Langevin v. Allstate Ins. Co.

• Decision Date: 04 June 2013
• Docket Number: Docket No. Cum–12–140.
• Citation: 2013 ME 55,66 A.3d 585
• Parties: Patrick LANGEVIN et al. v. ALLSTATE INSURANCE COMPANY.
• Court: Maine Supreme Court

66 A.3d 585

2013 ME 55

Patrick LANGEVIN et al.

v.ALLSTATE INSURANCE COMPANY.

Docket No. Cum–12–140.

Supreme Judicial Court of Maine.

Argued: April 10, 2013.

Decided: June 4, 2013.

Peter Clifford, Esq., (orally), Hodsdon & Clifford, LLC, Kennebunk, on the briefs, for appellants Cora P. Langevin and Patrick Langevin.

Martica S. Douglas, Esq., (orally), Douglas, Denham, Buccina & Ernst, Portland, on the briefs, for appellee Allstate Insurance Company.

Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, GORMAN, and JABAR, JJ.

GORMAN, J.

[¶ 1] Patrick and Cora P. Langevin appeal from the entry of a summary judgment in the Superior Court (Cumberland County, Warren, J.) in favor of Allstate Insurance Company on the Langevins' reach and apply action, brought pursuant to 24–A M.R.S. § 2904 (2012). The Langevins argue that the court erred in determining that a homeowners insurance policy issued by Allstate to Charles Johnson did not cover the damages they suffered as a result of purchasing property from Johnson, including damages for loss of investment, undisclosed physical problems with the property, and emotional distress. Because those damages do not constitute covered “bodily injury” or “property damage” pursuant to the Allstate homeowners insurance policy, we affirm the judgment.

I. BACKGROUND

[¶ 2] In August 2010, the Langevins filed a complaint against Charles Johnson (“underlying complaint”) arising out of their purchase from Johnson of property located at 866 Cape Road in Hollis.¹ Although the underlying complaint includes ten counts, the Langevins are pursuing only the counts of negligence, negligent misrepresentation, negligent infliction of emotional distress, and intentional inflictionof emotional distress, based on the following allegations. During the pendency of the sale of the Cape Road property, Johnson misrepresented the condition of the property and failed to disclose its prior use as a junkyard. As a result of Johnson's misrepresentations, the Langevins purchased the property for $315,000 pursuant to an April 6, 2005, purchase and sale agreement and suffered damages, including loss of the investment value of the property, undisclosed physical problems with the property, and emotional distress.

[¶ 3] While he owned the property at 866 Cape Road, Johnson maintained a homeowners insurance policy with Allstate. The Allstate policy provides:

Subject to the terms, limitations and conditions of this policy, Allstate will pay damages including prejudgment interest which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an occurrence to which this policy applies, and is covered by this part of the policy.

“Bodily injury,” “property damage,” and “occurrence” are all defined terms in the policy. It defines “bodily injury” as

physical harm to the body, including sickness or disease, and resulting death, except that bodily injury does not include:

a) any venereal disease;

b) Herpes;

c) Acquired Immune Deficiency Syndrome (AIDS);

d) AIDS Related Complex (ARC);

e) Human Immunodefiency Virus (HIV);

or any resulting symptom, effect, condition, disease or illness related to (a) through (e) listed above.

The policy defines “property damage” as “physical injury to or destruction of tangible property, including loss of its use resulting from such physical injury or destruction.” It defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions, during the policy period, resulting in bodily injury or property damage.”

[¶ 4] When the Langevins sued him, Johnson tendered the underlying complaint to Allstate but Allstate refused to defend or indemnify Johnson, citing the policy's contract exclusion, which excludes from coverage “any liability an insured person assumes arising out of any contract or agreement.” Following that denial, the Langevins and Johnson reached an agreement resolving the underlying complaint. Pursuant to the parties' agreement, the Superior Court (Cumberland County, Warren, J.) entered a judgment against Johnson in the amount of $330,000.² That judgment does not specify the basis for liability or damages.

[¶ 5] Armed with the judgment, the Langevins initiated a reach and apply action against Allstate, pursuant to 24–A M.R.S. § 2904. On cross-motions for summary judgment, the court concluded that (1) Johnson's homeowners insurance policy's contract exclusion did not apply to exclude coverage, (2) the damages sought did not constitute “property damage,” and (3) any damages for injury to the property did not result from an “occurrence.” Accordingly, the court granted Allstate's motion for summary judgment, denied the Langevins' motion for summary judgment, and entered judgment for Allstate. The court's order entering judgment does not discuss the Langevins' claim that the policy covers any damages resulting from their emotional distress. The Langevins timely appealed pursuant to 14 M.R.S. § 1851 (2012) and M.R.App. P. 2.

II. DISCUSSION

[¶ 6] The Langevins contend that the court erred in concluding that the Allstate policy did not cover the damages awarded in the underlying judgment. They first argue that the $330,000 judgment awarded damages for loss of investment and physical problems with the property on their negligent misrepresentation claim, as well as damages for emotional distress on their claims for intentional infliction of emotional distress or negligence. The Langevins then argue that (1) the damages for loss of investment and physical problems with the property constitute covered “property damage” and (2) the emotional distress damages constitute covered “bodily injury.” ³ Allstate essentially argues that none of the Langevins' claims supports recovery of their claimed emotional distress damages. Additionally, Allstate argues that there was no “property damage” that entitles the Langevins to recover on their negligent misrepresentation claim.⁴

[¶ 7] “We review the grant of a summary judgment de novo.” Trott v. H.D. Goodall Hosp., 2013 ME 33, ¶ 11 n. 5, 66 A.3d 7 (quotation marks omitted). Where, as here, there are no genuine issues of material fact, our review is focused on whether Allstate was entitled to judgment as a matter of law. See Travelers Indem. Co. v. Bryant, 2012 ME 38, ¶ 8, 38 A.3d 1267.

[¶ 8] Maine's reach and apply statute, 24–A M.R.S. § 2904, enables a judgment creditor to satisfy a judgment from the judgment debtor's insurer if “the judgment debtor was insured against such liability when the right of action accrued.” ⁵Sarah G. v. Me. Bonding & Cas. Co., 2005 ME 13, ¶ 6, 866 A.2d 835. To resolve a reach and apply action, we first identify the basis of liability and damages from the underlying complaint and judgment. Jacobi v. MMG Ins. Co., 2011 ME 56, ¶ 14, 17 A.3d 1229. We then review “the homeowners insurance policy to determine if any of the damages awarded in the underlying judgment are based on claims that would be recoverable pursuant to the homeowners policy.” Id. “[T]he party seeking to recover pursuant to the reach and apply statute ... has the burden to demonstrate that [his] awarded damages fall within the scope of the insurance contract.” Id.

[¶ 9] We review “the interpretation of an insurance policy de novo.” Cox v. Commonwealth Land Title Ins. Co., 2013 ME 8, ¶ 8, 59 A.3d 1280. We interpret unambiguous policy language consistent with its plain meaning and “construe ambiguous policy language strictly against the insurance company and liberally in favor of the policyholder.” Id.

[¶ 10] To begin our analysis, we must identify which of the damages sought in the underlying complaint constitute the $330,000 judgment. See Jacobi, 2011 ME 56, ¶ 14, 17 A.3d 1229;Sarah G., 2005 ME 13, ¶¶ 3, 7, 866 A.2d 835. The judgment entered by the court, pursuant to the parties' agreement, does not specify the basis of Johnson's liability nor does it specify what damages the $330,000 award redresses. Thus, we turn to the underlying complaint. In that complaint, the Langevins pursued recovery of damages for loss of investment and physical problems with the property on a claim of negligent misrepresentation and damages for emotional distress on claims of negligence, negligent infliction of emotional distress, and intentional infliction of emotional distress. So long as each claim permits recovery of the damages sought, we cannot rule out the possibility that the judgment awards damages for loss of investment, physical problems with the property, and emotional distress. Accordingly, we must determine whether the claims advanced in the underlying complaint permit recovery of the damages alleged and whether those damages are covered by the Allstate policy.

A. Damages for Negligent Misrepresentation

[¶ 11] The Langevins contend that any portion of the judgment awarded for their loss of investment and the undisclosed physical problems with the property on their negligent misrepresentation claim constitute covered “property damage.” Negligent misrepresentation is a vehicle for asserting “claims for economic harm.” Dan D. Dobbs, Law of Remedies § 9.1 at 544 (2d ed.1993); see also Jourdain v. Dineen, 527 A.2d 1304, 1307 (Me.1987) (observing that fraud actions “protect economic interests”). We define the tort of negligent misrepresentation as follows:

One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

St. Louis v. Wilkinson Law Offices, P.C., 2012 ME 116, ¶18, 55 A.3d 443;see also Chapman v. Rideout, 568 A.2d 829, 830 (Me.1990) (adopting the definition articulated in the Restatemen...