Facts
- A New Jersey parent, Eileen Voorhees, publicly criticized an elementary school teacher’s competence at a school-board meeting and was quoted in local newspaper coverage of the dispute.
- The teacher was temporarily removed from teaching pending psychiatric evaluation, later found fit, and reassigned.
- The teacher sued Voorhees and others, alleging the statements and conduct were “willfully, deliberately, recklessly and negligently,” and caused reputational harm, privacy-related harm, and severe emotional distress.
- Discovery in the teacher’s case included medical evidence that the emotional distress was accompanied by physical complaints (including headaches, stomach pains, nausea, and generalized body pains).
- Voorhees held a homeowner’s liability policy covering sums for which an insured is legally liable because of “bodily injury” caused by an “occurrence,” and requiring the insurer to defend suits seeking covered damages.
- The policy defined “bodily injury” as “bodily harm, sickness or disease,” defined “occurrence” as an “accident,” and excluded bodily injury “expected or intended by the insured.”
- The insurer refused to defend; the teacher’s case settled for $750, and Voorhees claimed more than $14,000 in defense costs.
- Voorhees sued the insurer for breach of contract, seeking reimbursement of defense costs and indemnification.
Issues
- Whether emotional distress accompanied by documented physical symptoms constitutes “bodily injury” under a homeowner’s policy defining bodily injury as “bodily harm, sickness or disease.”
- Whether an insured’s intentional statements can still be an “occurrence” (“accident”) when the insured did not intend to cause the alleged injury, and whether the “expected or intended” injury exclusion applies.
- Whether the allegations created a potential for coverage sufficient to trigger the insurer’s duty to defend (and related liability for breach of that duty).
Decision
- The Supreme Court of New Jersey affirmed the judgment in favor of Voorhees.
- Emotional distress accompanied by substantial physical manifestations can qualify as “bodily injury” within “bodily harm, sickness or disease.”
- The alleged harm could arise from an “occurrence” because the complaint did not establish that Voorhees intended or expected to cause the teacher’s injuries; the exclusion did not categorically bar coverage.
- Because the complaint presented a potential for coverage, the insurer owed a duty to defend and was liable for damages resulting from its wrongful refusal, including reasonable defense costs.
Legal Principles
- Insurance policy terms are construed in accordance with the reasonable expectations of the average policyholder; ambiguities are construed in favor of coverage.
- “Bodily injury” defined as “bodily harm, sickness or disease” can include emotional distress when it results in genuine, substantial physical symptoms.
- An “accident” may include unintended consequences of intentional acts; the relevant question is whether the insured intended or expected the injury, not merely whether the insured intended the conduct.
- The “expected or intended” injury exclusion applies when the insured intended or expected the harm itself; intent is generally assessed subjectively unless the act is so inherently injurious that intent to harm is presumed as a matter of law.
- The duty to defend is broader than the duty to indemnify and is triggered when the complaint’s allegations, if proven, potentially fall within coverage; doubts are resolved in favor of a defense.
Conclusion
The court held that a homeowner’s liability policy may cover claims for emotional distress that produce substantial physical symptoms and that intentional speech-related conduct can still constitute an “occurrence” when the insured did not intend the resulting injury; because the underlying complaint plausibly alleged covered bodily injury arising from potentially accidental harm, the insurer breached its duty to defend and owed contract damages, including reasonable defense costs.