MOORE v. CONTINENTAL INSURANCE COMPANY

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Court of Appeal, First District, Division 4, California.

Kenneth D. MOORE et al., Cross-complainants and Appellants, v. CONTINENTAL INSURANCE COMPANY, Cross-defendant and Respondent.

No. A069078.

Decided: March 28, 1996

James D. Boughey, Eileen R. Ridley, Boughey, Garvie & Bushner, San Francisco, for Cross-complainants and Appellants. Robert M. Peterson, Allison Lane, Long & Levit, San Francisco, for Cross-defendant and Respondent.

Kenneth D. Moore (Moore) and K.D. Moore Associates, Inc. (KDM) appeal from a judgment for Continental Insurance Company on their cross-complaint alleging that Continental should have defended them in a suit brought by Mary Weston for damages arising from constructive termination of her employment with KDM because of sexual harassment by Moore.   We affirm.

I.

Weston sued appellants in March of 1993.   Her complaint stated that she began working for KDM in November of 1991, first as a part time word processor, then for a month as a full time word processor, and then for three weeks as officer manager, until constructive termination of her employment on August 21, 1992.   The complaint set forth causes of action for:  assault and battery;  employment discrimination/sexual harassment;  wrongful termination in violation of public policy;  gender discrimination in violation of the Fair Employment and Housing Act;  breach of contract;  breach of the implied covenant of good faith and fair dealing;  intentional infliction of emotional distress;  and negligent infliction of emotional distress.

Appellants were insured by Continental under a comprehensive general liability policy covering claims for defamation and false imprisonment.   Continental denied appellants' tender of defense of the Weston suit under the policy, and appellants cross-complained against Continental in the Weston action in October 1993, alleging that Continental had wrongly refused to defend them against Weston's claims.   Appellants' counsel deposed Weston in November 1993, and appellants settled with Weston in 1994 for $50,000, without admitting liability.   In December 1994, the court granted Continental's motion for summary judgment or adjudication on appellants' cross-complaint, and entered judgment for Continental.   The court found that Moore's claims involved only inherently intentional conduct and did not suggest the possibility of any coverage under the policy.

II.

“An insurer ․ bears a duty to defend its insured whenever it ascertains facts which give rise to the potential of liability under the policy.”   (Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 276–277, 54 Cal.Rptr. 104, 419 P.2d 168.)  “[T]he insurer must look to the facts of the complaint and extrinsic evidence, if available, to determine whether there is a potential for coverage under the policy and a corresponding duty to defend.”  (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 25, 44 Cal.Rptr.2d 370, 900 P.2d 619.)  “Any doubt as to whether the facts give rise to a duty to defend is resolved in the insured's favor.”  (Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1081, 17 Cal.Rptr.2d 210, 846 P.2d 792.)   However, “ ‘ “where there is no possibility of coverage, there is no duty to defend.” ’ ”  (Waller v. Truck Ins. Exchange, Inc., supra, at p. 19, 44 Cal.Rptr.2d 370, 900 P.2d 619.)

 Insurance Code section 533, which states that an insurer is not liable for “the wilful act of the insured” and which is an implied exclusionary clause in all policies, precludes coverage for acts such as child molestation which are deemed to be inherently intentional, wrongful and harmful.  (J.C. Penney Casualty Ins. Co. v. M.K. (1991) 52 Cal.3d 1009, 1019, 1025, 278 Cal.Rptr. 64, 804 P.2d 689.)   This rule has been persuasively interpreted to preclude coverage for claims of sexual harassment (Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co. (1993) 14 Cal.App.4th 1595, 1603–1604, 18 Cal.Rptr.2d 692), and tortious termination of employment in violation of public policy (B & E Convalescent Center v. State Compensation Ins. Fund (1992) 8 Cal.App.4th 78, 93–99, 9 Cal.Rptr.2d 894).1

 Claims for injuries “directly related” to uncovered acts are likewise uninsurable.  (Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at p. 30, 44 Cal.Rptr.2d 370, 900 P.2d 619.)   For example, there is no duty to defend arising from acts of public embarrassment of a molested child if such acts occurred “in such close temporal and spatial proximity” to the uninsurable molestation as to be “inseparable from it.”  (Horace Mann Ins. Co. v. Barbara B., supra, 4 Cal.4th at p. 1084, 17 Cal.Rptr.2d 210, 846 P.2d 792.)   In the same vein, “section 533, and the public policy it represents, bar the attempt to shift liability for intentional sexual harassment and associated employment-related torts (claims of wrongful discharge, infliction of emotional distress, battery, and sexual assault) to an insurer.”  (Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co., supra, 14 Cal.App.4th at p. 1603, 18 Cal.Rptr.2d 692.)   In determining whether other torts are so “associated” with sexual harassment as to be uninsurable, the test is whether such torts are “independent” of the harassment, or instead so “essentially a part” of the harassment as to be “inseparably intertwined” with it.  (Horace Mann Ins. Co. v. Barbara B., supra, 4 Cal.4th at p. 1085, 17 Cal.Rptr.2d 210, 846 P.2d 792.)

III.

The relatively-narrow issue presented is whether, under the foregoing standards, Weston's complaint and deposition testimony disclosed claims for defamation or false imprisonment which were potentially covered by Continental's policy.   We note in this regard that both sides support their arguments with citations to the deposition testimony, even though the duty to defend is analyzed only on the basis of “ ‘facts available to the insurer from the complaint or other sources available to it at the time of the tender of defense’ ” (Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at p. 25, 44 Cal.Rptr.2d 370, 900 P.2d 619), and Weston was not deposed until after the tender of defense in this case.   It is evidently conceded that the facts to which Weston testified would have been available to Continental through investigation in response to the tender.  (See generally Croskey, et al., Cal. Practice Guide:  Insurance Litigation (Rutter 1995) § 12:848 et seq. [insurer has duty to thoroughly investigate claims].)   In any event, we will follow the parties lead and address the issue of coverage as if Continental was apprised of the facts to which Weston testified in her deposition, as well as the facts alleged in the complaint, when it declined the tender of defense.

 We turn first to the complaint.   A complaint is to be “liberally construed” in favor of potential coverage.  (Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at p. 23, 44 Cal.Rptr.2d 370, 900 P.2d 619.)   Since pleadings are easily amended, the proper focus is on the facts alleged, rather than the theories for recovery.  (Gray v. Zurich Insurance Co., supra, 65 Cal.2d at p. 276, 54 Cal.Rptr. 104, 419 P.2d 168.)   However, the insured “ ‘may not speculate about unpled third party claims to manufacture coverage’ ” (Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co., supra, 14 Cal.App.4th at p. 1605, 18 Cal.Rptr.2d 692), and the insurer has no duty to defend “where the potential for liability is ‘tenuous and farfetched’ ” (American Guar. & Liability Ins. Co. v. Vista Medical Supply (N.D.Cal.1988) 699 F.Supp. 787, 794).   The ultimate question is whether the facts alleged “ ‘fairly apprise’ ” the insurer that the suit is upon a covered claim.  (Gray v. Zurich Insurance Co., supra, at p. 276, fn. 15, 54 Cal.Rptr. 104, 419 P.2d 168.)

 Weston's complaint states at the outset that Moore is the President and a principal owner of KDM. The following allegations are set forth in the first cause of action, which is against Moore for assault and battery:

“10. During the course of plaintiff's employment with K.D. MOORE & ASSOCIATES and continuing until the date of her resignation, defendant KENNETH MOORE threatened to and did engage in physical contact offensive to plaintiff by repeated verbal and physical molestation, and the threat of it placed plaintiff in apprehension of immediate offensive contact including, but not limited to the following:  [¶] (a) Throughout plaintiff's employment, defendant KENNETH MOORE leered at plaintiff and positioned himself in close physical proximity to the plaintiff;  [¶] (b) Defendant KENNETH MOORE made repeated comments of a sexually suggestive nature, including sexually explicit references to plaintiff's body;  [¶] (c) Defendant KENNETH MOORE made repeated physical advances;  [¶] (d) Defendant KENNETH MOORE made repeated physical comments of a sexual nature to PLAINTIFF and on numerous and repeated occasions attempted to elicit sexual encounters with PLAINTIFF;  [¶] (e) Many of said statements and physical contact by defendant KENNETH MOORE took place in the confined quarters of business establishment.”

These allegations, along with an allegation that the foregoing conduct was “intentional, oppressive, and malicious,” are incorporated into all of the subsequent causes of action against Moore and KDM. Weston's style of pleading was to begin each cause of action with a paragraph incorporating all prior allegations by reference.

The second cause of action, for employment discrimination and sex harassment, alleges that the “above conduct” of Moore was so pervasive and extreme as to create a hostile working environment for Weston.   It further alleges that Weston resigned from KDM because of Moore's sexual harassment and his refusal to stop such conduct despite her repeated requests.

The third cause of action, for wrongful termination in violation of public policy, mentions no new facts other than the allegation that there had been an improper attempt to gain sexual favors from Weston in exchange for job benefits.

The fourth cause of action, for violation of the Fair Employment and Housing Act, adds no new facts.

The fifth cause of action, for breach of contract, alleges that, by creating a hostile working environment which forced Weston to resign, appellants breached an express or implied employment contract.

The sixth cause of action, for breach of the implied covenant of good faith and fair dealing, adds no new facts.

The seventh cause of action, for intentional infliction of emotional distress, adds the following allegations:  “41.   DEFENDANT, and each of them, as more fully alleged above, subjected PLAINTIFF without cause or business justification to undue expense, hardship, and public deprecation.   The conduct of DEFENDANT, and each of them, was done in a manner calculated to maximize PLAINTIFFS' pain and anguish. [¶] 42.   PLAINTIFF was known to DEFENDANT MOORE as a young female who was financially dependent upon her salary and benefits. [¶] 43.   DEFENDANT, and each of them, as more fully alleged above, vexed and harassed plaintiff, embarrassed PLAINTIFF in the presence of co-workers, and subjected her to demeaning terms and conditions of employment.   Said conduct was malicious with the purpose and effect of irreparably harming PLAINTIFFS' ability to practice her chosen career.”

The eighth cause of action, for negligent infliction of emotional distress, alleges that appellants “knew or should have known that the conduct more fully set forth above would likely result in mental pain and anguish.”

The prayer for relief sought, among other things, compensatory damages “for lost income, loss of back pay, loss of vacation and fringe benefits, loss of earning capacity, deferred compensation, damage to professional reputation and other employment benefits and interest thereon in an amount to be proven at trial.”

It is apparent from the foregoing review that the gravamen of the complaint is constructive termination of Weston's employment because of Moore's sexual harassment.  Insurance Code section 533 precludes coverage for claims of this nature.  (Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co., supra, 14 Cal.App.4th at pp. 1603–1604, 18 Cal.Rptr.2d 692;  B & E Convalescent Center v. State Compensation Ins. Fund, supra, 8 Cal.App.4th at pp. 93–99, 9 Cal.Rptr.2d 894.)   The complaint does not mention defamation or false imprisonment, or the ultimate facts constituting either of these causes of action (see generally 4 Witkin, Cal. Procedure (3d ed.   1985) Pleading, § 332, pp. 381–383).   It does not describe any defamatory statement, or refer to publication of such a statement to a third party.  (5 Witkin, supra, Pleading, §§ 688–689, pp. 140–141 [operative facts constituting defamation].)   Nor does it refer to unlawful restraint or confinement.  (Id. at § 712, p. 161 [definition of false imprisonment].)

Appellants submit, however, that publication of defamatory statements is implicit in the allegations of “public deprecation” and “embarrass[ment] ․ in the presence of coworkers,” and in the prayer's reference to “damage to professional reputation.”   They further submit a claim of unlawful confinement is implicit in the allegation that many of Moore's statements and actions occurred “in the confined quarters of [the] business establishment.”   However, this isolated language, without more, could not be said to“fairly apprise” Continental of potential claims for defamation and false imprisonment.   (Gray v. Zurich Insurance Co., supra, 65 Cal.2d at p. 276, fn. 15, 54 Cal.Rptr. 104, 419 P.2d 168.)   In the context of a complaint grounded on sexual harassment in the workplace, the allegations in question do no more than reflect the reality that such harassment can take place behind closed doors or in the presence of coworkers.   If allegations such as these were sufficient to create the potential for coverage, then contrary to Coit Drapery Cleaners and B & E Convalescent Center, insurers would be obliged to defend every claim of wrongful termination based on sexual harassment.   Appellants are merely “ ‘speculat[ing] about unpled third party claims to manufacture coverage.’ ”  (Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co., supra, 14 Cal.App.4th at p. 1605, 18 Cal.Rptr.2d 692.)

Even if the allegations appellants' cite could be interpreted as claims of defamation and false imprisonment, there would still be no potential for coverage unless those claims were “independent” of the underlying harassment (Horace Mann Ins. Co. v. Barbara B., supra, 4 Cal.4th at p. 1085, 17 Cal.Rptr.2d 210, 846 P.2d 792), and nothing in the complaint suggests that such claims would be anything other than “inseparably intertwined” with the harassment (Ibid ).   A contrary inference is “ ‘tenuous and farfetched’ ” in light of the complaint as a whole.  (American Guar. & Liability Ins. Co. v. Vista Medical Supply, supra, 699 F.Supp. at p. 794.)

Appellants also cite portions of Weston's deposition as evidence of potential coverage, but her testimony does not disclose any basis for claims of defamation or false imprisonment independent of Moore's harassment.  (See Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 291, 24 Cal.Rptr.2d 467, 861 P.2d 1153 [“evidence extrinsic to the underlying complaint can defeat as well as generate a defense duty”].)

Weston said she was talking with Moore in the office one day when she heard sirens and went over to the window look outside.   Moore walked up behind her and started to kiss and nuzzle her neck.   She told him to stop, but he continued kissing and nuzzling her neck, and then reached out and fondled her breast.   At that point she turned around and pushed him away.   He apologized, and they went back to work.   Appellants cite this incident as an episode of false imprisonment.   However, even if the conduct Weston described could be liberally construed as an act of “restraint” constituting false imprisonment (5 Witkin, Summary of Cal. Law (9th ed.)   Torts, § 378, pp. 463–464), the restraint “occurred in such close temporal and spatial proximity” to sexual harassment as to be “inseparable from it” (Horace Mann Ins. Co. v. Barbara B., supra, 4 Cal.4th at p. 1084, 17 Cal.Rptr.2d 210, 846 P.2d 792;  compare David Kleis, Inc. v. Superior Court (1995) 37 Cal.App.4th 1035, 1050, 44 Cal.Rptr.2d 181 [jury could find that no sexual harassment took place but that a false imprisonment did occur] ).

Weston said that Moore yelled at her in the office several times during the week before she resigned.   The first such incident occurred on Moore's wife Valerie's birthday.   Weston said Moore yelled when he told her that they would have to dispense with a meeting because he had to get Valerie a present.   He seemed very angry about having to go out and buy the gift.   On another occasion, Moore yelled at Weston to find a surveyor and make him rectify an omission in a report he had prepared.   Another time, a caller asked about surveying work KDM could not provide, and Weston asked Moore's daughter (who, like his wife, evidently worked for the company) if she knew someone who could provide that type of survey.   At this point Moore walked by, and the daughter asked him about another surveyor.   Moore then turned to Weston and yelled that he did not “need to take this kind of bullshit,” and told her to stop bothering him with questions she knew the answer to.

Appellants cite these incidents as evidence of defamation, but Moore's outbursts could not reasonably be construed as defamatory of Weston.   They did not impugn her character, and they did not concern her work.  (Compare American Guar. & Liability Ins. Co. v. Vista Medical Supply, supra, 699 F.Supp. at p. 794 [employee subject to repeated false accusations of dereliction of duty].)   The fits of pique were potentially tortious only by virtue of Weston's testimony that she viewed them as “part and parcel” of Moore's sexual harassment.   Weston thought that Moore was upset with her for spurning his advances, and was “t[a]k[ing] out that anger on me in other ways.”

After the yelling incidents, Moore and Weston had a closed-door meeting in his office to discuss the “breakdown in [their] communication.”   Weston said Moore made it clear that he was the boss, and that she would have to accept his style or leave the company.   Weston understood him to be saying “[t]hat he might yell at me, that he might make a pass at me, that he was not responsible for his behavior.”   He said he could not guarantee that he would be civil and professional with her.   When Weston heard this, she asked him how much notice he would like and walked out of his office.   Appellants cite this meeting as evidence of false imprisonment, but Weston did not testify to any restraint during the encounter.

Weston said that she had testified to every incident encompassed by the allegation in paragraph 10(e) of her complaint to the effect that much of Moore's harassment had taken place “in the confined quarters of [the] business establishment.”   Presumably, if Weston had related any acts, other than those described above, which could arguably be characterized as false imprisonment, appellants would have cited them in opposing the motion for summary judgment.   Insofar as it appears from the deposition, there was no potential for coverage based on any false imprisonment claim.

 The deposition likewise failed to disclose any potential for coverage based on a claim of defamation.   Weston was asked to describe all of the grounds for the complaint's references to “public deprecation” and damage to “professional reputation,” and she was asked specifically whether Moore or anyone at KDM had tried to reduce her standing in the community.   She said she felt that she had a “lesser image in the community” because she could never talk about her experience as an office manager at KDM. She said that she could have referred to her work in a management capacity if Moore's conduct had not forced her to resign.   This testimony confirmed that the allegations of Weston's “deprecation” and lost reputation did not refer to publication of any defamatory statement.  (See BAJI No. 7.02 [defining “publication”].)   They referred only to damages flowing from the uncovered act of constructive termination of her employment.  (Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at p. 30, 44 Cal.Rptr.2d 370, 900 P.2d 619 [finding no duty to defend claims of “lost reputation and humiliation ․ directly related to the uncovered business torts”].)

Appellants bore the burden of proving at trial that Weston's allegations were potentially within the policy's coverage of claims for defamation and false imprisonment.  (Croskey, supra, Cal. Practice Guide:  Insurance Litigation, § 15:545.)   In its motion for summary judgment, Continental submitted Weston's complaint and a portion of her deposition transcript showing that no potential for coverage under the policy could be established.  (Code Civ. Proc., § 437c, subd. (o)(2);  Montrose Chemical Corp. v. Superior Court, supra, 6 Cal.4th at p. 300, 24 Cal.Rptr.2d 467, 861 P.2d 1153 [insurer must show that claim cannot fall within policy coverage].)   The burden then shifted to appellants, as the parties with the burden of proof at trial, to show that a triable issue of fact existed as to the potential for coverage.   (Code Civ. Proc., § 437c, subd. (o)(2);  see Hunter v. Pacific Mechanical Corp. (1995) 37 Cal.App.4th 1282, 1285–1287, 44 Cal.Rptr.2d 335.)   The allegations and testimony cited by appellants did not meet that burden.   In light of the complaint and the deposition testimony, the trial court correctly found that there was no potential for coverage and thus no duty to defend, and properly entered summary judgment in favor of Continental.

IV.

Appellants contend that Continental had a duty to defend them under the analysis in Horace Mann Ins. Co. v. Barbara B., supra, 4 Cal.4th 1076, 17 Cal.Rptr.2d 210, 846 P.2d 792.   The issue in Horace Mann was whether there was a duty to defend claims by a minor whom the insured had sexually molested.   Evidence in opposition to the insurer's motion for summary judgment included a letter from the minor's attorney detailing 13 acts of public embarrassment of the minor by the insured.  (Id. at pp. 1079, fn. 2, 1080, 1085, fn. 5, 17 Cal.Rptr.2d 210, 846 P.2d 792.) The court observed that “[i]n many cases the plaintiff's allegations of molestation and other misconduct may be inseparably intertwined” (id. at p. 1085, 17 Cal.Rptr.2d 210, 846 P.2d 792), but concluded that the insurer was not entitled to summary judgment on a record which was “devoid of evidence demonstrating that [the insured's] acts of public embarrassment of [the minor] occurred in such close temporal and spatial proximity to the molestation as to compel the conclusion that they are inseparable from it” (id. at p. 1084, 17 Cal.Rptr.2d 210, 846 P.2d 792).

 Our conclusion herein is consistent with the result and reasoning in Horace Mann. The allegation of “public deprecation” in Weston's complaint was inseparable from her allegations of sexual harassment, and she did not identify a single instance of “public deprecation” when asked to do so in her deposition.   None of the evidence presented on the motion for summary judgment disclosed any potential claim of defamation or false imprisonment independent of Weston's claim of constructive termination due to sex harassment.  “If the parties to a declaratory relief action dispute whether the insured's alleged misconduct should be viewed as essentially a part of a proven sexual molestation, or instead as independent of it and so potentially within the policy coverage, and if the evidence pertaining to the alleged misconduct that the parties submit does not permit the court to eliminate either of these views, then factual issues exist precluding summary judgment in the insurer's favor.”  (Horace Mann Ins. Co. v. Barbara B., supra, 4 Cal.4th at p. 1085, 17 Cal.Rptr.2d 210, 846 P.2d 792 [italics added].)   The evidence herein presented no triable issue of fact on the potential for coverage.

Appellants note that they have consistently denied all of Weston's allegations, and thus that the uncovered acts of wrongful termination and sexual harassment in this case, unlike the uncovered act of sexual molestation in Horace Mann, have not been “proven.”   In view of their denial of liability, appellants submit that summary judgment cannot be entered against them on the assumption that Weston's claims are true.   They note that in Horace Mann, the court wrote that “the parties disputed not only whether the acts alleged to be harassment constituted part of the molestation, but also whether those acts actually occurred.   The latter dispute implicates the insurer's duty to defend groundless claims.”  (Horace Mann Ins. Co. v. Barbara B., supra, 4 Cal.4th at p. 1085, 17 Cal.Rptr.2d 210, 846 P.2d 792.)

 However, a mere denial of liability does not create the potential for coverage.   If that were the case, an insurer would have a duty to defend every tendered claim without regard to the limitations of its policy.   Continental's policy herein, with emphasis added, states:  “If a claim is made or a lawsuit is brought which is covered by this policy, we will defend the claim or lawsuit, even if the claim or lawsuit proves to be groundless, false or fraudulent.”   Thus, the issue under the policy is not whether appellants have admitted liability, but rather whether Weston's allegations would be covered if they are true.  “The ‘groundless, false, or fraudulent’ clause ․ does not extend the obligation to defend without limits;  it includes only defense to those actions of the nature and kind covered by the policy.”  (Gray v. Zurich Insurance Co., supra, 65 Cal.2d at p. 274, 54 Cal.Rptr. 104, 419 P.2d 168;  see also Horace Mann Ins. Co. v. Barbara B., supra, 4 Cal.4th at pp. 1088–1089, fn. 1, 17 Cal.Rptr.2d 210, 846 P.2d 792 (conc. opn. of Baxter, J.).)   In this case, Weston's claims concern only wrongful termination and sex harassment, which are excluded from coverage by virtue of Insurance Code section 533.

 Appellants cite authority to the effect that Insurance Code section 533 precludes only the indemnification, and not the defense, of wilful acts.   However, “this statement of principle ․ mean[s] only that an insurer and an insured are free to contract for the provision of a defense to a claim which can not be indemnified.”  (B & E Convalescent Center v. State Compensation Ins. Fund, supra, 8 Cal.App.4th at p. 101, 9 Cal.Rptr.2d 894.)   The policy in this case is not a litigation policy under which a defense was purchased without regard to indemnification.  (Ibid.) As previously noted, Continental's “obligation to defend is predicated upon liability for a loss covered by the policy.”  (Id. at p. 102, 9 Cal.Rptr.2d 894 [internal quotation marks omitted].)

 Appellants contend that the court erred in B & E Convalescent Center when it concluded that termination of employment in contravention of public policy, like child molestation, is an inherently wrongful act.   Appellants note that, unlike child molestation, termination of employment is not always wrongful.   However, the question is whether a termination in violation of public policy—not every termination—is always intentional, wrongful and harmful.  “[I]t can hardly be denied that a termination from employment in violation of antidiscrimination statutes or other fundamental and substantial public policies is inherently harmful.”  (B & E Convalescent Center v. State Compensation Ins. Fund, supra, 8 Cal.App.4th at p. 98, 9 Cal.Rptr.2d 894.)  “Under any reasonable criterion, a termination in violation of such public policies must be held wrongful as a matter of law.”  (Id. at p. 99, 9 Cal.Rptr.2d 894.)

 Appellants contend that Insurance Code section 533 does not preclude coverage of all of Weston's claims because her complaint included allegations of merely negligent conduct on their part.  (Horace Mann Ins. Co. v. Barbara B., supra, 4 Cal.4th at p. 1083, 17 Cal.Rptr.2d 210, 846 P.2d 792 [duty to defend against “torts of negligence against the victim which are apart from, and not integral to, the molestation”].)   However, Weston's cause of action for negligent infliction of emotional distress does not change the result in this case.   It is based solely on the allegation that appellants “should have known” that the wrongful termination and harassment described elsewhere in the complaint would cause her “anguish.”   Since wrongful termination because of sex harassment is intentional as a matter of law (Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co., supra, 14 Cal.App.4th at pp. 1603–1604, 18 Cal.Rptr.2d 692;  B & E Convalescent Center v. State Compensation Ins. Fund, supra, 8 Cal.App.4th at pp. 93–99, 9 Cal.Rptr.2d 894), an allegation which merely labels such conduct as negligent is entirely ineffectual.2  “California law and applicable precedents do not allow the recharacterization of such clearly intentional and willful sexual misconduct as merely negligent or nonwillful, so as to trigger insurance coverage.”  (Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co., supra, 14 Cal.App.4th at p. 1603, 18 Cal.Rptr.2d 692;  see also Horace Mann Ins. Co. v. Barbara B., supra, at p. 1086, 17 Cal.Rptr.2d 210, 846 P.2d 792 [there is no license to “ ‘plead around’ ” Ins.Code, § 533 by “relabelling child molestation as negligence”].)   Moreover, the negligence claim in this case merely sought “incidental emotional distress damages caused by the insured's noncovered ․ torts.”  (Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at p. 10, 44 Cal.Rptr.2d 370, 900 P.2d 619.)   It created no triable issue of fact on the potential for coverage because “damages flowing from noncovered losses that may lead to emotional distress cannot be used to expand coverage.”  (Id. at p. 16, 44 Cal.Rptr.2d 370, 900 P.2d 619.)

 Appellants also contend that Coit Drapery and B & E are distinguishable because the employees in those cases, unlike Weston, were actually, as opposed to constructively, discharged.   They argue that a constructive termination may involve only negligent acts, and thereby create a potential for coverage that is absent in cases where the employee is actually fired.   However, nothing in Coit Drapery and B & E's discussion of the strong public policies against sexual harassment and tortious employment termination suggests that coverage should be available in cases where unlawful harassment and discrimination have created working conditions which are intolerable to any reasonable employee.  (See Turner v. Anheuser–Busch, Inc. (1994) 7 Cal.4th 1238, 1246–1248, 32 Cal.Rptr.2d 223, 876 P.2d 1022 [identifying elements of cause of action for constructive wrongful discharge in violation of fundamental public policy].)   Constructive termination is no less inherently harmful than actual termination, and it can be deemed no less “wilful” than actual termination for purposes of Insurance Code section 533.   In order to recover for constructive termination, it is insufficient to show that the employer had only constructive knowledge of the intolerable conditions.  (Id. at p. 1248, 32 Cal.Rptr.2d 223, 876 P.2d 1022.)  “[T]he employer must either deliberately create the intolerable working conditions that trigger the resignation or, at a minimum, must know about them and fail to remedy the situation in order to force the employee to resign.”  (Turner v. Anheuser–Busch, Inc., supra, at pp. 1249–1250, 32 Cal.Rptr.2d 223, 876 P.2d 1022.)   Deliberate creation of intolerable working conditions or knowing failure to remedy them are “wilful” acts within the meaning of Insurance Code section 533.  (See California Casualty Management Co. v. Martocchio (1992) 11 Cal.App.4th 1527, 1533, 15 Cal.Rptr.2d 277 [a “ ‘wilful act’ ” under Ins.Code, § 533 is “some act more blameworthy than ordinary negligence”].)

Appellants' various arguments against the judgment are lacking in merit.

V.

The judgment is affirmed with costs to Continental Insurance Company.

FOOTNOTES

1.   B & E involved a worker's compensation and employer's liability policy, rather than a comprehensive general liability policy, but the court noted that differences between these types of policies did not affect the application of Insurance Code section 533.  (B & E Convalescent Center v. State Compensation Ins. Fund, supra, 8 Cal.App.4th at pp. 92–93, fn. 16, 9 Cal.Rptr.2d 894.)

2.   We note that there is no claim against KDM for negligent supervision of Moore, and that no such claim could succeed in view of his status as an owner and President of the company.  (See Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co., supra, 14 Cal.App.4th at p. 1605, 18 Cal.Rptr.2d 692.)

HANLON, Associate Justice.

POCHÉ, Acting P.J., and REARDON, J., concur.