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Euchner-USA, Inc. v. Hartford Cas. Ins. Co.

United States Court of Appeals, Second Circuit

June 10, 2014

EUCHNER-USA, INC., MICHAEL LADD, EUCHNER-USA, INC. 401-K PLAN, Plaintiffs-Appellants,
v.
HARTFORD CASUALTY INSURANCE COMPANY, Defendant-Appellee

Argued April 9, 2014.

Page 137

Euchner-USA, its Chief Executive Officer Michael Ladd, and the Euchner-USA 401-k Plan appeal from a judgment of the Northern District of New York (McAvoy, J.), granting summary judgment in favor of Hartford Casualty Insurance Company. Hartford denied coverage and refused to defend Euchner in a lawsuit alleging, inter alia, ERISA violations stemming from an alleged misclassification of a former employee as an independent contractor. For the following reasons, we conclude there was a reasonable possibility of coverage and, therefore, Hartford had a duty to defend. As a result, we vacate and remand in part. We affirm the dismissal of Euchner's claim brought under N.Y. Gen. Bus. Law § 349.

ALAN J. PIERCE, Hancock Estabrook, LLP, Syracuse, NY, for Plaintiffs-Appellants.

KENNETH R. LANGE (Brendan T. Fitzpatrick, on the brief), Goldberg Segalla LLP, Garden City, NY, for Defendant-Appellee.

Before: KEARSE, JACOBS, and LYNCH, Circuit Judges.

OPINION

Page 138

DENNIS JACOBS, Circuit Judge:

This declaratory judgment action under New York law involves Hartford Casualty Insurance Company's issuance to Euchner-USA of comprehensive general liability insurance with an endorsement covering the company's employee benefits program. Hartford has denied coverage and refused a defense as to a suit in which the plaintiff alleged (a) that she was sexually harassed and (b) that she was coerced into accepting a changed status that Euchner improperly classified as an independent sales position, with resulting loss of employee benefits under Euchner's 401(k) plan.

Euchner, its Chief Executive Officer (" CEO" ) Michael Ladd, and the Euchner 401-k Plan (collectively, " Euchner" ) appeal from a judgment of the Northern District of New York (McAvoy, J.), granting Hartford's motion for summary judgment on

Page 139

the ground that the underlying suit alleged only intentional wrongdoing. Having ruled that Hartford did not owe a defense, the court did not reach the issue of indemnity. For the following reasons, we conclude that a reasonable possibility existed that some claims in the former employee's (amended) complaint might implicate the coverage extended bye endorsement, and that Hartford therefore owed a duty to defend. We do not reach the issue of indemnity. We therefore vacate and remand in part. The dismissal of the claim brought under N.Y. Gen. Bus. Law § 349 is affirmed.

BACKGROUND

In April 2011, Euchner was sued by former employee Jada Scali. Scali Compl., J.A. at 56-74. Her initial complaint alleged that she was hired as a regional sales manager 1 in 2008, that she was sexually harassed by a senior executive, that she confronted him about his conduct, that she was wrongfully terminated as an employee, that she was coerced into accepting an independent sales position, and that the new position disqualified her from receiving a number of benefits reserved for the company's employees. Passim, the initial complaint ...


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