In a significant ruling, the New York Appellate Court has sided with Zurich American Insurance Company (ZAI) in a dispute over insurance coverage related to sexual misconduct allegations against a former employee of Giorgio Armani Corporation (GAC). The court decided that Hiscox Insurance Company must cover a lawsuit tied to these allegations, clarifying how insurers handle claims that span multiple policy periods.
The case stems from three lawsuits filed against GAC involving Javier Herrera, a former employee accused of sexual misconduct. The lawsuits include Loreto-Hays v. Herrera, which alleges sexual assault, Oberloh v. Giorgio Armani Corp., which claims GAC ignored harassment reports, and Christin v. Herrera, involving multiple plaintiffs alleging a pattern of harassment over several years.
Hiscox provided coverage for GAC during the first two lawsuits but denied coverage for the Christin lawsuit, claiming it was filed outside its policy period. ZAI, which insured GAC during the Christin lawsuit, argued that Hiscox should still be responsible under the policy’s Related Wrongful Acts clause.
The court’s decision focused on the definitions of related claims in the insurance policies. The Hiscox policy defined related acts as those arising from a common cause, while the ZAI policy considered claims with a shared factual basis as a single claim. The court found that all three lawsuits were closely connected, emphasizing GAC’s failure to act on repeated complaints about Herrera’s behavior.
The court ruled that the Christin lawsuit was sufficiently related to the earlier cases and reversed a lower court’s decision. This means Hiscox is now liable for the defense and costs associated with the Christin lawsuit.
This ruling underscores the importance of related claims provisions in insurance policies, showing that insurers may need to cover lawsuits that arise outside their active policy periods if they are deemed related. For businesses and insurers, this serves as a reminder to carefully review policy language and coverage structures regarding potential long-term liabilities.
The case is officially titled Zurich American Insurance Company v. Giorgio Armani Corporation, et al., and was decided in the Supreme Court of New York County.