Evidence Of Physical Manifestation Required

Emotional Distress Alone Not

“Bodily Injury”

People continue to bring cases to the courts asking that the court rewrite a policy to provide coverage that the insurer never promised to provide. Even when the plaintiffs have suffered greatly they cannot cause a court, even the Ninth Circuit, to change the clear and unambiguous meaning of a policy.

Dale and Karen Conley (the “Conleys”) appealed the district court’s order denying their motion for summary judgment and granting defendant’s cross motion for summary judgment in Dale Conley; Karen Conley, In the Name of the Estate of Steve A. v. First National Insurance Company of America; American States Insurance, No. 11-35577, (9th Cir. 09/27/2012) against First National Insurance Company and American States Insurance Company (“Insurers”). The Insurers cross-appealed the district court’s finding that there was a covered “occurrence” under the subject policy.

The Dispute

The relevant insurance policy covered “bodily injury.” Under Montana law, “bodily injury” includes mental or psychological injury that is accompanied by “physical manifestations.” Such conditions include those which are susceptible to medical diagnosis and treatment in a manner which distinguishes them from mental injuries.

The Conleys contend their allegation of “anxiety” triggered Insurers’ duty to defend because, unlike emotional distress or mental anguish, anxiety is commonly understood to include physical manifestations. They further argued this duty was triggered by their October 1, 2009, letter to the  Insurers, which explained, the dread of the tax liability that the Conleys face has taken a serious toll on their health.


Even if anxiety typically includes such things as headaches, sleeplessness, muscle tension, and nausea, an insurer need not assume physical manifestations rising to the level of “bodily injury” whenever “anxiety” is alleged. The Ninth Circuit noted that at a minimum, there must be allegations of physical manifestations supported by sufficient documented evidence in order for insurance coverage to be triggered.

The district court held that the Conleys’ letter failed to make even a generalized reference to physical injury and that it was reasonable to read a serious toll on their health in context with the rest of the paragraph, which discussed only the emotional cost of bad advice.

The Conleys argued that, at the very least, their complaint and letter triggered a duty to investigate and that such an investigation would have revealed their extreme weight loss and chronic diarrhea. Montana law supports the district court’s holding that it was not the Insurers’ responsibility to affirmatively disprove a bodily injury where none had been alleged.

As a result the Ninth Circuit concluded that the Insurers fulfilled their duty to investigate by reading the complaint and submitted information and requesting additional information, documentation or authority that would in any way help support the claim for coverage. Since the Insurers did not receive the information needed The Ninth Circuit found that the district court was correct in granting summary judgment, because there was no genuine dispute as to any material fact relating to the asserted duty to defend, and defendants were entitled to judgment as a matter of law.

Because the Ninth Circuit decided the Insurers had no duty to defend, it had no reason to reach other issues on appeal or cross appeal.


A claimant cannot make a Guava into a steak dinner. Clearly the claimants in this case incurred emotional distress and were frightened that they would incur a tax liability they were not ready to deal with but they could not and did not allege any physical manifestation of injury that could be diagnosed by a medical professional. An insurance policy, even when brought to the Ninth Circuit, must be read as written.


© 2012 – Barry Zalma

Barry Zalma, Esq., CFE, has practiced law in California for more than 40 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally, for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes.

He founded Zalma Insurance Consultants in 2001 and serves as its only consultant.

Mr. Zalma recently published the e-books, “Rescission of Insurance in California – 2013;” “Random Thoughts on Insurance” a collection of posts on this blog; “Zalma on Insurance Fraud – 2012″; “Zalma on Diminution in Value Damages – 2012,”“Zalma on Insurance,” “Heads I Win, Tails You Lose — 2011,”  “Arson for Profit”  and others that are available at www.zalma.com/zalmabooks.htm.

Mr. Zalma can also be seen on World Risk and Insurance News’ web based television program “Who Got Caught” with copies available at his website at http://www.zalma.com.

About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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