A business firm fired an employee and was sued by him for damages for alleged "mental upset, distress and aggravation" caused by his termination. The employer's general liability carrier accepted the employer's tender of defense under a reservation of rights, but sought a judicial determination that it had no duty to indemnify the insured or to provide a further defense. The trial court granted the insurer's motion for summary judgment, and the insured appealed.

The policy provided coverage for damages for which the insured might become liable as a consequence of bodily injury or property damage caused by an "occurrence." The basic definition of "occurrence" was expanded by an attached "Special Form CGL Endorsement" to mean "an accident, an event or a continuous or repeated exposure to conditions which results, during the policy period, in bodily injury or property damage neither expected nor intended by the insured."

The appeal court noted that the injured employee did not allege that his mental upset, distress and aggravation "manifested itself in any psychosomatic symptoms or physical injuries, such as ulcers." Nor was "bodily injury" defined to include mental distress or anguish, or related concepts.

The court, furthermore, observed that, since the firing of the employee was not an accident, there was not an "occurrence" for which the policy provided coverage.

The judgment of the trial court was affirmed in favor of the insurer and against the insured.

Editor's Note: It has never been intended that alleged injury or damage sustained by an employee is within the scope of basic coverage provided by an employer's CGL policy. Some insurers underscore this by attachment of an "employment-related practices" exclusion.

(UNITED PACIFIC INS. CO., Plaintiff, Respondent v. McGUIRE CO. ET AL., Defendants, Appellants. CA Court of Appeal, First District, Division One. No. A045445. July 24, 1990. 222 Cal. App. 3d 467. CCH 1991 Fire and Casualty Cases, Paragraph 2779.)