Wade Clark Mulcahy LLP

In Kramer v. Nationwide Prop. & Cas. Ins. Co., Laurie Cruz (“Laurie”), the mother of Michael Murphy (“Michael”) and administrator of his estate, sued Stewart Kramer, Valerie Concinello, (the “Parents”) and their son, Adam Kreamer (“Adam”), after Michael died from a drug overdose while staying with Adam at the Parents’ home. See Kramer v. Nationwide Prop. & Cas. Ins. Co.103 MAP 2022, 2024 WL 1776575 at *1 (Pa. Apr. 25, 2024). The Montgomery County Coroner’s office ultimately determined that the overdose was triggered by a combination of fentanyl, heroin, and benzodiazepines. Id. Count I of Larie’s complaint asserts that the Parents entrusted Adam with their home, knew or should have known that he used and distributed narcotics, and breached the duty of care owed to all invitees in providing access to controlled substances. Id at 2. In Count II of her complaint, Laurie asserts a survival action against the Parents and Adam, alleging that they owed a duty of care to Michael within their home and breached that duty when Michael was afforded access to controlled substances. Id. Larie sought damages under Pennsylvania’s Wrongful Death Act in excess of fifty-thousand dollars. Id.

The Parents tendered the complaint to Nationwide Property & Casualty Insurance Co. (“Nationwide”) under their Homeowners’ Policy (the “Policy”), seeking coverage under “Section II Liability Coverages” which provides that Nationwide will “pay damages an insured is legally obligated to pay due to an occurrence resulting from negligent personal acts or negligence arising out of the ownership, maintenance, or use of real or personal property.” Id. at 1. "Occurrence" is defined as bodily injury resulting from an accident, and while "bodily injury" includes bodily harm and death, but does not include emotional distress or mental anguish. Id. The Policy also includes an exclusion barring coverage for personal liability or bodily injury resulting from the use of a controlled substance. Id.

Nationwide ultimately denied coverage under the Policy’s “controlled substance” exclusion. The Parents then filed a declaratory judgement action, and both sides moved for summary judgment. Id. at 2. The trial court ultimately granted summary judgment in favor of the Parents and ordered Nationwide to provide them with a defense based on the reasoning that the underlying lawsuit alleges negligence and a breach of duty to care for an invitee, which are distinct from injuries “resulting from” the use of controlled substances. Id. Nationwide appealed. Id. The Pennsylvania Superior Court affirmed the trial court’s decision, finding that Laurie did not suffer a bodily injury, and therefore, the exclusion did not apply to bar coverage for the emotional distress damages Laurie was seeking. Id at 3 – 4.

The Pennsylvania Supreme Court granted Nationwide’s petition to determine if the Superior Court erred in finding that emotional distress damages are covered under a liability policy for claims of bodily injury. Id. The Supreme Court ultimately sided with Nationwide, reversing the judgement of the Superior Court “insofar as it held that Nationwide owed a duty to defend the Underlying Lawsuit because emotional and mental distress damages in wrongful death claims were not bodily injuries.” Id. at 11. The Court reasoned that,

Reduced to its essence, as relevant to this appeal, Nationwide's obligation arises only when there is an occurrence. An occurrence requires a bodily injury. A bodily injury, by definition under the Policy, does not include emotional distress or similar injury unless [it is] the direct result of     bodily harm. The Superior Court's determination that Mother did not suffer a bodily injury as  defined in the Policy for purposes of the wrongful death claim requires a conclusion that there is no coverage for the wrongful death claim. Therefore, the Superior Court's interpretation that Nationwide was potentially required to pay out for Mother's emotional and mental distress damages for that wrongful death claim is contrary to the unambiguous provisions of the Policy and erroneous as a matter of law.

Id. at 6.