Garvis v. Employers Mut. Cas. Co.

• Decision Date: 19 March 1993
• Docket Number: No. C4-92-1562,C4-92-1562
• Citation: 497 N.W.2d 254
• Parties: Patricia GARVIS, Plaintiff, Robert Demuth, Jr., Demuth Insurance Agency, and Utica Mutual Insurance Company, Plaintiffs, v. EMPLOYERS MUTUAL CASUALTY COMPANY, Defendant.
• Court: Minnesota Supreme Court

Page 254

497 N.W.2d 254

Patricia GARVIS, Plaintiff Robert Demuth, Jr., Demuth Insurance Agency, and Utica Mutual Insurance Company, Plaintiffs, v. EMPLOYERS MUTUAL CASUALTY COMPANY, Defendant.

No. C4-92-1562.

Supreme Court of Minnesota.

March 19, 1993.

Syllabus by the Court

Certified questions from federal district court relating to "bodily injury" and "personal injury" coverages under a comprehensive general liability policy answered.

James E. Malters, Von Holtum, Malters & Shepard, Worthington, for Patricia Garvis.

Clarance E. Hagglund, Britton D. Weimer, James R. Harries, Hagglund Law Firm, P.A., Minneapolis, for Robert Demuth, Jr., et al.

Kay Nord Hunt, Steven L. Theesfeld, Lommen, Nelson, Cole & Stageberg, P.A., Minneapolis, for defendant.

Heard, considered, and decided by the court en banc.

SIMONETT, Justice.

We are presented with five certified questions from the federal district court relating to whether an insurer had a duty under its policy to defend and indemnify a claim for emotional distress asserted by an injured claimant against the insured.

Plaintiff Patricia Garvis thought she had purchased auto insurance from Robert Demuth, Jr., and the Demuth Agency. Demuth, however, failed to process her insurance application to Allstate Insurance Company. On February 3, 1990, Garvis was in a serious two-car accident, in which one of her passengers was killed, her son was injured, and she herself was injured. The very next day, upon learning of the accident, Demuth called Garvis at the hospital where she was a patient and told her she did not have insurance coverage for the accident. Demuth then attempted to cover up his failure to submit the application by returning the uncashed premium checks and backdating the letter of transmittal.

Patricia Garvis promptly commenced a lawsuit in state court against Robert Demuth, Jr., Demuth Insurance, and Allstate Insurance Company. The complaint alleged three causes of action: Count I, against Demuth and his agency for intentional or reckless infliction of emotional distress caused by the telephone call; Count II, against Demuth and his agency for negligent failure to provide auto insurance coverage; and Count III, against all the defendants for breach of contract to insure.

Demuth tendered defense of this lawsuit to Utica Mutual Insurance Company, his errors and omissions carrier, and to Employers Mutual Casualty Company, his comprehensive general liability carrier. Utica accepted the tender (reserving defenses as to intentional conduct and punitive damages), and provided Demuth with defense counsel. Employers Mutual denied coverage.

Eventually, Garvis settled her lawsuit, including settlement of the Count I cause of action for emotional distress under a so-called Miller-Shugart agreement with Demuth and the Demuth Agency. A new action was then commenced in state district court--the action now before us--in which plaintiffs Patricia Garvis and Utica Mutual Insurance Company are suing defendant Employers Mutual to establish coverage under defendant's policy for the emotional distress claim and to enforce the Miller-Shugart settlement. ¹ This case was removed to federal district court by defendant Employers Mutual.

Employers Mutual's comprehensive general liability policy provides two types of coverage: Coverage A for bodily injury; and Coverage B for personal injury. Plaintiffs claim both coverages apply here. Employers Mutual contends, among other things, that it was never apprised by the complaint or otherwise of facts that would give rise to a duty to defend under its "bodily injury" coverage, and that Patricia Garvis' claim of emotional distress did not qualify as a "personal injury."

We now turn to the certified questions set out below. ² We will discuss the questions in a different order than presented, and further facts will be added as we go along.

I.

The first certified question asks whether the allegations in the complaint with respect to infliction of emotional distress set out facts constituting a "bodily injury" so as to trigger the insured's duty to defend and to indemnify. Generally, the insurer's obligation to defend is determined by comparing the allegations of the complaint with the relevant policy language. See Prahm v. Rupp Constr. Co., 277 N.W.2d 389 (Minn.1979). The critical paragraph of Garvis' complaint in the underlying action reads:

That on February 4, 1990 Defendant Robert Demuth, Jr. called Plaintiff, while she was in the hospital and suffering from a concussion, broken arm, severely lacerated leg, and broken clavicle and while in a state of extreme emotional distress as a result of her significant injuries, significant injuries to her son and the death of her friend and passenger, and Defendant did inform her that she did not have insurance coverage and that she would be solely financially responsible for the death of her friend and for her own medical bills. That said action was done intentionally or with reckless disregard for Plaintiff's emotional state and did cause her extreme and severe emotional distress.

Employers Mutual's policy covers damages for "bodily injury." The term "bodily injury" is defined as "bodily injury, sickness, or disease sustained by a person * * *."

The problem with plaintiff's complaint is it alleges only that defendant Demuth's conduct "did cause her extreme and severe emotional distress." Emotional distress is not an injury to the body, but to the psyche. Words in an insurance policy are to be given their ordinarily understood meaning, and "bodily injury" in this policy is not ambiguous. An injury to the body does not include nonbodily emotional distress. See, e.g., Clemens v. Wilcox, 392 N.W.2d 863, 866 (Minn.1986) ("bodily injury" does not include nonphysical harm such as mental suffering and emotional distress); Hamlin v. Western Nat'l Mut. Ins. Co., 461 N.W.2d 395, 397 (Minn.App.1990) (mental suffering from sexual harassment not a bodily injury).

We do not understand plaintiffs to disagree that emotional distress is not a bodily injury. They argue, however, that emotional distress which manifests itself physically should be deemed a "bodily injury" within the meaning of the insurance policy. The fourth certified question asks whether or not this is so, and we should answer that question here because it bears on the first certified question.

We conclude that emotional distress with appreciable physical manifestations can qualify as a "bodily injury" within the meaning of the insurance policy. We do not think the term "bodily injury," as ordinarily understood, would draw a nice distinction between emotional distress and its harmful physical consequences, if any; rather, "bodily injury" would be thought of as encompassing both because they are so closely interrelated. Particularly do we think this is so when the term "bodily injury" appears in an insurance policy designed to protect the insured against tortious conduct, and where there is tort law recognizing infliction of emotional distress as a viable cause of action if accompanied by physical manifestations. ³

But here again, returning to the allegations of plaintiff's complaint, there is no allegation of any physical manifestation of plaintiff's emotional distress. ⁴ Indeed, from a reading of the complaint, one learns only that plaintiff was already suffering from extreme emotional distress from the auto accident even before the agent's phone call. Plaintiffs argue that the insurer should have assumed, in view of the allegation of emotional distress, that there were physical manifestations. But we see no reason why the insurer should have to make such an assumption. Not every case of emotional distress results in physical manifestations. See Clemens v. Wilcox, 392 N.W.2d 863 (Minn.1986). Cf. Egeland v. City of Minneapolis, 344 N.W.2d 597 (Minn.1984) (discussing compensability of mental trauma in the workers' compensation area). It is possible, too, that a plaintiff might be trying to recover for emotional suffering alone, notwithstanding our cases to the contrary. Knowing the importance of insurance coverage, it would seem that plaintiff would have alleged facts necessary to implicate coverage, if, in fact, physical manifestations of her distress had occurred as a result of the agent's phone call.

We answer the first certified question "no." Because we conclude there is no "bodily injury," we do not need to answer the second part of the first question which asks whether the injury arose out of an "occurrence" or "accident." Our answer to the fourth certified question is that emotional distress with appreciable physical manifestations does constitute a "bodily injury."

II.

We next take up the fifth certified question, which is, "Was Employers obligated to conduct an investigation beyond the four corners of the complaint?"

This court has consistently stated that where the insurer has no knowledge to the contrary, it may make an initial determination of whether or not it is obligated to defend from the facts alleged in the complaint against its insured. See State Farm Fire & Cas. Co. v. Williams, 355 N.W.2d 421, 424-25 (Minn.1984); Republic Vanguard Ins. Co. v. Buehl, 295 Minn. 327, 332-33, 204 N.W.2d 426, 429 (1973); Crum v. Anchor Cas. Co., 264 Minn. 378, 385, 119 N.W.2d 703, 708 (1963). Where the pleadings do not raise a claim arguably within the scope of coverage, the insurer has no duty to defend or investigate further to determine whether there are other facts present which trigger such a duty. Republic Vanguard Ins. Co., supra; Brown v. State Auto. & Cas. Underwriters, 293 N.W.2d 822, 825-26 (Minn.1980).

Of course, if the insurer is aware of facts indicating that there may be a claim, either from what is said directly or inferentially in the complaint, or if the insured tells the insurer of such facts, or if the insurer has some independent knowledge of such facts, then the insurer must either accept tender of the...