HARRISBURG – The Supreme Court of Pennsylvania has overturned a lower court ruling which found Nationwide Insurance had a duty to defend a pair of homeowners in an underlying lawsuit surrounding a man’s fatal overdose which took place in their home.
In an April 25 opinion, state Supreme Court Justices Christine Donohue, Debra Todd, Kevin M. Dougherty, David N. Wecht, Sallie Updyke Mundy and P. Kevin Brobson ruled to resurrect the case brought by Stewart Kramer and Valerie Conicello against Nationwide Property and Casualty Insurance Co., Laurie Cruz (Administrator for the Estate of Michael T. Murphy, Jr., deceased) and Adam Kramer.
Justice Donohue authored the Court’s majority opinion in this matter – while Justice Daniel McCaffery did not participate in the hearing of the case.
This case stems from the 2018 overdose death of Michael T. Murray, Jr., who passed away at the home of plaintiffs Stewart Kramer and Valerie Conicello. The plaintiffs’ son, Adam, had hosted Murray at his parents’ home while the Kramers were away. Murray’s mother, Laurie Cruz, filed a wrongful death and survival action against both the Kramers and Adam.
Cruz alleged that Adam was “widely known to use and sell controlled substances”, was “negligent in supplying [Murray] with the drugs that caused his overdose” and further alleged that the Kramers were “negligent in allowing Adam to use their home for such illicit activities.”
Nationwide Insurance Company, the Kramers’ insurer, disqualified any and all coverage according to the policy’s “controlled substance” exclusion, which excluded coverage for” bodily injury or property damage…resulting from the use, sale, manufacture, delivery, transfer or possession by a person of a controlled substance(s)…” as defined by the Food & Drug Administration.
The Kramers’ policy qualified “bodily injury” for the purposes of the exclusion as “bodily harm, including resulting care, sickness or disease, loss of service or death” – and clarified that “bodily injury does not include emotional distress, mental anguish, humiliation, mental distress, injury or any similar injury unless it is a direct result of bodily harm.”
The Kramers pursued legal action wanting to force Nationwide to defend them in the underlying action and were successful in the Montgomery County Court of Common Pleas, which granted them summary judgment and ruled Nationwide had to defend them.
On appeal to the Superior Court of Pennsylvania, the state’s intermediate appellate body upheld the order of the trial court in December 2021, as to Nationwide being compelled to defend the Kramers in the underlying lawsuit.
While the Superior Court concurred with Nationwide that bodily injury stemming from controlled substances fell under the policy’s “controlled substance” exclusion, it also specified that the wrongful death claim asserted against the Kramers in the underlying lawsuit was not limited only to bodily injury.
Rather, the Superior Court decreed that Pennsylvania law accounted for emotional and psychological loss damages in a wrongful death suit, and furthermore, that such damages fell outsides the auspices of the policy’s “controlled substance” exclusion.
As it ruled the policy’s “controlled substance” exclusion did not apply to the wrongful death claim, the Superior Court also found that Nationwide had a duty to defend the Kramers – which led Nationwide to appeal to the state Supreme Court.
“Although this case was litigated in the trial court on the applicability of this exclusion, the Superior Court’s analysis renders the controlled substance exclusion irrelevant. The Superior Court’s conclusion that Mother [Conicello] did not suffer bodily injury obviates coverage under the policy provisions that control when Nationwide is obligated to pay (and thus defend). 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 the direct result of bodily harm,” Donohue said.
“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.”
In reversing the ruling of the Superior Court, it likewise overturned the affirming of the trial court’s order granting the Kramers’ motion for summary judgment and denying Nationwide’s motion for summary judgment.
Justices Todd, Wecht and Brobson joined the opinion, while Justices Dougherty and Mundy filed concurring opinions.
Supreme Court of Pennsylvania case 103 MAP 2022
Superior Court of Pennsylvania case 726 EDA 2021
Montgomery County Court of Common Pleas case 2020-17901
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com