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Employers Mutual Casualty Co. v. DGG & Car, Inc. - 2/14/2008

Arizona Supreme Court Holds That a Standard Form Insurance Policy Treats the Loss from a Series of Thefts by a Single Employee as One “Occurrence” of Loss.


Appellee DGG purchased employee fidelity insurance policies from Appellant EMC, which covered loss of property resulting from employee dishonesty.  The policy promised that EMC would pay up to $50,000 for each “occurrence” of loss, which was defined as “all loss caused by, or involving, one or more ‘employees,’ whether the result of a single act or series of acts.”  A DGG employee embezzled $500,000 during a five-year period forging multiple company checks.  DGG filed a claim seeking reimbursement of the full amount; EMC countered that the series of thefts constituted a “single occurrence,” which entitled DGG to only $50,000.  EMC filed a declaratory action, seeking a ruling it only owed $50,000.  After the superior court determined that DGC could recover $50,000 for each theft, the parties stipulated to a judgment in favor of DGG with EMC preserving its right to appeal.  The Court of Appeals reversed in an unpublished decision, finding that the series of acts constituted one occurrence.  DGG petitioned the Supreme Court. 

The Supreme Court agreed with the Court of Appeals that the series of acts constituted one occurrence, but vacated its memorandum decision, and reversed the judgment of the superior court.  The Supreme Court found that the policy’s plain language considers the loss resulting from the embezzlement of a single employee “an occurrence,” which meant that the $50,000 limit applied.  The Court rejected DGG’s claims that the policy was ambiguous, that a literal reading of the policy would “nullify” coverage, or that the policy language violated Arizona ’s public policy. 

Justice Ryan authored the opinion; Justices McGregor, Berch, Hurwitz, and Bales concurred. 

Posted On: 2/20/2008