July 6, 2011
By: Mark C. Stephenson and Erin Nulty
This article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.
The New Jersey Supreme Court recently held that a commercial general liability insurer (CGL) is obliged to defend claims of severe emotional distress, even when no allegation of resulting substantial bodily injury or sickness has been made and in the face of policy language to the contrary. The Court's June 21, 2011 decision in Abouzaid v. Mansard Gardens Associates, LLC represents further relaxation of the circumstances triggering an insurer's duty to defend.
Under New Jersey law, tort claims for emotional distress generally require proof of substantial bodily injury or sickness. An exception arises when the plaintiff witnesses the death or serious injury of a person, linked to the plaintiff by "marital or intimate familial" ties, caused by defendant's negligence that results in plaintiff's severe emotional distress. Portee v. Jaffee, 84 N.J. 88 (1980). Under Portee, that category of plaintiff does not need to exhibit physical consequences in order to recover for emotional distress. Severe mental and emotional harm alone are enough to allow a Portee plaintiff to prevail.
In Abouzaid, a fire broke out in an apartment when paint thinner fumes reached a pilot light. Two mothers in the apartment heard an explosion and saw their sons "engulfed by a fireball." While the women were not injured, the children suffered burns. The women sued the landlord, claiming emotional distress (among other things), but omitting any allegation that they had sustained physical injury or that their distress resulted in physical manifestations.
The CGL policy at issue covered loss due to bodily injury, which it defined as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." The landlord forwarded the complaint to its insurer, which provided a limited defense on negligence and res ipsa loquitor claims, but denied coverage for the emotional distress claims as failing to satisfy the policy's bodily injury requirement.
Even though plaintiffs did not allege a bodily injury within their emotional distress Portee count, the Court found that the absence of such allegations did not exclude the possibility that physical manifestations would be proved during the litigation. It went on to conclude that in this situation, doubts regarding the duty to defend should be resolved in favor of the insured. Presuming that the extreme level of distress contemplated by a Portee claim will likely have a physical component, the Court determined that the carrier needed to provide a defense until the elimination of the possibility of any physical ailments, unless another coverage exclusion is applicable. As a result, the Abouzaid decision now requires insurers to defend Portee claims from the filing of the complaint, irrespective of allegations of bodily injury. Considering the low threshold the New Jersey Supreme Court has set, whether any physical manifestation of any substance will be required in Portee claims remains a question for a future court decision.
For further insight on complex litigation issues impacting insurers and their clients, including professional liability and product liability as well as disputes involving life, accident, health, disability and other benefits, contact Mark Stephenson at 215-358-5175 or via email at mstephenson@nldhlaw.com or Erin Nulty at 856-665-8544 or via email at enulty@nldhlaw.com.
