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Fluke Corp. v. Hartford Accident & Cas. Co.

Public policy does not prohibit insurance coverage for malicious prosecution and punitive damages under Washington state law; commercial general liability policy provided coverage to policyholder for adverse judgment in malicious prosecution suit brought in California.

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The full case caption appears at the end of this opinion.

OWENS, J. — The Hartford Accident and Indemnity Company (Hartford)challenges the decision of the Court of Appeals that, under the terms ofthe Commercial General Liability (CGL) policy that Hartford sold to FlukeCorporation (Fluke), Hartford was obligated to pay both the compensatoryand punitive damages that a California jury awarded against Fluke in amalicious prosecution action. In this declaratory judgment action, thetrial court and the Court of Appeals concluded that public policy inWashington did not negate the CGL policy’s unambiguous grant ofliability coverage for malicious prosecution. See Fluke Corp. v. HartfordAccident & Indem. Co., 102 Wn. App. 237, 7 P.3d 825 (2000). However,contrary to the trial court’s conclusion, the Court of Appeals held thatthe policy covered awards of punitive damages against Fluke, and it furtherdetermined that coverage for punitive damages did not contravene a clearpublic policy in this state regarding such insurance. Because Californialaw precludes coverage both for intentional acts (including maliciousprosecution) and for punitive damages,1 Hartford invoked California law,but the Court of Appeals agreed with the trial court that Washington law,not California law, governed this declaratory judgment action.We affirm the Court of Appeals on all issues.

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