Richbell v. Executive Risk Indemnity

Filed 3/15/07 Richbell v. Executive Risk Indemnity CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

APPEAL from a judgment of the Superior Court of Los Angeles County. Allan J. Goodman, Judge. Affirmed.

Lerman Pointer & Clarkson, Robert L. Clarkson and Lawrence C. Jones for Plaintiffs and Appellants.

Musick, Peeler & Garrett and Gilbert D. Jensen for Defendant and Respondent.

This is an insurance coverage dispute concerning an insurers duty to defend a lawsuit by one insured (the former employee of an insured entity) against other insured entities, including the former employer. The liability insurance policy at issue excludes coverage for lawsuits between insureds, but excepts from the exclusion retaliatory treatment against an employee . . . on account of such employees exercise or attempted exercise of his or her rights under law. The trial court entered summary judgment in favor of the insurer, defendant and respondent Executive Risk Indemnity, Inc. (defendant), after concluding that the policy exclusion for lawsuits between insureds barred coverage of the underlying action, and that plaintiffs failed to present a triable issue of material fact as to whether the underlying lawsuit was potentially covered under the policy exception for retaliatory treatment against an employee.

In this appeal, the insureds, plaintiffs and appellants Richbell, LLC (Richbell) Richbell III, LLC (Richbell III), the Greenwich Group International, LLC (Greenwich), Greenwich Brokerage Services, Inc., and Simon Mild (Mild) (collectively, plaintiffs) contend that triable issues of material fact exist as to whether the underlying lawsuit alleged retaliatory treatment against an employee, thereby triggering defendants defense obligations under the policy. Plaintiffs further contend the trial court abused its discretion by disregarding declarations they submitted in opposition to the motion for summary judgment. They argue that the declarations attest to retaliatory acts potentially covered under the policy.

We affirm the judgment. Defendant owed no duty to defend the underlying lawsuit, which was excluded from coverage under the policy by the provision barring coverage for lawsuits between insureds. Plaintiffs raised no triable issue of material fact as to whether the underlying claims were for retaliatory treatment against an employee excepted from that exclusion and potentially covered under the policy. The trial court did not abuse its discretion by disregarding plaintiffs evidence of previously undisclosed facts purportedly establishing a potential for coverage, but not known to defendant at the time the third party lawsuit was tendered.

BACKGROUND

A. The Parties and Entities

Plaintiffs are insureds under a directors and officers liability insurance policy (the Policy) issued by defendant. Greenwich and Richbell are New York limited liability companies. Greenwich operated and managed Paddock Players, LLC (Paddock) another New York limited liability company. Richbell owned a majority interest in Greenwich,[1] and on January 1, 2000, transferred its interest in Greenwich to Richbell III. Mild was the managing member of Richbell, Richbell III, and Greenwich.

The plaintiff in the underlying lawsuit, David Doupe (Doupe), was employed by Greenwich pursuant to a written contract as a commercial real estate broker. Doupe was also a member of Richbell and a member of Paddock.

B. The Policy

The Policy affords indemnity coverage to Insured Persons for claims made during the period from June 23, 2000 to June 23, 2001 for Wrongful Acts, including Employment Practices Wrongful Acts.[2] The Policy also imposes on defendant the duty to defend claims: As part of and subject to the limit of liability stated in ITEM 3 of the Declarations, the Underwriter will have the right and duty to defend any Claimas described in INSURING AGREEMENTS (A) AND (B)(1) (and, if it is stated in the Declarations that coverage has been made available thereunder, INSURING AGREEMENT (B)(2)), even if such Claimis groundless, false or fraudulent.

The Policy excludes coverage for any Claim by or on behalf of, or in the name or right of, the Company or any Insured Person (the Insured versus Insured Exclusion), but excepts from this exclusion any Claim for an Employment Practices Wrongful Act (the Employment Practices Exception).[3] The Policy defines the term Employment Practices Wrongful Act to include any actual or alleged . . . retaliatory treatment against an employee of the Company on account of such employees exercise or attempted exercise of his or her rights under law.[4]

The term Company is defined under the Policy to include Greenwich and any subsidiary created or acquired before the Policy inception date, Richbell, and Greenwich Brokerage Services, Inc. An Insured Person is defined as any past, present or future director or officer of the Company and any past, present or future employee of the Company; provided, that employees, unlike directors and officers, will be Insured Persons only if and to the extent that Claims are made against them for Employment Practices Wrongful Acts.

C. The Underlying Action

Doupe resigned from his employment with Greenwich on June 8, 1999, and began working for a competitor. On June 30, 1999, Greenwich filed a lawsuit against Doupe.[5] On November 4, 1999, Doupe filed a complaint against Greenwich with the California Labor Commissioner for unpaid vacation wages, unreimbursed business expenses, interest, and penalties pursuant to Labor Code section 203. In an order dated August 1, 2000, a hearing officer designated by the California Labor Commissioner awarded Doupe vacation wages in the amount of $29,442.35, interest in the amount of $2,594.57, expense reimbursements in the amount of $5,396.00, and penalties pursuant to Labor Code section 203 in the amount of $28,846.20. Greenwich paid the sums awarded to Doupe.

On September 8, 2000, Doupe filed a first amended cross-complaint against Greenwich and Richbell seeking defense and indemnity of plaintiffs lawsuit against him, pursuant to an indemnity provision in Doupes employment agreement with Greenwich; payment of distributions allegedly owed him as a member of Paddock; and payment of sums allegedly owed him under a note executed by Richbell. Defendant received notice of Doupes first amended cross-complaint by a transmittal dated October 13, 2000, along with plaintiffs request for a defense and indemnity of the cross-action. By letter dated October 23, 2000, defendant denied coverage for the Doupe cross-action.

On January 11, 2002, Doupe filed a third amended cross-complaint against Richbell, Richbell III, and Mild for sums allegedly owed him under a note executed by Richbell, for Richbells allegedly fraudulent transfer of its assets to Richbell III, for withholding distributions allegedly owed Doupe as a member of Paddock, and for withholding documents and other information to which Doupe was entitled as a member of Richbell. Greenwich was not named as a defendant in Doupes third amended cross-complaint. In January 2002, defendant received a copy of Doupes third amended cross-complaint, along with a request for a defense and indemnity. Defendant denied coverage for Doupes third amended cross-complaint.

At some point, plaintiffs settled their action against Doupe and obtained the dismissal of Doupes cross-action.[6]

D. The Instant Coverage Litigation

Plaintiffs filed this action against defendant on February 19, 2003, seeking a declaration that defendant was obligated under the Policy to defend and indemnify Richbell, Richbell III, and Mild against the claims asserted in Doupes cross-action.[7] Defendant moved for summary judgment, or in the alternative, summary adjudication, that it had no duty to defend the Doupe cross-action on the grounds that the Insured versus Insured Exclusion barred coverage, the Employment Practices Exception did not apply, and plaintiffs failed to disclose the facts and circumstances of the Doupe cross-action in their application for insurance. Defendant maintained that the Employment Practices Exception did not apply because the Doupe cross-complaints alleged no retaliatory acts against him as an employee, and all of plaintiffs alleged transgressions occurred after Doupe resigned from his employment.

Plaintiffs opposed the motion, arguing that Doupes first and third amended cross-complaints alleged acts of retaliation potentially covered under the Policy, and plaintiffs application for insurance submitted in September 2000 was accurate at the time. In support of their opposition, plaintiffs submitted a declaration by Doupe, dated May 12, 2005. In his declaration, Doupe attests to certain employment-related acts of retaliation by Mild and Richbell, stating that after he announced his decision to resign from Greenwich, but before he actually resigned, Mild and Richbell undertook a campaign of retaliation against him by, among other things, unilaterally reducing his salary, refusing to pay him wages he had earned, refusing to pay him for accrued vacation time, refusing to pay him travel and entertainment expenses, and creating a hostile work environment. Doupe unequivocally states in his declaration, however, that he was asserting no claims for these employment-related acts in his cross-action against Mild and Richbell: [M]y claims against Richbell I were solely in my capacity as an investor in Richbell I, not as a member of Richbell I and My claims against Mr. Mild were also solely in my capacity as an investor, including my investments in Richbell I, Paddock Players, and my ROSA note.[8] Plaintiffs also submitted the declaration of their counsel, Robert Clarkson, who stated that Greenwich and Richbell undertook various acts of retaliation against Doupe in June 1999 as the result of his decision to resign from Greenwich, and that the definition of an employee in the Policy could reasonably be understood to mean a former, current, or future employee.

Plaintiffs opposition was also supported by the declaration of James Flood, the person at Greenwich responsible for completing the application for an insurance policy from defendant. In his declaration, Mr. Flood stated that on or before September 11, 2000, he did not know of any claim or threatened claim by Doupe against Greenwich. Defendant objected to the Flood declaration on the ground that Mr. Flood had, during deposition, refused to answer and provide any information as to when plaintiffs became aware of the Doupe cross-action, and that the declaration therefore contradicted Mr. Floods deposition testimony. Defendant also objected to the Doupe and Clarkson declarations on various grounds, including lack of foundation and hearsay.

The trial court sustained all of defendants evidentiary objections to the Flood declaration, and to defendants objection, based on lack of foundation, to statements in the Clarkson declaration concerning the meaning of the term employee under the Policy. On its own motion, the trial court struck as irrelevant portions of the Doupe and Clarkson declarations describing purported acts of retaliation against Doupe before his formal resignation from Greenwich. The trial court then granted summary judgment in defendants favor. This appeal followed.

DISCUSSION

I. Standard of Review

Summary judgment is granted when a moving party establishes the right to entry of judgment as a matter of law. (Code Civ. Proc.,  437c, subd. (c).) A defendant moving for summary judgment bears the initial burden of proving that there is no merit to a cause of action by showing that one or more elements of the cause of action cannot be established or that there is a complete defense to that cause of action. (Code Civ. Proc.,  437c, subd. (p)(2); Cucuzza v. City of Santa Clara(2002) 104 Cal.App.4th 1031, 1037.) Once the defendant has made such a showing, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or as to a defense to the cause of action. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849.) If the plaintiff does not make such a showing, summary judgment in favor of the defendant is appropriate. In order to obtain a summary judgment, all that the defendant need do is to show that the plaintiff cannot establish at least one element of the cause of action . . . . [T]he defendant need not himself conclusively negate any such element . . . . (Id. at p. 853.)

We review the trial courts grant of summary judgment de novo and decide independently whether the facts not subject to triable dispute warrant judgment for the moving party as a matter of law. (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348; Code Civ. Proc., 437c, subd. (c).) We review the trial courts evidentiary rulings in connection with a summary judgment motion under the abuse of discretion standard. (Carnes v. Superior Court (2005) 126 Cal.App.4th 688, 694; Walker v. Countrywide Home Loans, Inc. (2002) 98 Cal.App.4th 1158, 1169.)

II. The Duty to Defend

[A] liability insurer owes a broad duty to defend its insured against claims that create a potential for indemnity. [Citation.] . . . [T]he carrier must defend a suit which potentially seeks damages within the coverage of the policy. [Citation.] Implicit in this rule is the principle that the duty to defend is broader than the duty to indemnify; an insurer may owe a duty to defend its insured in an action in which no damages are ultimately awarded. [Citations.] (Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1081.) However, while the duty to defend is broad, it is not unlimited. It is entirely dependent upon a showing by the insured that the third party claim for which it seeks a defense is one for damages which potentially fall within the policy coverage. It is the nature and kind of risk covered by the policy which both defines and limits the duty to defend. [Citation.] (Lebas Fashion Imports of USA, Inc. v. ITT Hartford Ins. Group (1996) 50 Cal.App.4th 548, 556.)

The determination whether the insurer owes a duty to defend usually is made in the first instance by comparing the allegations of the complaint with the terms of the policy. Facts extrinsic to the complaint may also give rise to a duty to defend when they reveal a possibility that the claim may be covered by the policy. [Citation.] [Citation.] (Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 295.) [T]he extrinsic facts which may create a duty to defend must be known by the insurer at the inception of the third party lawsuit. (Gunderson v. Fire Ins. Exchange (1995) 37 Cal.App.4th 1106, 1114 (Gunderson).) An insured may not trigger the duty to defend by speculating about extraneous facts regarding potential liability or ways in which the third party claimant might amend its complaint at some future date. . . . [A] third party is not the arbiter of the policys coverage. [Citations.] A corollary to this rule is that the insured may not speculate about unpled third party claims to manufacture coverage. [Citation.] (Gunderson, at p. 1114.)

Applying these principles to the instant case, the relevant inquiry is what facts defendant knew at the time plaintiffs tendered the defense of the Doupe first and third amended cross-complaints, both from the allegations on the face of the cross-complaints, and from extrinsic information known to it at that time, and whether these known facts created a potential for coverage under the terms of the Policy. It is undisputed that Greenwich, Richbell, Doupe, and Mild were insureds under the Policy. The claims asserted in Doupes first and third amended cross-complaints are therefore excluded from coverage by the Insured versus Insured Exclusion, unless the Employment Practices Exception applies. We must therefore determine whether the allegations of Doupes first and third amended cross-complaints, or the extrinsic evidence known to defendant at the time of tender, showed employment-related retaliation potentially covered under this exception. No such showing was made here.

A. Doupes First Amended Cross-Complaint

Plaintiffs contend that the first and sixth causes of action in Doupes first amended cross-complaint allege retaliation potentially covered under the Policy. As we discuss, neither the first nor the sixth causes of action alleges retaliatory treatment against an employee that comes under the Policys Employment Practices Exception.[9]

1. First Cause of Action

The first cause of action in Doupes first amended cross-complaint seeks a declaration and an order that Greenwich indemnify Doupe for attorneys fees and expenses incurred in connection with plaintiffs lawsuit against Doupe, pursuant to a contractual indemnity covering claims relating to his work for Greenwich. Plaintiffs claim that the following allegation under this cause of action is a claim for retaliation potentially covered under the Policy: Plaintiffs initiated this civil action against Mr. Doupe, alleging wrongful conduct by him arising out of his actions serving as an employee and as joint president of Greenwich.

Viewed in context, Doupes allegation that plaintiffs lawsuit against him alleg[ed] wrongful conduct . . . arising out of his actions serving as an employee and joint president of Greenwich is made in order to trigger Greenwichs contractual indemnity obligation for claims relating to [Doupes] work for Greenwich. There is no allegation of any retaliatory treatment against Doupe on account of his exercise or attempted exercise of his . . . rights under law. The first cause of action alleges no wrongful employment practice that is covered under the Policys Employment Practices Exception to the Insured versus Insured Exclusion.

2. Sixth Cause of Action

Plaintiffs contend that the sixth cause of action in Doupes first amended cross-complaint alleges acts of retaliation potentially covered under the Policy. The sixth cause of action is for breach of fiduciary duty against Greenwich for knowingly and intentionally failing and refusing to deliver funds it received as a fiduciary for Mr. Doupe, in its capacity as a manager of Paddock, in which Doupe owned a 12.5 percent interest. The funds allegedly owed to Doupe were distributions that Greenwich was obligated to make to members of Paddock in accordance with their percentage interests, but that Greenwich failed to distribute to Doupe. Under this cause of action, Doupe further alleges that Greenwich embarked upon a course of action intentionally depriving [him] of other funds to which he was entitled, including withholding his vacation pay and reimbursable business expenses, monies due him from his investment in Paddock Players, and interest payments on a note executed by Richbell, and that [t]his conduct has aggravated the wrongful effect of the breach of Greenwichs fiduciary duty.

The alleged breach of fiduciary duty for which Doupe seeks relief under this cause of action are acts by Greenwich in its capacity as manager of Paddock, and not as an employer, and the relief sought is for nonpayment of funds owed to Doupe as a member of Paddock. Doupe does not allege that Greenwich withheld the Paddock distributions as retaliation for Doupes exercise of any legal right. Although Doupe does allege that Greenwich intentionally withheld other funds to which he was entitled as an employee, including vacation pay and reimburseable business expenses, he does not contend that this conduct constituted a breach of fiduciary duty, but that it merely aggravated the wrongful effect of Greenwichs breach. Nor did Doupe seek to recover unpaid vacation pay and other expenses as part of his first amended cross-complaint. As discussed, he had already sought and obtained recovery of those sums in a separate action filed with the California Labor Commissioner. The sixth cause of action in Doupes first amended cross-complaint alleges no acts of retaliation that come under the Policys Employment Practices Exception.[10]

B. Doupes Third Amended Cross-Complaint

Doupes third amended cross-complaint alleges that after his resignation from Greenwich in June 1999, Mild, Richbell, and Richbell III embarked upon a campaign against him to deprive him of his investment interests in Richbell and Paddock and to withhold payment of funds owed him under a note executed by Paddock. Plaintiffs argue that the claims asserted in the third amended cross-complaint are acts of retaliation covered under the Policys Employment Practices Exception.

None of the claims asserted in Doupes third amended cross-complaint are for retaliatory treatment against an employee of the Company on account of such employees exercise or attempted exercise of his or her rights under law. None of the entities sued as defendants in Doupes third amended cross-complaint employed him.[11] Nowhere in the third amended cross-complaint does Doupe allege that plaintiffs alleged transgressions were in retaliation for his attempted exercise of his legal rights as an employee. In his 2005 declaration, Doupe concedes that all of the claims asserted in his third amended cross-complaint are solely in his capacity as an investor in Richbell and Paddock. Plaintiffs themselves took the position in the underlying action that Doupes cross-complaint was unrelated to [his] employment agreement, but instead relates exclusively to Doupes position as a member of Richbell, and his contention that he was denied rights to which he was entitled as a member of Richbell III.[12] Their argument to the contrary in this action is unavailing. Doupes third amended cross-complaint asserts no claim that is potentially covered under the Policy.

C. Extrinsic Facts and Evidentiary Rulings

Plaintiffs contend that facts extrinsic to Doupes first and third amended complaints presented a potential for coverage under the Policy and that defendant had a duty to investigate and discover these facts at the time the cross-complaints were tendered. Plaintiffs further contend that the Doupe and Clarkson declarations they submitted in opposition to the motion for summary judgment confirmed the existence of such extrinsic facts, and that the trial court erred by striking this evidence on relevancy grounds.

After receiving a tender of defense, the insurer satisfies its duty to investigate by considering the complaint and the terms of the policy. (Baroco West, Inc. v. Scottsdale Ins. Co. (2003) 110 Cal.App.4th 96, 103, fn. omitted.) [A]n insurer does not have a continuing duty to investigate whether there is a potential for coverage. If it has made an informed decision on the basis of the third party complaint and the extrinsic facts known to it at the time of tender that there is no potential for coverage, the insurer may refuse to defend the lawsuit. [Citations.] (Gunderson, supra, 37 Cal.App.4th at p. 1114.)

Plaintiffs have presented no extrinsic facts known to defendant at the time the Doupe cross-complaints were tendered that create a potential for coverage under the Policy. Defendant had no duty to investigate previously undisclosed facts set forth in declarations plaintiffs submitted in this coverage litigation. Gunderson is the controlling authority on the scope of defendants duty to investigate. In Gunderson, the insureds presented extrinsic evidence of a potentially covered claim while litigating coverage issues with the insurer after the underlying third party lawsuit had settled. The insurer denied coverage on the ground that the policy afforded defense and indemnity coverage for liability because of bodily injury or property damage covered by the policy, and the underlying lawsuit had sought only declaratory and injunctive relief to quiet title in an easement. (Gunderson, supra, 37 Cal.App.4th at p. 1110.) The insureds argued that the insurer knew or should have known that there was a potential that underlying plaintiff might assert a property damage claim against them, and that the insurer breached its duty to investigate facts extrinsic to the complaint in determining its duty to defend. They pointed to letters from the underlying plaintiffs attorney complaining about a fence the insureds had removed at the outset of the underlying dispute, as well as discovery responses and deposition testimony by the underlying plaintiff mentioning property damage based on removal of the fence. (Id. at p. 1111.)

The court in Gunderson held that the insureds extrinsic evidence of a potential claim for property damage did not establish a duty to defend because allegations of property damage were never incorporated in the underlying third party complaint, and because the alleged extrinsic evidence arose after the underlying complaint had been filed and tendered to the insurer. (Gunderson, supra, 37 Cal.App.4th at pp. 1116-1117.) The court noted that the insurer was entitled to base its determination of whether or not to accept the tender on the facts available to it at that time. Once it determined on the basis of the lawsuit itself and the facts known to it at that time that there was no potential for coverage, it did not have a continuing duty to investigate or monitor the lawsuit to see if the third party later made some new claim, not found in the original lawsuit. [Citations.] (Id. at p. 1117.)

Here, as in Gunderson, defendant was entitled to base its determination of whether or not to accept plaintiffs tender on the facts known to it at that time. Moreover, [i]t is the insureds burden to bring to the insurers attention new facts indicating a potential for coverage. If the insured fails to do so, the insurer cannot be liable for refusing a defense because it has no way to know of these new facts, and no obligation to find them out by itself. [Citation.] (Croskey, et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2006) 7:588.6, p. 7B-29, quoting Gunderson, supra, 37 Cal.App.4th at p. 1117.)

Plaintiffs made no showing that defendant knew of the facts contained in the declarations and other evidence submitted in this action at the time the Doupe cross-complaints were tendered in 2002 and 2003, or that they made any effort to bring these facts to defendants attention at that time. None of the evidence plaintiffs present is relevant to determining defendants duty to defend the Doupe cross-action. (See Gunderson, supra, 37 Cal.App.4th at p. 1114.) Therefore, the trial court did not abuse its discretion by striking, on its own motion, portions of the Doupe and Clarkson declarations.

CONCLUSION

The Insured versus Insured Exclusion bars coverage of the Doupe cross-action. Plaintiffs failed to present a triable issue of material fact as to whether the claims asserted in the Doupe cross-action were potentially covered as Employment Practices Wrongful Acts and thus excepted from the exclusion. Summary judgment was therefore properly granted in defendants favor. In view of our holding, we need not determine whether the Employment Practices Exception applies only to retaliatory acts against a present employee of an insured entity, or whether the Doupe cross-action is not covered under the Policy because plaintiffs failed to disclose that claim in their application for insurance.

DISPOSITION

The judgment is affirmed. Defendant is awarded its costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

____________________, J.

CHAVEZ

We concur:

____________________, P. J. _____________________, J.

BOREN DOI TODD

Publication courtesy of San Diego free legal advice.

Analysis and review provided by Santee Property line attorney.

[1] Richbell initially owned a 50 percent interest in Greenwich, but after several acquisitions and redemptions, owned a 98 percent interest in Greenwich.

[2] The insuring agreements in the Policy provide as follows: (A) The Underwriter will pay on behalf of the Insured Persons Lossfrom Claimsfirst made against them during the Policy Periodfor Wrongful Acts, including Employment Practices Wrongful Acts, unless the Companypays such Loss to or on behalf of the Insured Personas indemnification. [] (B) The Underwriter will pay on behalf of the Company: [] (1) Lossfrom Claimsfirst made against the Insured Personsduring the Policy Periodfor Wrongful Acts, including Employment Practices Wrongful Acts, if the Companypays such Lossto or on behalf of the Insured Personsas indemnification; and [] (2) (OPTIONAL COVERAGE) if it is stated in the Declarations that coverage has been made available under this INSURING AGREEMENT (B)(2), Loss from Claimsfirst made against the Companyduring the Policy Periodfor Wrongful Acts, including Employment Practices Wrongful Acts. The Policy declarations state that the optional coverage under paragraph (B)(2) of the insuring agreement was available during the policy period.

[3] The Insured versus Insured Exclusion and the Employment Practices Exception are stated in the Policy as follows: This Policy does not apply to: . . . [] (E) any Claim by or on behalf of, or in the name or right of, the Companyor any Insured Person, except that this EXCLUSION (E) will not apply to: [] . . . [] (3) any Claimfor an Employment Practices Wrongful Act.

[4] The Policy definition of an Employment Practices Wrongful Act also includes wrongful termination of the employment of, or demotion of or failure or refusal to hire or promote, any person and discrimination or sexual harassment adversely affecting any employee of, or applicant for employment with, the Company. Plaintiffs do not contend that the underlying lawsuit for which they seek a defense alleges these other types of acts.

[5] Although the parties do not discuss the substance of plaintiffs action against Doupe, that action appears to have been to enforce a noncompete clause in Doupes employment agreement with Greenwich and breach of an alleged agreement by Doupe to remain with Greenwich for a five-year period.

[6] See footnote 7.

[7] The record does not indicate when plaintiffs settled the Doupe cross-action, and it is therefore unclear when their claim against defendant became a fully matured cause of action for money, rather than a claim for declaratory relief, which operates prospectively, rather than to redress past wrongs. (Firemans Fund Ins. Co. v. Maryland Casualty Co. (1994) 21 Cal.App.4th 1586, 1593, fn. 5.) Defendant did not move for summary judgment on the ground that plaintiffs declaratory relief action should be dismissed for this reason.

[8] The ROSA note is a promissory note executed by Richbell and pursuant to which Doupe lent Richbell $16,225.

[9] Plaintiffs do not contend that Doupes cross-complaints allege other types of Employment Practices Wrongful Acts potentially covered under the Policy, such as wrongful termination, demotion or failure to hire, discrimination, or sexual harassment.

[10] The allegations set forth under the sixth cause of action are of questionable relevance in this declaratory relief action, as they apply only to Greenwich, an entity for which plaintiffs do not seek a declaration concerning defendants defense or indemnity obligations under the Policy. The sixth cause of action contains no allegations that concern Richbell, the only other entity sued in the first amended cross-complaint for which plaintiffs seek such a declaration.

[11] Greenwich, Doupes former employer, was not named as a defendant in Doupes third amended cross-complaint.

[12] We grant defendants request for judicial notice of the brief plaintiffs filed in the underlying action in support of a motion to sever Doupes cross-complaint from their complaint against him.