Meaning of “Employee” under Crime Policy
April 13, 2015
Union Hill Supremo Pharmacy appeals from an order granting summary judgment in favor of Franklin Mutual Insurance Company. This case is Union Hill Supremo Pharmacy v. Franklin Mut. Ins. Co., 2015 WL 893260 (N.J. Sup. Ct. March 4, 2015).
The pharmacy was robbed while the store was closed, and the loss amounted to $300,000 worth of merchandise. The commission of the crime was facilitated by a former employee, Yusofova, who worked at Union Hill for about twelve to eighteen months. Yusofova worked part-time as a technician's assistant where she was responsible for assisting with prescriptions, entering patient information, and performing other clerical duties. Yosofova admitted that she gave the criminals the security code and a copy of the pharmacy key.
When the insured submitted a claim, the insurer disclaimed coverage under the crime policy based on the disappearance or dishonesty exclusion, which applied when there were criminal, dishonest, or fraudulent acts by an employee or other insureds. The policy defined “employee” as a person employed by the named insured. When the coverage dispute went to trial, the court granted summary judgment to the insurer and this appeal followed.
The insured argued that summary judgment was inappropriate because there was a genuine issue of material fact regarding the term “employee.” The insured maintained that the insurance policy was vague and ambiguous in its definition of “employee” and that, as a part-time employee, Yusofova should not be considered an employee under the terms of the policy.
The Superior Court of New Jersey, Appellate Division, noted that the plain language of the policy includes Yusofova as an employee. She worked at Union Hill as an employee and there was no indication that her employment at the pharmacy had any particular end date. Moreover, nowhere in the policy does it say that part-time employees are exempt from the disappearance or dishonesty exclusion. As to the argument of the insured that the exclusion is ambiguous and should apply only to someone who is acting during working hours, the court simply disagreed.
The court further noted that Yusofova surreptitiously obtained the key and pharmacy combination and passed them on to the thieves and acquired this information by using her knowledge as an employee. Her involvement falls squarely under the express language of the exclusionary clause of the policy.
The ruling of the trial court was affirmed.
Editor's Note: The policy definition of “employee“ in this case is very simple—a person employed by the named insured. The appeals court decided that the definition and the facts unambiguously pointed out that Yusofova was an employee and so, the exclusion clearly applied to the claim under the insured's crime policy.