Kramer v. Nationwide Property and Casualty Ins.
Co.
No. 103 MAP 2022, --- A.3d ---, 2024 WL 1776575 (Penn. April 25,
2024)
The Pennsylvania Supreme Court reversed the lower courts' rulings that Nationwide Property & Casualty Insurance Company (Nationwide) had a duty to defend its insureds, Stewart Kramer (Kramer) and Valeria Conicello (Conicello), in an underlying action for wrongful death after their son's houseguest, Michael T. Murray Jr. (Murray), died from a drug overdose caused by a combination of a fentanyl, heroin and benzodiazepines.
The underlying action was brought by Murray's mother, Laurie Cruz (Cruz) against Kramer, Conicello, and their son, Adam Kramer (Adam). Cruz asserted two counts, wrongful death and survival. Both claims sounded in negligence and were premised on Kramer's and Conicello's breach of a duty of care owed to Murray, occasioned by the negligent entrustment of their home to Adam on the evening of Murray's overdose death when Kramer and Conicello were out of town.
Kramer and Conicello sought liability coverage under their homeowner policy issued by Nationwide. Nationwide, relying on the controlled substances exclusion, denied coverage. After receiving Nationwide's denial letter, Kramer and Conicello filed a declaratory judgment action seeking a declaration that Nationwide had a duty to defend. The parties filed competing dispositive motions on the issue of the applicability of the controlled substances exclusion. The trial court granted summary judgment in favor of Kramer and Conicello, finding that the controlled substances exclusion did not apply to the claims alleged against them in the underlying case, because such claims are grounded in negligence and are distinct from the injuries resulting from the use or delivery of controlled substances. Accordingly, the trial court ordered Nationwide to provide a defense to Kramer and Conicello in the underlying action.
Nationwide appealed the trial court's ruling to the Superior Court of Pennsylvania, which affirmed the trial court's summary judgment order but on alternative grounds. The Superior Court held, without explanation, that the controlled substance exclusion applied to the survival action in its entirety and to the wrongful death action except to damages for emotional and mental distress claims of the decedent's mother. As such, the Superior Court ruled that Nationwide had a duty to defend Kramer and Conicello in the underlying suit.
Nationwide petitioned the Pennsylvania Supreme Court to decide the limited issue of whether the Superior Court erred in finding that the decedent's mother's emotional distress injuries, as alleged in her wrongful death claim, are covered under its policy where the policy excludes emotional distress from the definition of bodily injury. The Supreme Court accepted Nationwide's petition, and in its opinion noted that Nationwide's duty to provide a defense arises when there is an “occurrence” within the meaning of the policy. An occurrence requires a “bodily injury,” which by definition under the policy does not include emotional distress or similar injury unless it is the direct result of bodily harm. Because the decedent's mother did not suffer a “bodily injury” as defined by the policy, the Superior Court erred in determining that Nationwide had a duty to defend Kramer and Conicello with respect to Cruz's wrongful death claim. The Pennsylvania Supreme Court did not decide the issue of the applicability of the controlled substance exclusion because that issue was not before it.
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