Mental Injury Not Resulting from Bodily Injury, Sickness or Disease Is Not Covered

GENERAL LIABILITY – "BODILY INJURY" – MENTAL INJURY 

Incorporated Village of Old Westbury v. American Alternative Ins. Co.
(2nd Cir., 2/8/2018)

Those who have attended my law firm's New York Coverage seminars over the years have heard me preach that every coverage analysis starts with the policy or, more particularly, reading and re-reading the policy.

The plaintiff in this case sought indemnification coverage under its general liability policy with the defendant insurer for claims of purely mental injury.  The GL policy at issue defined "bodily injury" as:

"Bodily injury" means bodily injury, sickness or disease sustained by a person. This includes mental anguish, mental injury, shock, fright or death resulting from bodily injury, sickness or disease.

The insured argued that the district court had erred in granting summary judgment to the defendant insurer by failing to apply Lavanant v. General Accident Insurance Co. of America, 79 N.Y.2d 623 (1992), which held under the policy there at issue (which defined "bodily injury" simply as "bodily injury, sickness or disease"), that bodily injuries include purely mental injuries.

In AFFIRMING the District Court's grant of summary judgment to the defendant insurer, the United States Court of Appeals agreed with the district court's conclusion that the second sentence of the GL policy's BI definition would be superfluous if "bodily injury" included purely mental injuries that were not directly caused by an independent physical bodily injury.  With respect to the insured's argument under the Lavanant case, the Second Circuit noted:

The Village relies on the New York Court of Appeals' construction of "bodily injury" in Lavanant, 79 N.Y.2d 623, which concluded that purely mental injuries were bodily injuries under the contract at issue. However, the contract at issue in Lavanant did not limit coverage for mental injury to mental injury that results from bodily injury, as the contract at issue in this case does, and thus allow the inference that bodily and mental injury are distinct.

Words matter.