State Farm seeks declaratory judgment in Dado's Cafe harassment and discrimination suit

By Danielle Pacey | Jul 13, 2018

ST. LOUIS — Believing policy parameters relieve it from liability coverage, State Farm Insurance on July 8  asked the U.S. District Court for the Eastern District State of Missouri for a declaratory judgment in a sexual harassment and discrimination case.

Dado's Cafe in St. Louis had a restaurant liability policy with State Farm from July 8, 2016 until July 8, 2017. During this time, three female employees alleged Nick Avouris, another employee, sexually harassed them and touched them inappropriately. 

The plaintiffs, Anna McNamara, Aimee, Duvall and Elisha Velis, alleged they made complaints to supervisors and management in regards to sexual harassment but nothing was done.  After they were all terminated, they alleged they were wrongfully discriminated and retaliated against.

The women filed complaints with the Missouri Commission on Human Rights, which granted them the right to file their civil action under the Missouri Human Rights Act.  

Shortly after the women filed their suit, State Farm issued a reservation of rights letter to Dado's Cafe, saying it does not believe it should have to defend and indemnify Dado's under the policy terms.

As an explanation for why it should not be required to provide liability coverage, State Farm cited the policy, which reads:

"When a Limit Of Insurance is shown in the Declarations for Coverage L – BusinessLiability, we will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury”, “property damage” or “personal and advertising injury” to which this insurance applies."

State Farm maintains that by definition of "bodily injury" in the policy, sickness or disease must occur, which none of the women are alleging. 

The policy also states for "personal and advertising" injury to take place, physical injury of the property has to happen. State Farm does not think it is required to indemnify Dado's based on the claim, because no physical injury of the property occurred.

Dado's declaration page states that the company is a corporation and is insured.  However, State Farm points out that Avouris is not insured under the policy.  Avouris would need to be an officer, director or stakeholder to be an insured under the policy terms, according to the insurance company. 

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