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Trinity Universal Insurance Company v. Cowan5/16/1997
OPINION DELIVERED: May 16, 1997
On Application for Writ of Error to the Court of Appeals for the Third District of Texas
Argued on October 2, 1996
JUSTICE CORNYN delivered the opinion for a unanimous Court.
We decide in this case the meaning of two terms commonly used in insurance policies. First, we decide whether mental anguish alone is a "bodily injury" under a standard homeowners' insurance policy defining "bodily injury" as "bodily harm, sickness or disease." We conclude that, absent an allegation of physical manifestation of mental anguish, a claim of mental anguish is not a "bodily injury" as defined in the policy for purposes of invoking the duty to defend. Second, we decide whether an insured's intentional tort that results in unintended injuries is an "accident," and thus an "occurrence" under the same policy. We conclude that it is not, and thus there is no coverage under the policy.
Gregory Gage was working at an H.E.B. Photo Place as a photo lab clerk when a roll of film containing somewhat revealing pictures of Nicole Cowan was delivered for developing. Gage made extra prints of four of the pictures and took them home. He later showed them to some friends and left the pictures with one friend with instructions to throw them away. That friend, however, showed the pictures to someone else, who was a friend of Cowan and who told her of Gage's actions. Cowan then sued Gage and H.E.B., alleging, among other things, negligence and gross negligence. Cowan alleged that she had suffered "severe mental pain, a loss of privacy, humiliation, embarrassment, fear, frustration, mental anguish, and [would] continue to do so in the future." Gage, who was about twenty years old and living with his parents at the time, notified his parents' homeowners' insurance carrier, Trinity Lloyd's Insurance Company, a subsidiary of Trinity Universal Insurance Company (collectively "Trinity"), of the suit.
Trinity initially defended Gage under a reservation of rights, but later denied coverage and withdrew its defense. Cowan settled with H.E.B., and then Gage agreed to assign to Cowan any claims he might have against Trinity in exchange for her promise not to execute against any of his assets except any coverage afforded by the Trinity policy. During the ensuing non-jury trial against Gage, at which he did not appear or otherwise defend, Cowan and her mother testified that Nicole suffered mental anguish, along with headaches, stomachaches, and sleeplessness as a result of Gage's actions. The trial court found Gage negligent and grossly negligent, and awarded Cowan $250,000.
Cowan then filed this lawsuit against Trinity, bringing a claim as Gage's judgement creditor, and also bad faith claims as Gage's assignee. Both parties moved for summary judgment, Cowan on the question of insurance coverage and Trinity on both coverage and bad faith. The trial court granted Cowan's motion and denied Trinity's, leaving the issue of damages, the bad faith claims, and attorney's fees for trial.
Cowan and Trinity settled most of their dispute on the eve of trial. Trinity agreed to pay the $250,000 underlying judgment, postjudgment interest, and $100,000 in attorney's fees, and Cowan agreed to waive any claim for extracontractual damages above that amount. Trinity expressly reserved the right to appeal the trial court's partial summary judgement on coverage and whether Trinity was bound by the amount of the underlying judgment. The trial court signed a final judgment incorporating the parties' agreement. Trinity appealed, and the court of appeals affirmed. 906 S.W.2d 124.
Because our decision on the coverage issue is dispositive
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