INSURER HAS NO DUTY TO DEFEND OR INDEMNIFY FLSA CLAIMS

February 14, 2012

On Friday, U.S. District Judge Ellison granted summary judgment for SAFECO in a declaratory judgment action finding SAFECO owed no duty to defend or indemnity Fair Labor Standards Act (FLSA) claims under a homeowners and umbrella policy for claims brought by the insured’s nanny.  SAFECO v. Kamat, No.04:11-CV-00557 (S.D. Tex. February 10, 2012) (not designated for publication).   The nanny sued because she was required to work eighteen hours per day for unfairly low wages, the Kamats threatened that if she went outside she would be arrested by the police, and Kamats also kept Prakash from seeing a doctor when she was sick.  On December 7, 2010, the jury returned its verdict, which found that the Kamats willfully violated the FLSA.  The Kamats were willing to enter into an agreed order on coverage, but the nanny challenged SAFECO’s coverage action.

The court rejected the nanny’s argument that it did not have subject matter jurisdiction.  It then considered the allegations and verdict in light of the plain language of the policy.  The court noted that the policies provide for coverage of “personal injury,” which is defined as including “false arrest, detention or imprisonment, or malicious prosecution or humiliation.”  But, the court noted that the nanny did not allege any of these.  The court found the nanny’s intentional inflection of emotional distress claims, which the jury rejected, also did not fall within these categories.  The court held SAFECO had no duty to defend or indemnify the claims.

[Editor’s  Note:   MDJW  congratulates  SAFECO  on  its  summary  judgment  in  this  unique  claim. Christopher W. Martin, Barrie Beer, and Amber Dunten of MDJW represented SAFECO in this matter.]