Jamba Juice says insurer refused coverage in worker's sex assault claim

By Elizabeth Alt | May 28, 2018

SAN FRANCISCO – The parent company of Jamba Juice outlets in Colorado is suing insurance company Houston Casualty over its denial to cover a sexual assault claim filed on behalf of a juvenile employee at a Colorado outlet who was allegedly sexually assaulted by a store manager.

Whirl Colorado LLC filed its complaint May 22 in U.S. District Court for the Northern District of California and states it is “obvious that HCC was looking to avoid providing coverage to Whirl at any cost.”

The former employee filed claims in January 2017 of “sexual harassment, sex discrimination and constructive wrongful termination" 

The complaint alleges the insurance company denied coverage because of a claim letter sent to Whirl that it said it didn't receive. The letter was reportedly mailed out last July. The insurer used the “mailbox rule” – the legal presumption that the mail gets delivered – to decide Whirl must have received the letter and has removed notes from the claims adjuster who found that Whirl had not received the letter after looking at dates on the emails from the CCRD to Whirl, and Whirl’s quick response to CCRD once they were made aware that the letter required a response.

In April, Whirl claimed Houston Casualty said it would offer a “temporary” defense for the mediation, but put “impermissible conditions and limitations on the defense," including the amount of attorneys’ fees they would reimburse, with no explanation, and has failed to settle the case.

In court documents Whirl Colorado alleges, “HCC has raised unfounded defenses to coverage, seriatim, in a desperate effort to avoid its responsibilities. It has twice withdrawn the defense it purported to provide Whirl. More importantly, HCC has callously prevented Whirl from reaching a reasonable settlement of the claims recommended by defense counsel."

Whirl’s complaint states that HCC has no good faith basis to deny coverage to Whirl, and that its policy covers the exact claims alleged by the former employer. Whirl claims it has been financially harmed.

The complaint alleges among the claims that HCC has breached contract and the covenant of good faith and fair dealing by “whipsawing Whirl by withdrawing its defense twice without any reasonable basis for doing so." Whirl requests financial relief in the form of double the policy benefits, prejudgment interest, costs to recover fees paid to Whirl’s attorneys and court costs in recovering the benefits due, “plus the financial losses suffered by Whirl as a result of HCC’s conduct, plus punitive damages.”

Whirl is represented by Dennis M. Cusac and Erica Villanueva of Farella Braun & Martel LLP in San Francisco.

U.S. District Court for the Northern District of California San Francisco Division, case number 3:18-cv-03044

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