Washington Legal Roundup – Division I
S&K Motors did business as Pinnacle Masada. Pinnacle had a bad employee appropriately named Stephen Casino. Mr. Casino had a gambling problem and stole a bunch of money from Pinnacle.
Pinnacle gave Casino a second and third chance to change his ways on the condition that he pay back the amount he stole out of his pay check. Mr. Casino did not change his way and kept stealing. Pinnacle finally fired him.
Pinnacle had insurance with Harco National Insurance Co. Harco provided insurance coverage for employee theft, but only up to the point where the employer learns of the theft.
Harco provided coverage for the theft up to the time that Pinnacle learned about the theft, but did not provide coverage for the period during which Pinnacle gave Mr. Casino second and third chances.
By the time Pinnacle submitted its claim to Harco, Mr. Casino had already paid back a good chuck of what he stole. Pinnacle argued that it was entitled to recover the amount that Mr. Casino had re-paid.
The Court of Appeals held that because the theft had continued, the “occurrence” included all of the thefts. The court went on to say that even though Harco was not obligated to pay for the losses sustained by Pinnacle after it learned that Mr. Casino had stolen from it the first time, it also was not entitled to recover any money it paid until Pinnacle had been “made whole” under Sherry v. Fin. Idem. Co., 160 Wn.2d 611, 160 P.3d 31 (2007).
Harco also got dinged for attorney fees under Olympic Steamship v. Centennial Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991).
Note to insurers: When there’s a doubt about coverage or subrogation, do yourself a favor by giving your customers the benefit of the doubt. That’s what the courts usually do.