Allstate Insurance v. Wagner-Ellsworth

July 8 2008
DA 06-0061
IN THE SUPREME COURT OF THE STATE OF MONTANA
2008 MT 240
ALLSTATE INSURANCE COMPANY,
Plaintiff and Appellee,
v.
TERRY WAGNER-ELLSWORTH and TIFFANY
RUSK, individually, and as mother and
natural guardian of BRANDON RUSK,
Defendants and Appellants.
APPEAL FROM: District Court of the Eighth Judicial District,
In and For the County of Cascade, Cause No. DDV 04-1008(C)
Honorable Kenneth R. Neill, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Ward E.Taleff; Taleff Law Office, Great Falls, Montana
(Attorney for Appellant Wagner-Ellsworth)
Roland B. Durocher; Hartelius, Ferguson, Kazda, Baker, & Durocher,
P.C., Great Falls, Montana (Attorney for Appellant Rusk)
For Appellee:
Mikel L. Moore; Christensen, Moore, Cockrell, Cummings & Axelberg,
P.C., Kalispell, Montana
Submitted on Briefs: November 9, 2006
Decided: July 8, 2008
Filed:
__________________________________________
Clerk
Justice Jim Rice delivered the Opinion of the Court.
¶1 Terry Wagner-Ellsworth (Wagner-Ellsworth) and Tiffany Rusk (Tiffany),
individually, and as mother and natural guardian of Brandon Rusk (Brandon) appeal an
order entered in the Eighth Judicial District Court, Cascade County, granting summary
judgment in favor of Allstate Insurance Company (Allstate). We reverse.
¶2 We consider the following issue on appeal:
¶3 Did the District Court err when it denied Wagner-Ellsworth and Tiffany’s motions
for summary judgment and granted summary judgment in favor of Allstate?
BACKGROUND
¶4 On February 22, 2000, Wagner-Ellsworth caused an automobile-pedestrian
collision, striking Matthew Rusk (Matthew) as he and his brother, Brandon, crossed the
street together in front of their elementary school. Matthew’s mother, Tiffany, while not
immediately present at the time of the accident, was arriving to pick up her sons from
school and came upon Matthew while he was still lying injured on the street. Matthew
suffered severe trauma and was hospitalized for an extended period of time. All of
Matthew’s claims stemming from the accident have been fully and finally settled and
released in exchange for Allstate’s payment of the per-person limit of $50,000 under
Wagner-Ellsworth’s policy.
¶5 Tiffany filed a negligence action against Wagner-Ellsworth on her own behalf and
as guardian of Brandon, claiming emotional and physical injuries to herself and to
Brandon. Tiffany and Brandon contend they were traumatized and suffered injury, not
2
by being struck by the car, but rather as a result of Matthew being run over and injured.
Brandon’s injuries were allegedly the result of seeing his brother run over; Tiffany’s
injuries allegedly resulted from her arrival at the accident scene, the subsequent
ambulance ride to the hospital, and her continued care of Matthew as he recovered. The
complaint alleged that they both suffered physical and emotional injuries. Brandon
allegedly became withdrawn and Tiffany allegedly suffered from stress, migraine
headaches, a rapid heart beat when she hears sirens, physical pain, and depression. Both
Brandon and Tiffany underwent therapy.
¶6 In response to the suit, Wagner-Ellsworth sought coverage from her liability
insurer, Allstate.1 Allstate then filed this action, seeking a declaratory judgment that it
was not obligated to provide a defense or coverage to Wagner-Ellsworth for Tiffany and
Brandon’s claims of emotional and psychological injuries and any resulting physical
manifestations. The District Court granted Allstate’s motion for summary judgment, and
this appeal followed.
STANDARD OF REVIEW
¶7 “We review a district court’s conclusions of law to determine whether the court’s
conclusions of law are correct.” Hern v. Safeco Ins. Co. of Illinois, 2005 MT 301, ¶ 18,
329 Mont. 347, ¶ 18, 125 P.3d 597, ¶ 18 (citations omitted). Our standard of review for
an appeal from a district court’s order granting summary judgment is de novo. Hern,
¶ 18.
1
Wagner-Ellsworth was an insured under her mother’s Allstate policy.
3
¶8 Here, the issue before this Court is whether, under the terms of Wagner-
Ellsworth’s insurance policy, Allstate was entitled to judgment as a matter of law. “The
interpretation of an insurance policy presents a question of law.” Jacobsen v. Farmers
Union Mut. Ins. Co., 2004 MT 72, ¶ 9, 320 Mont. 375, ¶ 9, 87 P.3d 995, ¶ 9 (citing
Wendell v. State Farm Mutual Ins. Co., 1999 MT 17, ¶ 10, 293 Mont. 140, ¶ 10, 974 P.2d
623, ¶ 10). Consequently, we review whether the District Court correctly interpreted the
provisions of Wagner-Ellsworth’s insurance policy. Jacobsen, ¶ 9.
DISCUSSION
¶9 Did the District Court err when it denied Wagner-Ellsworth and Tiffany’s
motions for summary judgment and granted summary judgment in favor of Allstate?
¶10 At the time of the accident, Wagner-Ellsworth was covered by Allstate automobile
Policy No. 020343927. The policy’s General Statement of Coverage declared:
If a premium is shown on the Policy Declarations for Bodily Injury
Liability Coverage and Property Damage Liability Coverage, Allstate will
pay damages which an insured person is legally obligated to pay because
of:
a. bodily injury sustained by any person . . . .
The policy defined “bodily injury” as follows:
“Bodily Injury” means physical harm to the body, sickness, disease, or
death, but does not include:
a. Any venereal disease;
b. Herpes;
c. Acquired Immune Deficiency Syndrome (AIDS);
d. AIDS Related Complex (ARC);
e. Human Immunodeficiency Virus (HIV);
4
or any resulting symptom, effect, condition, disease or illness related to a.
through e. listed above.
¶11 The District Court held that the policy language contained in Wagner-Ellsworth’s
liability policy did not cover Tiffany and Brandon’s claimed injuries, relying on Jacobsen
v. Farmers Union Mut. Ins. Co. In Jacobsen, the plaintiff attempted to collect under his
own uninsured coverage for alleged emotional injuries he had suffered. Jacobsen was
driving his vehicle when he encountered another vehicle traveling in the opposite
direction. That vehicle suddenly crossed the center median and eventually came to rest in
a wheat field on the other side of the roadway. Jacobsen stopped to help and found the
driver lying unconscious in his vehicle, with blood flowing from a wound in his head.
Jacobsen administered aid for several minutes, but was later supplanted by a team of
paramedics. As the paramedics removed the driver from his vehicle, Jacobsen noticed a
handgun underneath the driver’s body. The cause of death was later determined to be a
suicide. Jacobsen, ¶¶ 4-5. Jacobsen claimed that his emotional injuries as well as his
resulting physical manifestations were covered under his uninsured coverage for “bodily
injury.”
¶12 After concluding there was no ambiguity in the meaning of “bodily injury,” and
with no prior Montana case addressing whether emotional or psychological injuries
constituted “bodily injury,” this Court looked to the United States District Court’s
holding in Aetna Cas. and Sur. Co. v. First Sec. Bank of Bozeman, 662 F. Supp. 1126 (D.
Mont. 1987), and concluded that the emotional injury suffered by Jacobsen, including the
5
physical manifestations resulting therefrom, did not constitute “bodily injury” as defined
in that policy.2 Jacobsen, ¶¶ 23, 29.
¶13 Here, the District Court reasoned:
The language in the Farmers’ Union policy and the Allstate policy in
question are too similar to allow this Court to overlook the Montana
Supreme Court’s decision in Jacobsen. The language defining “bodily
injury” is unambiguous and does not include the injuries Brandon and
Tiffany have claimed or any physical manifestations that may result from
the psychological damages. The Court will not extend itself to create an
ambiguity where there is none. While Montana law concerning insurance
contracts has developed with the intention of providing fundamental
protection to consumers, this does not allow this Court to simply ignore the
clear terms of a contract.
We commend the District Court for its close adherence to precedent. However, after a
careful review of the policy language at issue here, and of the analysis employed in
Jacobsen, we ultimately conclude herein that our decision in Jacobsen was incorrectly
2
The relevant language in Jacobsen’s policy for uninsured motorist coverage was quoted
in the Opinion:
We will pay all sums the “insured” is legally entitled to
recover as compensatory damages from the owner or driver of
an “uninsured motor vehicle.” The damages must result from
“bodily injury” sustained by the “insured” caused by an
“accident.” The owner’s or driver’s liability for these
damages must result from the ownership, maintenance or use
of the “uninsured motor vehicle.”
Consistent with the statutory language in § 33-23-201, MCA, the policy
defines “bodily injury” as follows:
“Bodily injury” means bodily injury, sickness or disease
sustained by a person including death resulting from any of
these.
Jacobsen, ¶ 11.
6
analyzed and should be overruled, requiring reversal of the District Court. For purposes
of promoting clarity, we discuss the issues raised in the following three parts.
I. Coverage of Third-Party Claims
¶14 Tiffany argues the District Court erred by not applying the plain language of the
contract because it provides coverage for “damages” more generally, and not strictly for
bodily injury. She notes that the policy requires Allstate to pay for “damages which an
insured person is legally responsible to pay because of bodily injury sustained by any
person . . . .” Tiffany contends this language is broader than the policy language at issue
in Jacobsen. Therefore, since Tiffany and Brandon’s damages were incurred “because
of” Matthew’s bodily injury, she argues that their damages were covered whether or not
they suffered the bodily injury themselves. Wagner-Ellsworth agrees, and likewise
contends that the District Court failed to consider these material differences between the
policy language in Jacobsen and her policy with Allstate.
¶15 In response, Allstate argues this Court’s holding in Jacobsen controls the outcome
of this action because, as in Jacobsen, the unambiguous definition of “bodily injury” in
Wagner-Ellsworth’s Allstate policy does not include emotional or psychological injuries
or resulting physical manifestations. Citing Graber v. State Farm Fire and Cas. Co., 244
Mont. 265, 270, 797 P.2d 214, 217 (1990), which held an insurer was not obligated to
indemnify an insured where the claims do not come within the coverage of the policy,
Allstate reasons that Appellants’ proffered interpretation defies common sense and
ignores the “unbroken connection” in the policy language requiring the “bodily injury” to
7
be sustained by the “any person” for whose damages the insured person may be legally
obligated. Appellants’ interpretation, Allstate argues, severs the link between the person
who suffers the bodily injury and the person claiming damages and re-writes the policy to
mean that “Allstate will pay damages which an insured person is legally obligated to pay
because of: bodily injury sustained by any person, whether the damages are suffered by
the person who sustained the bodily injury or by any other person . . . .” (emphasis in
Allstate’s brief). Consequently, Allstate urges that Appellants’ argument be rejected.
¶16 “This Court is bound to interpret the terms of this insurance policy according to
their usual, common sense meaning as viewed from the perspective of a reasonable
consumer of insurance products.” Stutzman v. Safeco Ins. Co. of America, 284 Mont.
372, 376, 945 P.2d 32, 34 (1997). We “may not rewrite the contract at issue, but must
enforce it as written if its language is clear and explicit.” Stutzman, 284 Mont. at 376,
945 P.2d at 34 (citation omitted).
¶17 We disagree with Allstate’s position. The language in the opening General
Statement of Coverage in Wagner-Ellsworth’s policy is indeed broader than the policy
language at issue in Jacobsen. The policy here states: “Allstate will pay damages which
an insured person is legally obligated to pay because of . . . a. bodily injury sustained by
any person.” In contrast, the uninsured coverage provision in Jacobsen stated that
“damages must result from ‘bodily injury’ sustained by the ‘insured.’” Jacobsen, ¶ 12.
While the policy in Jacobsen required that the insured be the person who suffered the
bodily injury, Wagner-Ellsworth’s policy requires payment for damages that an insured
8
person is legally obligated to pay because of bodily injury sustained by any person in a
covered accident, whether to the claimant directly or to another.
¶18 The language here provides coverage to Wagner-Ellsworth for Matthew’s
damages, as he sustained a bodily injury. However, Tiffany and Brandon also allege that
they sustained damages “because of” Matthew’s bodily injury, and thus their claims
necessarily fall within the language which provides that “Allstate will pay damages
which an insured person is legally obligated to pay because of . . . a. bodily injury
sustained by any person.”
¶19 This interpretation is supported by the policy’s Limitation of Liability section,
which provides that “[t]he limit stated for each person for bodily injury is our total limit
of liability for all damages because of bodily injury sustained by one person, including all
damages sustained by anyone else as a result of that bodily injury.” (Emphasis added.)
This language contemplates third party claims such as those made here by Tiffany and
Brandon and reinforces Allstate’s obligation to insure Wagner-Ellsworth against those
claims for damages—within the applicable monetary limits of the policy.
¶20 In summary, the broad language used in the policy’s General Statement of
Coverage and the Limits of Liability section provide Wagner-Ellsworth with coverage for
the claims made by Tiffany and Brandon resulting from Matthew’s bodily injuries.
II. Monetary Limits for Derivative Claims
¶21 Allstate notes that because Tiffany and Brandon’s initial argument premises their
claims upon Matthew’s bodily injury, and not on their own bodily injuries, their claims
9
necessarily derive from Matthew’s bodily injury. As such, Allstate argues that, even
under the interpretation of the policy rendered above in Section I, no funds are available
for Tiffany and Brandon’s derivative claims, because the policy limits for coverage have
already been exhausted for Matthew’s claim, citing to Bain v. Gleason, 223 Mont. 442,
451-52, 726 P.2d 1153, 1158-59 (1986). In Bain, this Court considered whether a
consortium claim was subject to the “each person” limit of liability in an insurance
policy, and, in doing so, examined both the policy and the mandatory motor vehicle
liability insurance law, § 61-6-103, MCA (1981). In determining that the consortium
claim came within the each person limitation, we concluded:
Our interpretation of the Farmers’ policy in the case at bar must
follow our interpretation of the statutes as they apply to mandatory motor
vehicle liability insurance. It is plain under our statutes, and under the
policy provisions here that the “each person” limitation refers to all
damages imposed by law by whomever suffered resulting from one bodily
injury and one accident; the “each accident” limitation applies when two or
more persons suffer bodily injury in the same accident.
Bain, 223 Mont. at 451, 726 P.2d at 1158.
¶22 The statute governing the liability policy at issue here, § 61-6-103(2)(b), MCA
(2003), requires that the policy
insure the . . . insured . . . against loss from the liability imposed by law for
damages . . . subject to limits . . . as follows: . . . (i) $25,000 because of
bodily injury to or death of one person in any one accident and subject to
said limit for one person; (ii) $50,000 because of bodily injury to or death
of two or more persons in any one accident[.]3
3
The monetary limits in coverage under the subject Allstate policy are $50,000 per person
and $100,000 per occurrence for bodily injury, and $25,000 for property damage, which
exceed the statute’s minimum monetary limits.
10
Thus, the statute requires that the owner or operator be insured for losses from liability
imposed by law subject to the limits stated for a single bodily injury or for bodily injuries
to two or more persons. The coverage language of the statute is similar to the language in
the Allstate policy, which provides coverage for “damages which an insured person is
legally obligated to pay because of . . . bodily injury sustained by any person,” and which
we have interpreted in Section I to include Tiffany and Brandon’s claims stemming from
Matthew’s bodily injury. However, the statute also requires that the coverage provided
for claims arising “because of” the bodily injury of another be “subject to said limit for
one person.” (Emphasis added.) Thus, the statutory monetary coverage limit specified
for a bodily injury to one person applies to others who have suffered losses arising from
the bodily injury to that one person.
¶23 An examination of the Allstate policy at issue reveals that it tracks the statutory
coverage language. Wagner-Ellsworth’s policy states, with regard to “Limits of
Liability,” that:
The limits shown on the Policy Declarations are the maximum we
will pay for any single accident involving an insured auto. The limit stated
for each person for bodily injury is our total limit of liability for all
damages because of bodily injury sustained by one person, including all
damages sustained by anyone else as a result of that bodily injury.
Subject to the limit for each person, the limit stated for each accident
is our total limit of liability for all damages for bodily injury. . . .
(Emphasis added.) Like the statute, the Allstate policy applies the “each person”
monetary limit to not only the damages suffered by the person who suffered the bodily
injury, but also to the damages suffered by anyone else as a result of that bodily injury.
11
The “each accident” or, as stated in the policy, “each occurrence” monetary limitation
applies only when two or more persons suffer bodily injury in one accident.
¶24 Therefore, Allstate is correct that, even though Tiffany and Brandon’s claims for
damages because of Matthew’s bodily injury are covered under Wagner-Ellsworth’s
policy, those damages are subject to the “each person” monetary limit applicable to
Matthew, which amount was exhausted in Matthew’s settlement. Therefore, despite
coverage, there are no additional funds available under this policy for Tiffany and
Brandon’s derivative claims. Only if Tiffany and Brandon can establish that their claims
likewise fall within the policy’s definition of “bodily injury,” thus establishing that there
are two or more bodily injury claims in this accident, will the higher “each accident”
monetary limits of the policy be triggered.
III. Emotional Distress with Physical Manifestations as “Bodily Injury”
¶25 We then turn to Appellants’ argument that Tiffany and Brandon’s emotional
injuries, with resulting physical manifestations, fall within the Allstate policy’s definition
of “bodily injury.” The policy defines “bodily injury” as “physical harm to the body,
sickness, disease, or death . . . [listing exceptions].” As noted, the District Court relied on
Jacobsen in granting summary judgment in favor of Allstate, reasoning that
[t]he language in the Farmers’ Union policy and the Allstate policy in
question are too similar to allow this Court to overlook the Montana
Supreme Court’s decision in Jacobsen. The language defining “bodily
injury” is unambiguous and does not include the injuries Brandon and
Tiffany have claimed or any physical manifestations that may result from
the psychological damages.
12
¶26 Tiffany argues that she and Brandon suffered “shock and fright” when Matthew
was run over, leading to physical symptoms that should constitute a “bodily injury.”
Wagner-Ellsworth agrees, and contends the Allstate policy is distinguishable from the
policy in Jacobsen, providing broader coverage. Wagner-Ellsworth argues that because
“bodily injury” is defined in the Allstate policy as “physical harm to the body, sickness,
disease, or death,” this definition creates a disjunctive list based on the use of commas
which creates coverage for Tiffany and Brandon’s asserted emotional injuries as a
“sickness” or “disease.” Alternatively, she argues that if the definition did not create a
disjunctive list, then the definition is ambiguous and, either way, Tiffany and Brandon’s
emotional injuries should be covered without an underlying physical injury.
¶27 Allstate responds that the mere use of the word “or” in the definition of bodily
injury does not make the definition disjunctive or otherwise turn the individual
components of the definition into separate bases for coverage. Moreover, Allstate argues
that, consistent with Jacobsen, the definition of “bodily injury” in the policy is
unambiguous and does not include emotional or psychological injuries or resulting
physical manifestations. In reply, Appellants respectfully suggest that the Court “revisit”
Jacobsen, noting that stare decisis does not require the Court to follow “a manifestly
wrong decision.”
¶28 We agree with Allstate and the District Court that the definition of “bodily injury”
in this case is substantially similar to the definition at issue in Jacobsen (“bodily injury,
sickness or disease sustained by a person including death resulting from any of these”).
13
We are not persuaded by Wagner-Ellsworth’s argument that the policy’s use of commas
and the word “or” within the definition requires a different outcome than we reached in
Jacobsen. Jacobsen thus requires a decision for Allstate if it was correctly decided.
However, we accept Appellants’ invitation to revisit and reconsider our holding in
Jacobsen.
¶29 In reaching our decision in Jacobsen, this Court relied heavily on the United States
District Court’s 1987 Aetna decision. In Aetna, the insurer brought a declaratory action
seeking judgment that the liability insurance policy it had issued to a bank did not
provide coverage for certain damages claimed by an employee who had been discharged,
including damages for emotional distress. Aetna, 662 F. Supp. at 1127. The parties
argued over whether a claim for emotional distress came within the term “bodily injury.”
Aetna, 662 F. Supp. at 1128. After noting that Montana law contained no authority on
point, the United States District Court stated: “[w]here it appears that the highest court of
Montana has not squarely addressed a particular question, this court must forecast what
the Montana Supreme Court would do were it confronted with the same question.” Aetna,
662 F. Supp. at 1127 (citations omitted).
¶30 The Aetna court first stated that courts which had interpreted the term “bodily
injury” as used in comprehensive general liability insurance policies “have determined
that it limits coverage to physical injury to the body” and cited to several cases. Aetna,
662 F. Supp. at 1128. The court then observed that “[i]n tort actions alleging mental
suffering, the Montana Supreme Court has distinguished mental and emotional harm
14
from physical harm.” Aetna, 662 F. Supp. at 1128 (citation omitted). The court thus
concluded:
In light of the Montana court’s recognition that “there is a difference
between (physical) injury and (mental) distress,” Johnson [v. Supersave
Markets, Inc., 211 Mont. 465, 472, 686 P.2d 209, 212 (1984)], it is likely
the Montana Supreme Court would follow the lead of the above-cited
decisions and hold that the term “bodily injury,” as used in the liability
insurance policy at issue, limits coverage to physical injury, sickness or
disease.
Aetna, 662 F. Supp. at 1128.
¶31 In Jacobsen, we concurred with the rationale set forth in Aetna and concluded that
“the term ‘bodily injury,’ as defined in Farmers Union UM policy, is limited to physical
injury to a person caused by an accident and does not include emotional and
psychological injuries stemming therefrom.” Jacobsen, ¶ 29. We thus held that
Jacobsen’s emotional injuries, “including his physical manifestations resulting therefrom,
do not constitute ‘bodily injury’ as that term is defined in the contract of insurance
between Farmers Union and Jacobsen . . . .” Jacobsen, ¶ 29 (emphasis added).
¶32 We are troubled by the analysis we employed in Jacobsen in a couple respects.
First, Aetna was decided prior to the development of a significant body of court decisions
which perceived a distinction between mental injuries and mental injuries with physical
manifestations. See e.g. Twin City Fire Ins. Co. v. Colonial Life & Acc. Ins. Co., 124
F. Supp. 2d 1243, 1247 (M.D. Ala. 2000) (applying South Carolina law, emotional
trauma can constitute “bodily injury” unless the complaint contains no allegations of
physical damages); Am. Motorists Ins. Co. v. S. Sec. Life Ins. Co., 80 F. Supp. 2d 1280,
15
1283 (M.D. Ala. 2000) (under Florida law, allegation of physically manifested mental
anguish met insurance policy’s definition of “bodily injury”); Gen. Star Indem. Co. v.
Sch. Excess Liability Fund, 888 F. Supp. 1022, 1027 (N.D. Cal. 1995) (“Physical injury
resulting from emotional distress, however, constitutes ‘bodily injury.’”); State Farm
Fire & Cas. Co. v. Nikitow, 924 P.2d 1084, 1089 (Colo. App. 1995) (although the term
“bodily injury” in insurance contract did not encompass purely emotional harm, coverage
was available if injury was accompanied by physical manifestations); Garvis v.
Employers Mut. Cas. Co., 497 N.W.2d 254, 257 (Minn. 1993) (“emotional distress with
appreciable physical manifestations can qualify as a ‘bodily injury’ within the meaning of
the insurance policy”); Voorhees v. Preferred Mut. Ins. Co., 607 A.2d 1255, 1262 (N.J.
1992) (emotional distress resulting in headaches, stomach pains, nausea, and body pains
constituted “bodily injury” under homeowner’s insurance policy).
¶33 Reliance on Aetna may well have led the Jacobsen Court to overlook this later
development in the law which addressed the distinction between these injuries. However,
without an understanding of this development, the Court was unequipped to recognize
that none of the cases upon which Aetna relied, American and For. Ins. Co. v. Church
Schools, Diocese of Virginia, 645 F. Supp. 628 (E.D. Va. 1986), St. Paul Fire and
Marine Ins. Co. v. Campbell County Sch. Dist. No. 1, 612 F. Supp. 285 (D.Wyo. 1985),
and Rolette County v. Western Cas. & Sur. Co., 452 F. Supp. 125 (D.N.D. 1978),
involved mental injuries accompanied by physical manifestations. To the contrary, they
addressed whether strictly mental injuries were included within the term “bodily injury.”
16
Thus, this precedent did not provide precise authority for Jacobsen’s conclusion that a
mental injury with physical manifestations could not constitute a bodily injury.
¶34 To further explain, American and For. Ins. Co. held that “bodily injury” did not
include emotional damages in the absence of physical injury. American and For. Ins.
Co., 645 F. Supp. at 632. However, the injured party alleged “purely emotional harm,”
with no assertion regarding physical manifestations. American and For. Ins. Co., 645 F.
Supp. at 632. Similarly, in St. Paul Fire and Marine Ins. Co., the court found that
“[s]ince Ms. Worth is not suing for a physical injury or disease, the Court concludes that
plaintiff insurance company has no duty to defend or cover any losses” and further held
that emotional suffering “without physical changes” did not constitute bodily injury. St.
Paul Fire and Marine Ins. Co., 612 F. Supp. at 287-88. Finally, the court in Rolette
County held that the insurer was not required to defend the insured against a complaint
alleging the injured party was embarrassed and humiliated and suffered great mental
anguish and emotional distress. Rolette County, 452 F. Supp. at 129-30. Again, the
injured party in that case alleged no physical manifestations arising from the emotional
injury.
¶35 Given the clear development in the law which distinguished mental injuries from
mental injuries with physical manifestations, Aetna and the aforementioned cases it relied
upon did not provide current, on-point support for Jacobsen’s holding that emotional
injuries, “including . . . physical manifestations resulting therefrom, do not constitute
‘bodily injury’ as that term is defined in the contract of insurance . . . .” Jacobsen, ¶ 29.
17
None of those cases involved mental injuries accompanied by physical manifestations
and, without more, this critical distinction was missed entirely. We should have
examined the plentiful authority addressing such injuries which had developed by the
time Jacobsen was decided in 2004 in order to provide a more accurate analysis of
relevant authority. We now make the belated effort to do so.
¶36 A review of our sister states’ case law, including those cases referenced above in
¶ 32, reveals that various courts have held that allegations of physically-manifested
emotional distress fall within bodily injury coverage in the insurance context. See also
Keri Farrell-Kolb, General Liability Coverage for Claims of Emotional Distress—An
Insurance Nightmare, 45 Drake L. Rev. 981, 993 (1997) (“many courts agree that
allegations of emotional distress or mental anguish come within bodily injury coverage if
accompanied by allegations of physical manifestations”). The Washington Court of
Appeals has observed that “many courts have held that allegations of physically-
manifested emotional distress fall within ‘bodily injury’ coverage in the insurance
context.” Trinh v. Allstate Ins. Co., 37 P.3d 1259, 1262 (Wash. App. Div. 2002)
(citations omitted).
¶37 In Trinh, the plaintiff, after witnessing her friend’s death in a car accident, began
to experience emotional trauma accompanied by multiple physical ailments including
headaches, nausea, hair loss, and weight loss. At issue was whether her injuries
constituted “bodily injury” under the insurance policy, which defined bodily injury as
“bodily injury, sickness, disease or death[.]” Trinh, 37 P.3d at 1261. The Washington
18
Court of Appeals first observed that Washington followed the view that “‘in the context
of purely emotional injuries, without physical manifestations, the phrase ‘bodily injury’ is
not ambiguous. Its ordinary meaning connotes a physical problem.’” Trinh, 37 P.3d at
1261-62 (citation omitted). However, the Washington Court of Appeals also noted that
“many jurisdictions that deny ‘bodily injury’ coverage for purely emotional injuries have
indicated that there would be coverage if an emotional injury were accompanied by
physical manifestations.” Trinh, 37 P.3d at 1263 (citations omitted). Persuaded by this
authority, it concluded that the term bodily injury “includes emotional injuries that are
accompanied by physical manifestations.” Trinh, 37 P.3d at 1264.
¶38 In State Farm Fire and Cas. Co. v. Basham, 520 N.W.2d 713 (Mich. App. 1994),
the insurer filed a declaratory action to determine its obligations under a homeowner’s
insurance policy. The Michigan Court of Appeals held that “absent physical
manifestations, the phrase ‘bodily injury’ does not include a claim for psychiatric
damage” but, on the other hand, noted that “allegations of physical manifestations
supported by sufficient documented evidence” would be sufficient to trigger coverage as
bodily injury. State Farm Fire and Cas. Co., 520 N.W.2d at 715.
¶39 We are cognizant that “[v]ery weighty considerations underlie the principle that
courts should not lightly overrule past decisions.” Moragne v. States Marine Lines, Inc.,
398 U.S. 375, 403, 90 S. Ct. 1772, 1789 (1970). We have held, in this regard, that “stare
decisis is a fundamental doctrine which reflects our concerns for stability, predictability
and equal treatment . . . .” Formicove, Inc. v. Burlington Northern, Inc., 207 Mont. 189,
19
194, 673 P.2d 469, 472 (1983). “Court decisions are not sacrosanct, however, and stare
decisis is ‘not a mechanical formula of adherence to the latest decision[.]’” State v.
Gatts, 279 Mont. 42, 51, 928 P.2d 114, 119 (1996) (quoting Patterson v. McLean Credit
Union, 491 U.S. 164, 172, 109 S. Ct. 2363, 2370 (1989)). We have held, as noted by
Appellants, that stare decisis does not require us to follow “a manifestly wrong decision.”
Formicove, 207 Mont. at 194, 673 P.2d at 472 (citations omitted).
¶40 We now conclude that we manifestly erred in Jacobsen by failing to recognize the
development in the law with regard to mental injuries with physical manifestations.
Many courts have concluded in insurance interpretation cases like this one that the term
“bodily injury” is ambiguous when applied to physical problems arising from a mental
injury. “An ambiguity exists when an insurance contract, taken as a whole, is reasonably
subject to two or more different interpretations.” Heggem v. Capitol Indem. Corp., 2007
MT 74, ¶ 22, 336 Mont. 429, ¶ 22, 154 P.3d 1189, ¶ 22 (citation omitted). The definition
of “bodily injury” in the Allstate policy—“physical harm to the body, sickness, disease,
or death”—could mean a strictly physical injury or could also include physical
manifestations arising from a mental injury or sickness. “Any ambiguity in an insurance
policy must be construed in favor of the insured and in favor of extending coverage.”
Travelers Cas. & Sur. Co. v. Ribi Immunochem Research, 2005 MT 50, ¶ 17, 326 Mont.
174, ¶ 17, 108 P.3d 469, ¶ 17 (citation omitted). We thus join other courts which have
construed the term “bodily injury” within an insurance policy to include a mental or
psychological injury that is accompanied by physical manifestations. We therefore hold
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that Tiffany and Brandon’s claims, to the extent they are based on physical
manifestations, fall within the “bodily injury” definition of Wagner-Ellsworth’s Allstate
policy and may be asserted on that basis. We agree, in light of the preceding analysis,
that in the context of purely emotional injuries without physical manifestations, the
phrase “bodily injury” is not ambiguous and its ordinary meaning connotes a physical
problem and not purely emotional injuries. See Trinh, 37 P.3d at 1263; see also Kolb, 45
Drake L. Rev. at 986-89.
¶41 We recognize that distinguishing between injuries which have physical
manifestations from those which do not can be challenging. See Pekin Ins. Co. v. Hugh,
501 N.W.2d 508 (Iowa 1993) (noting the belief that “‘every emotional disturbance has a
physical aspect and every physical disturbance has an emotional aspect.’”) (citation
omitted). It has been held that “there is no litmus test for determining where to draw the
line between emotional and physical injuries. . . .” SL Industries, Inc. v. American
Motorists Ins. Co., 607 A.2d 1266, 1273 (N.J. 1992). Courts have struggled with these
distinctions, focusing on the facts of each case. Compare State Farm Fire & Cas. Co. v.
Westchester Inv. Co., 721 F. Supp. 1165, 1167 (C.D. Cal. 1989) (dry throat, rise in body
temperature, and knot in stomach were sufficient physical manifestations of emotional
distress to constitute bodily injury), W. Cas. & Sur. Co. v. Waisanen, 653 F. Supp. 825,
832 (D.S.D. 1987) (allegation of high blood pressure was sufficient to bring within
definition of bodily injury), and Trinh, 37 P.3d at 1264 (bodily injury includes emotional
distress where it is accompanied by physical symptoms such as weight loss, sleep loss,
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headaches, stomach pains, and muscle aches) with Farm Bureau Mut. Ins. Co. of
Michigan v. Hoag, 356 N.W.2d 630, 633 (Mich. App. 1984) (“bodily injury” does not
encompass damages for humiliation, mental anguish, and mental suffering; at a
minimum, physical manifestation of mental suffering is necessary to satisfy bodily injury
requirement), Economy Preferred Ins. Co. v. Jia, 92 P.3d 1280, 1284 (N.M. App. 2004)
(“crying, shaking, and sleep difficulties are not enough”), and SL Indus., Inc., 607 A.2d at
1273-75 (“bodily injury” does not include emotional distress claims accompanied only by
allegations of “loss of sleep, loss of self esteem, humiliation and irritability”).
¶42 We echo the statement made by the Supreme Court of New Jersey in a similar
case that although, as a result of this holding, “a few plaintiffs may be tempted to assert
emotional distress with accompanying physical manifestations more often, that will not
necessarily obligate insurers to undertake unbounded duties to defend and indemnify.
When an emotional distress claim is not supported factually, the insurer can and should
move to dismiss the meritless claims.” Voorhees, 607 A.2d at 1262. Each case must
necessarily be judged by its own facts to determine whether the alleged injuries are
sufficiently akin to physical injuries to fall within coverage for “bodily injury.” Such
conditions include those which are susceptible to medical diagnosis and treatment in a
manner which distinguishes them from mental injuries. See State Farm Fire and Cas.
Co., 520 N.W.2d at 715 (“At a minimum, there must be allegations of physical
manifestations supported by sufficient documented evidence in order for insurance
coverage to be triggered.”).
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CONCLUSION
¶43 Appellants have raised a genuine issue of material fact about whether Tiffany and
Brandon suffered mental injuries with physical manifestations. Such injuries would be
covered within the subject policy’s definition of “bodily injury.” Accordingly, we
reverse the trial court’s summary judgment order. Appellants have requested an award of
attorney fees, which is denied.
¶44 Reversed and remanded for further proceedings consistent with this Opinion.
/S/ JIM RICE
We concur:
/S/ KARLA M. GRAY
/S/ JAMES C. NELSON
/S/ BRIAN MORRIS
/S/ PATRICIA COTTER
/S/ W. WILLIAM LEAPHART
/S/ JOHN WARNER
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