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Voorhees v. Preferred Mutual Insurance Co.

Decided: March 20, 1991.


On appeal from Superior Court of New Jersey, Law Division, Union County.

Pressler, Deighan and Baime. The opinion of the court was delivered by Baime, J.A.D. Deighan, J.A.D. (dissenting).


This appeal presents novel questions concerning an insurer's duty to defend its insured. The principal issue is whether a complaint alleging that the insured committed the torts of outrage and negligent infliction of emotional distress resulting in mental anguish to the claimant creates a duty to defend under the comprehensive general liability coverage of a homeowner's insurance policy. An ancillary question is how the insurer's duty to defend can best be enforced where an action against the insured includes covered and non-covered claims. We hold that the term "bodily injury," as used in the policy, encompasses the mental and psychological sequelae resulting from the torts of outrage and negligent infliction of emotional distress and therefore the insurer had the duty to defend. We also conclude that because the expenses incurred by the insured cannot fairly be apportioned between covered and non-covered claims, the insurer alone should bear the reasonable costs of the defense.


In December 1985, Linda Sisto, a teacher in the Kenilworth public schools, filed a complaint in the Law Division, naming as defendants the superintendent, the principal, the board of education, two local newspapers, plaintiff Eileen Voorhees and another parent of a student. The complaint alleged that Sisto had been suspended from her teaching duties and directed to undergo psychiatric examinations as a result of the claims of several parents concerning her alleged lack of fitness. Sisto claimed that the school officials had acted unfairly and that she had been defamed by reports of the episode in the newspapers.

The fourth count of the complaint was directed against Voorhees and the other parent. Because the complaint was inartfully drafted, it is difficult to characterize accurately the specific claims made against the two defendants. The issue is an important one and we therefore quote liberally from the fourth count:

At various times and on various dates relevant to this complaint, defendants Constance Scuderi and Eileen Voorhees made false and erroneous statements about the competency and fitness of the plaintiff, such statements serving to place plaintiff before the public in a false light, further serving to interfere with her rights of privacy and to inflict upon her severe humiliation, embarrassment, emotional distress and mental anguish. The statements as well as conduct of these defendants respecting the plaintiff herein were made and carried out wilfully, deliberately, recklessly and negligently. Moreover, these defendants knew or should have known that their statements about plaintiff were false and would probably, as occurred, place plaintiff before the public in a false light, interfere with her rights of privacy, cause her severe humiliation, embarrassment, emotional distress and mental anguish.

As a direct and proximate result of the foregoing, plaintiff was damaged in her reputation as a professional teacher and has been unable and remains unable to function in her customary teaching assignment. Moreover, she has been placed before the public in a false light, has had her rights of privacy interfered with and has suffered and continues to suffer embarrassment, humiliation, emotional distress and mental anguish. [Emphasis added].

Upon receipt of the complaint, Voorhees notified defendant Preferred Mutual Insurance Co. (Preferred) of the pendency of the suit and requested it to defend the action in accordance with its obligation under her homeowner's policy. In an exchange of correspondence, defendant declined Voorhees' demand. Initially, defendant asserted that Sisto's complaint sounded in defamation and that the damage to her reputation claimed did not constitute "bodily injury" under the policy. In a subsequent letter, defendant added that Sisto's claim fell within the policy's exclusion for intentional acts. Voorhees retained an attorney and ultimately settled the Sisto claim for the sum of $750. However, extensive discovery proceedings had occurred prior to the settlement. In the course of these proceedings, Voorhees' attorney had received a report from Sisto's psychiatrist, indicating that Sisto had experienced various physical symptoms as the result of the emotional distress allegedly caused by Voorhees'

conduct, including headaches, nausea and stomach and body pains. According to the psychiatrist, these physical effects were consistent with Sisto's subjective complaints and were not idiosyncratic.

Following the settlement of Sisto's suit, Voorhees instituted this action seeking a declaratory judgment that Preferred was responsible for reimbursement of all defense costs, approximately $14,000. Cross-motions for summary judgment were filed. The Law Division judge rendered an oral opinion, finding that although Sisto's claim did not fall within the policy exclusion for intentional acts, the complaint alleged defamation, a cause of action not covered under the insuring agreement. The judge granted summary judgment in Preferred's favor and this appeal followed.


We commence our analysis with the well-settled principle that an insurer's duty to defend an action against the insured is measured by the allegations contained in the complainant's pleadings. Ohio Cas. Ins. Co. v. Flanagin, 44 N.J. 504, 512, 210 A.2d 221 (1965); Danek v. Hommer, 28 N.J. Super. 68, 77, 100 A.2d 198 (App.Div.1953), certif. granted 14 N.J. 465, 102 A.2d 693 (1954), aff'd 15 N.J. 573, 105 A.2d 677 (1954); 8 Appleman, Insurance Law and Practice (Berdal ed. 1979), § 4683 at 42. The duty to defend arises when the complaint states a claim constituting a risk falling within the purview of the policy language. Danek v. Hommer, 28 N.J. Super. at 77, 100 A.2d 198. If the pleadings state facts bringing the injury within the coverage of the policy, the insurer must defend regardless of the insured's ultimate liability to the complainant. 8 Appleman, Insurance Law and Practice, supra, § 4683 at 42. The nature of the damage claim, rather than the actual details of the accident or the ultimate liability of the insured, determines whether the insurer is obliged to defend. Ohio Cas. Ins. Co. v. Flanagin, 44 N.J. at 512, 210 A.2d 221; see also

Hackensack Water Co. v. General Acc. Fire & Life Assur. Corp., 84 N.J. Super. 479, 482-483, 202 A.2d 706 (App.Div.1964); Van Der Veen v. Bankers Indemnity Ins. Co., 30 N.J. Super. 211, 217, 103 A.2d 900 (App.Div.1954).

Applying these principles, we first look to the policy language. The standard form policy provides that Preferred will pay all sums recovered against the insured "because of bodily injury . . . caused by an occurrence." The word "occurrence" is defined in pertinent part as "an accident." "Bodily injury" means "bodily harm, sickness or disease . . . ." The duty to defend clause is broader than the indemnification provision in that it does not require the "bodily injury" be caused by an "occurrence." However, both clauses are subject to a policy exclusion which excepts from coverage "liability . . . caused intentionally by or at the direction of any insured."

We next consider the allegations contained in Sisto's complaint. As we pointed out previously, the complaint was inartfully drafted and ambiguously phrased. The Law Division judge concluded that the fourth count alleged a cause of action for defamation. In the case of a complaint charging defamation, the plaintiff must plead facts sufficient to identify the defamatory words, their utterer and the fact of their publication. Zoneraich v. Overlook Hosp., 212 N.J. Super. 83, 101, 514 A.2d 53 (App.Div.1986), certif. den. 107 N.J. 32, 526 A.2d 126 (1986). A vague conclusory allegation is not enough. Ibid.; see also Kotok Building v. Charvine Co., 183 N.J. Super. 101, 105, 443 A.2d 260 (Law Div.1981). Sisto's complaint does not satisfy that requirement. Of course, we have no occasion to consider the merits of Sisto's claim. Rather, our purpose is to determine whether Preferred had a duty to defend by comparing the allegations of Sisto's complaint with the coverage provisions of Voorhees' policy. We point to the defects in Sisto's pleadings to emphasize the uncertainty respecting whether it was her intention to allege defamation or some other cause of action or multiple claims. Construing the fourth count

liberally, we conclude that the Law Division judge erred by finding only defamation alleged. In our view, the allegations set forth in the fourth count can just as well be interpreted as pleading the torts of invasion of privacy, negligent infliction of emotional distress and outrage. We must thus consider whether any or all of these causes of actions fall within the coverage of Voorhees' policy.

In a trilogy of decisions, we have addressed the question whether emotional distress qualifies as "bodily injury" under an insuring agreement. We first considered the issue in NPS Corp. v. Insurance Co. of North America, 213 N.J. Super. 547, 517 A.2d 1211 (App.Div.1986). There, the complaint in the underlying action alleged acts of sexual harassment consisting of non-consensual touching resulting in the complainant's emotional distress and mental anguish. Noting the lengthening line of cases which has recognized that emotional distress is just as real as physical pain and its valuation no more difficult, see Strachan v. John F. Kennedy Memorial Hosp., 109 N.J. 523, 538 A.2d 346 (1988); Saunderlin v. E.I. Dupont Co., 102 N.J. 402, 508 A.2d 1095 (1986); Portee v. Jaffee, 84 N.J. 88, 417 A.2d 521 (1980); Berman v. Allan, 80 N.J. 421, 404 A.2d 8 (1979); Zahorian v. Russell Fitt Real Estate Agency, 62 N.J. 399, 301 A.2d 754 (1973); Falzone v. Busch, 45 N.J. 559, 214 A.2d 12 (1965); Pushko v. Board of Trustees of Teachers' P. & A. Fund, 202 N.J. Super. 98, 493 A.2d 1309 (App.Div.1985), on remand 208 N.J. Super. 141, 505 A.2d 154 (App.Div.1986); Eyrich for Eyrich v. Dam, 193 N.J. Super. 244, 473 A.2d 539 (App.Div.1984), certif. den. 97 N.J. 583, 483 A.2d 127 (1984); Muniz v. United Hosps. Med. Ctr. Pres. Hosp., 153 N.J. Super. 79, 379 A.2d 57 (App.Div.1977); Lemaldi v. De Tomaso of America, Inc., 156 N.J. Super. 441, 383 A.2d 1220 (Law Div.1978), we found it highly unrealistic to "separate a person's nerves and tensions from his body" in determining whether a particular injury falls within the coverage of an insuring agreement. NPS Corp. v. Insurance Co. of North America, 213 N.J. Super. at 553, 517 A.2d 1211. We observed that "emotional

trauma can be as disabling to the body as a visible physical wound . . . [and] can and often does have a direct effect on other bodily functions." Ibid. We thus held that the term "bodily injury" included "claims for emotional distress caused by an assault and battery." Id. at 554, 517 A.2d 1211.

Our decision in NPS was followed by Lumbermen's v. United Serv. Auto., 218 N.J. Super. 492, 528 A.2d 64 (App.Div.1987), where the insured was sued for defamation. One of the claims made by the complainant in the underlying suit was that the insured's defamatory statements had caused him "embarrassment, humiliation, anguish and distress." Id. at 496, 528 A.2d 64. Based upon that allegation, the insured forwarded the complaint to his insurer which subsequently disclaimed coverage. We held that "[a] cause of action for defamation does not, without more, allege physical or emotional injury to the person defamed within the meaning of the standard homeowner's policy." Id. at 494, 528 A.2d 64. In reaching this result, we reasoned that defamation is an impairment of a "relational" interest in that it denigrates the opinion which others in the community have of the person defamed, and it invades his interest in his reputation and good name. Id. at 498, 528 A.2d 64, citing Prosser & Keeton, Law of Torts (5th ed. 1984), § 111 at 771. We said that "[u]nlike a claim for physical or mental injury, defamation 'is not concerned with the plaintiff's own humiliation, wrath or sorrow, except as an element of 'parasitic' damages attached to an independent cause of action.'" Lumbermen's, 218 N.J. Super. at 498, 528 A.2d 64; Prosser & Keeton, supra, § 111 at 771.

We last revisited this subject in Wolfe v. State Farm Ins. Co., 224 N.J. Super. 348, 540 A.2d 871 (App.Div.1988), certif. den. 111 N.J. 654, 546 A.2d 562 (1988). There, the decedent died from carbon monoxide poisoning while she sat in a car owned by the insured. The decedent's father pulled her from the automobile, contacted the local first aid squad and watched helplessly while rescue attempts failed. Members of the decedent's family, including her father, filed claims against the

insured for wrongful death, survivorship and emotional distress. The insurer disclaimed liability respecting the father's claim for emotional distress. We rejected the insurer's argument that the emotional distress allegedly suffered by the decedent's father did not constitute "bodily injury" covered by the policy. Id. 224 N.J. Super. at 352, 540 A.2d 871. Viewing the policy language from the perspective of the average insurance purchaser's reasonable expectations, see Butler v. Bonner & Barnewall, Inc., 56 N.J. 567, 576, 267 A.2d 527 (1970); Mazzilli v. Accident & Cas. Ins. of Winterthur, 35 N.J. 1, 7, 170 A.2d 800 (1961); Ellmex Const. Co., Inc. v. Republic Ins. Co., 202 N.J. Super. 195, 204-205, 494 A.2d 339 (App.Div.1985), certif. den. 103 N.J. 453, 511 A.2d 639 (1986); Great American Ins. v. Lerman Motors, Inc., 200 N.J. Super. 319, 326, 491 A.2d 729 (App.Div.1984), we held that the phrase "bodily injury" in the insuring agreement included claims for emotional distress. Wolfe v. State Farm Ins. Co., 224 N.J. Super. at 353, 540 A.2d 871.

Synthesizing these decisions, the lesson to be learned is that mental anguish qualifies as "bodily injury" at least to the extent that the emotional distress alleged does not constitute "parasitic" damages attached to an independent cause of action. See Lumbermen's v. United Serv. Auto., 218 N.J. Super. at 498, 528 A.2d 64. Where the emotional distress is the product of the impairment of a "relational interest," however, it is arguable that the ...

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