal also said the insurance policy did not cover any injury suffered by an employee in the course of his or her employment.
John Sinclair, Royal’s attorney, said in an interview that the Slywkas’ lawyer never raised the issue of negligence at trial. “I have to assume it was a calculated decision on his part, and not an oversight,” he said.
Sinclair also said the question of negligence was moot if the injury in question — the alleged sexual harassment — occurred in the course of the Slywkas’ employment.
If Haas wanted such coverage, Sinclair said, it could have bought a rider to its policy.
Sinclair said he will urge his client to appeal to the Court of Appeals. “I am confident we will get a reversal,” he said.
Suellen Poland, an attorney for Haas, said the complaint by the Slywkas did allege negligence, even if it was not spelled out.
The Court of Special Appeals agreed, saying any issue that had the potential to trigger insurance coverage should have been considered, even if a formal complaint of negligence was never made.
“An insured is entitled to the benefit of the doubt,” the court said. Sinclair disagreed, saying the Slywkas’ attorney had every opportunity to raise the negligence issue directly. “It would not have detracted from his case a single bit….If he wanted to hedge his bets, he would have,” he said. -30-