MAINE SUPREME JUDICIAL COURT                                     Reporter of Decisions
Decision: 2013 ME 55
Docket:   Cum-12-140
Argued:   April 10, 2013
Decided:  June 4, 2013

Panel:       SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, GORMAN, and JABAR,
             JJ.


                           PATRICK LANGEVIN et al.

                                        v.

                      ALLSTATE INSURANCE COMPANY

GORMAN, J.

         [¶1] Patrick and Cora P. Langevin appeal from the entry of a summary

judgment in the Superior Court (Cumberland County, Warren, J.) in favor of

Allstate Insurance Company on the Langevins’ reach and apply action, brought

pursuant to 24-A M.R.S. § 2904 (2012). The Langevins argue that the court erred

in determining that a homeowners insurance policy issued by Allstate to Charles

Johnson did not cover the damages they suffered as a result of purchasing property

from Johnson, including damages for loss of investment, undisclosed physical

problems with the property, and emotional distress. Because those damages do not

constitute covered “bodily injury” or “property damage” pursuant to the Allstate

homeowners insurance policy, we affirm the judgment.
2

                                      I. BACKGROUND

        [¶2]   In August 2010, the Langevins filed a complaint against Charles

Johnson (“underlying complaint”) arising out of their purchase from Johnson of

property located at 866 Cape Road in Hollis.1 Although the underlying complaint

includes ten counts, the Langevins are pursuing only the counts of negligence,

negligent misrepresentation, negligent infliction of emotional distress, and

intentional infliction of emotional distress, based on the following allegations.

During the pendency of the sale of the Cape Road property, Johnson

misrepresented the condition of the property and failed to disclose its prior use as a

junkyard. As a result of Johnson’s misrepresentations, the Langevins purchased

the property for $315,000 pursuant to an April 6, 2005, purchase and sale

agreement and suffered damages, including loss of the investment value of the

property, undisclosed physical problems with the property, and emotional distress.

        [¶3] While he owned the property at 866 Cape Road, Johnson maintained a

homeowners insurance policy with Allstate. The Allstate policy provides:

        Subject to the terms, limitations and conditions of this policy,
        Allstate will pay damages including prejudgment interest which an
        insured person becomes legally obligated to pay because of bodily
        injury or property damage arising from an occurrence to which this
        policy applies, and is covered by this part of the policy.

    1
     The underlying complaint also named Johnson’s real estate agent and agency as defendants but the
court later dismissed the claims against those parties without prejudice, pursuant to the parties’
agreement.
                                                                                 3

“Bodily injury,” “property damage,” and “occurrence” are all defined terms in the

policy. It defines “bodily injury” as

      physical harm to the body, including sickness or disease, and resulting
      death, except that bodily injury does not include:
      a) any venereal disease;
      b) Herpes;
      c) Acquired Immune Deficiency Syndrome (AIDS);
      d) AIDS Related Complex (ARC);
      e) Human Immunodefiency Virus (HIV);

      or any resulting symptom, effect, condition, disease or illness related
      to (a) through (e) listed above.

The policy defines “property damage” as “physical injury to or destruction of

tangible property, including loss of its use resulting from such physical injury or

destruction.” It defines “occurrence” as “an accident, including continuous or

repeated exposure to substantially the same general harmful conditions, during the

policy period, resulting in bodily injury or property damage.”

      [¶4]   When the Langevins sued him, Johnson tendered the underlying

complaint to Allstate but Allstate refused to defend or indemnify Johnson, citing

the policy’s contract exclusion, which excludes from coverage “any liability an

insured person assumes arising out of any contract or agreement.” Following that

denial, the Langevins and Johnson reached an agreement resolving the underlying

complaint. Pursuant to the parties’ agreement, the Superior Court (Cumberland
4

County, Warren, J.) entered a judgment against Johnson in the amount of

$330,000.2 That judgment does not specify the basis for liability or damages.

        [¶5] Armed with the judgment, the Langevins initiated a reach and apply

action against Allstate, pursuant to 24-A M.R.S. § 2904. On cross-motions for

summary judgment, the court concluded that (1) Johnson’s homeowners insurance

policy’s contract exclusion did not apply to exclude coverage, (2) the damages

sought did not constitute “property damage,” and (3) any damages for injury to the

property did not result from an “occurrence.” Accordingly, the court granted

Allstate’s motion for summary judgment, denied the Langevins’ motion for

summary judgment, and entered judgment for Allstate. The court’s order entering

judgment does not discuss the Langevins’ claim that the policy covers any

damages resulting from their emotional distress. The Langevins timely appealed

pursuant to 14 M.R.S. § 1851 (2012) and M.R. App. P. 2.

                                     II. DISCUSSION

        [¶6] The Langevins contend that the court erred in concluding that the

Allstate policy did not cover the damages awarded in the underlying judgment.

They first argue that the $330,000 judgment awarded damages for loss of

investment and physical problems with the property on their negligent


    2
     As part of their agreement, the Langevins agreed not to execute the judgment against Johnson
personally.
                                                                                                          5

misrepresentation claim, as well as damages for emotional distress on their claims

for intentional infliction of emotional distress or negligence. The Langevins then

argue that (1) the damages for loss of investment and physical problems with the

property constitute covered “property damage” and (2) the emotional distress

damages constitute covered “bodily injury.”3 Allstate essentially argues that none

of the Langevins’ claims supports recovery of their claimed emotional distress

damages. Additionally, Allstate argues that there was no “property damage” that

entitles the Langevins to recover on their negligent misrepresentation claim.4

        [¶7] “We review the grant of a summary judgment de novo.” Trott v. H.D.

Goodall Hosp., 2013 ME 33, ¶ 11 n.5, --- A.3d --- (quotation marks omitted).

Where, as here, there are no genuine issues of material fact, our review is focused

on whether Allstate was entitled to judgment as a matter of law. See Travelers

Indem. Co. v. Bryant, 2012 ME 38, ¶ 8, 38 A.3d 1267.


   3
      The Langevins also argue that the court erred by placing the burden of proving coverage on them
because Allstate breached its duty to defend Johnson, Allstate’s insured. Because the Langevins are
neither insureds with respect to the Allstate policy nor Johnson’s assignees, however, there is no basis for
affording the Langevins any collateral benefits of Allstate’s contractual duty to defend Johnson. See
Smith v. Allstate Ins. Co., 483 A.2d 344, 346 (Me. 1984) (observing that an injured party “has no
judicially protectible interest” in the defense owed by the insurer to the insured). As we stated clearly in
Jacobi v. MMG Insurance Co., the judgment creditor has the burden of proof in a reach and apply action.
2011 ME 56, ¶ 14, 17 A.3d 1229.
   4
      Allstate also contends on appeal that the court erred in concluding that the policy’s contract
exclusion did not apply to preclude coverage for the Langevins’ claims. Allstate, however, did not file a
cross-appeal. Because it failed to preserve its argument regarding the policy’s contract exclusion, we do
not address it on appeal. See Lyle v. Mangar, 2011 ME 129, ¶ 22, 36 A.3d 867 (declining to disturb a
conclusion of the court when the appellee failed to file a cross-appeal); Millien v. Colby Coll., 2005 ME
66, ¶ 9 n.3, 874 A.2d 397 (same).
6

          [¶8]     Maine’s reach and apply statute, 24-A M.R.S. § 2904, enables a

judgment creditor to satisfy a judgment from the judgment debtor’s insurer if “the

judgment debtor was insured against such liability when the right of action

accrued.”5 Sarah G. v. Me. Bonding & Cas. Co., 2005 ME 13, ¶ 6, 866 A.2d 835.

To resolve a reach and apply action, we first identify the basis of liability and

damages from the underlying complaint and judgment. Jacobi v. MMG Ins. Co.,

2011 ME 56, ¶ 14, 17 A.3d 1229. We then review “the homeowners insurance

policy to determine if any of the damages awarded in the underlying judgment are

based on claims that would be recoverable pursuant to the homeowners policy.”

Id. “[T]he party seeking to recover pursuant to the reach and apply statute . . . has

the burden to demonstrate that [his] awarded damages fall within the scope of the

insurance contract.” Id.

          [¶9] We review “the interpretation of an insurance policy de novo.” Cox v.

Commonwealth Land Title Ins. Co., 2013 ME 8, ¶ 8, 59 A.3d 1280. We interpret


    5
        Title 24-A M.R.S. § 2904 (2012) provides in relevant part that:

          Whenever any person, administrator, executor, guardian, recovers a final judgment
          against any other person for any loss or damage specified in section 2903, the judgment
          creditor shall be entitled to have the insurance money applied to the satisfaction of the
          judgment by bringing a civil action, in his own name, against the insurer to reach and
          apply the insurance money, if when the right of action accrued, the judgment debtor was
          insured against such liability and if before the recovery of the judgment the insurer had
          had notice of such accident, injury or damage.

It is undisputed that Johnson notified Allstate of the underlying complaint before the court entered
judgment in favor of the Langevins.
                                                                                   7

unambiguous policy language consistent with its plain meaning and “construe

ambiguous policy language strictly against the insurance company and liberally in

favor of the policyholder.” Id.

      [¶10] To begin our analysis, we must identify which of the damages sought

in the underlying complaint constitute the $330,000 judgment.           See Jacobi,

2011 ME 56, ¶ 14, 17 A.3d 1229; Sarah G., 2005 ME 13, ¶¶ 3, 7, 866 A.2d 835.

The judgment entered by the court, pursuant to the parties’ agreement, does not

specify the basis of Johnson’s liability nor does it specify what damages the

$330,000 award redresses. Thus, we turn to the underlying complaint. In that

complaint, the Langevins pursued recovery of damages for loss of investment and

physical problems with the property on a claim of negligent misrepresentation and

damages for emotional distress on claims of negligence, negligent infliction of

emotional distress, and intentional infliction of emotional distress. So long as each

claim permits recovery of the damages sought, we cannot rule out the possibility

that the judgment awards damages for loss of investment, physical problems with

the property, and emotional distress. Accordingly, we must determine whether the

claims advanced in the underlying complaint permit recovery of the damages

alleged and whether those damages are covered by the Allstate policy.
8

A.    Damages for Negligent Misrepresentation

      [¶11] The Langevins contend that any portion of the judgment awarded for

their loss of investment and the undisclosed physical problems with the property

on their negligent misrepresentation claim constitute covered “property damage.”

Negligent misrepresentation is a vehicle for asserting “claims for economic harm.”

Dan D. Dobbs, Law of Remedies § 9.1 at 544 (2d ed. 1993); see also Jourdain v.

Dineen, 527 A.2d 1304, 1307 (Me. 1987) (observing that fraud actions “protect

economic interests”). We define the tort of negligent misrepresentation as follows:

      One who, in the course of his business, profession or employment, or
      in any other transaction in which he has a pecuniary interest, supplies
      false information for the guidance of others in their business
      transactions, is subject to liability for pecuniary loss caused to them
      by their justifiable reliance upon the information, if he fails to exercise
      reasonable care or competence in obtaining or communicating the
      information.

St. Louis v. Wilkinson Law Offices, P.C., 2012 ME 116, ¶ 18, 55 A.3d 443; see also

Chapman v. Rideout, 568 A.2d 829, 830 (Me. 1990) (adopting the definition

articulated in the Restatement (Second) of Torts § 552(1) (1977)).

      [¶12] Although it is clear from that formulation that the Langevins could

recover their loss of investment through a negligent misrepresentation claim, such

recovery is not available from Allstate because damages for loss of investment do

not constitute “property damage.” See Vigna v. Allstate Ins. Co., 686 A.2d 598,
                                                                                   9

600 (Me. 1996) (“Economic injury does not constitute ‘property damage’ for

purposes of insurance coverage.”).

      [¶13] To overcome that bar to coverage, the Langevins argue that because

they also sought recovery for physical problems with the property, their damages

for negligent misrepresentation fall within the policy’s definition of “property

damage.”    That argument also fails because the physical problems with the

property did not result from the “occurrence” alleged in the Langevins’ negligent

misrepresentation count.

      [¶14] The Allstate policy requires that any damages for “property damage”

be caused by an “occurrence.”         With respect to the Langevins’ negligent

misrepresentation count, the only factual allegation in their complaint that arguably

constitutes an “occurrence” is Johnson’s act of misrepresenting the condition of the

property.    The Langevins’ theory of damages is based solely on those

misrepresentations. Thus, to be compensable as “property damage,” damages for

the physical problems with the property must have resulted from Johnson’s

misrepresentations. The summary judgment record, however, does not contain any

support for that assertion. Rather, any physical damage to the property resulted

from its actual use as a junkyard, which, according to the underlying complaint,

predates Johnson’s statements regarding the condition of the property. Therefore,

damages for undisclosed physical problems are not covered by the policy because
10

those physical problems did not result from the “occurrence” alleged in the

underlying complaint. See Veilleux v. Nat’l Broad. Co., 206 F.3d 92, 123-24

(1st Cir. 2000) (stating that, in order for harm suffered to be compensable as

damages for negligent misrepresentation, the negligent misrepresentation must be

the legal cause of the harm suffered); Restatement (Second) of Torts § 552B(1)

(1977) (same). Accordingly, the court correctly determined that the Langevins

failed to establish that their damages for loss of investment and physical problems

with the property are covered by the Allstate policy.

B.       Emotional Distress Damages

         [¶15] This leaves only the Langevins’ claim for emotional distress damages,

which the trial court did not discuss.6 The Langevins argue that (1) their claims for

intentional infliction of emotional distress and negligence could support an award

of emotional distress damages 7 and (2) emotional distress damages constitute

“bodily injury” regardless of how that term is defined in the Allstate policy. We

     6
      It is not clear why the trial court did not discuss the Langevins’ claim for emotional distress
damages, and we note that neither party brought that omission to the court’s attention. That
notwithstanding, the court’s omission is at most harmless error because of our ultimate conclusion that
the Allstate policy does not cover the Langevins’ emotional distress damages. See M.R. Civ. P. 61.
     7
     As the Langevins recognize, their claim for negligent infliction of emotional distress cannot, on its
own, provide for recovery of emotional distress damages when, as here, the Langevins did not plead
bystander liability or some other special relationship. Jacobi, 2011 ME 56, ¶ 17, 17 A.3d 1229; Curtis v.
Porter, 2001 ME 158, ¶ 19, 784 A.2d 18. Rather, there must be an independent tort that caused the
emotional distress, and there must be coverage for that independent tort and for the damages it allegedly
caused pursuant to the Allstate policy. Jacobi, 2011 ME 56, ¶ 17, 17 A.3d 1229. The independent tort
cannot be negligent misrepresentation because that tort does not permit recovery for emotional harm.
Curtis, 2001 ME 158, ¶ 19, 784 A.2d 18.
                                                                                                         11

need not decide, however, whether the Langevins’ claims for intentional infliction

of emotional distress and negligence could support recovery of their claimed

emotional distress damages because such damages do not constitute “bodily

injury” as that term is defined in the Allstate policy.

        [¶16]     The Langevins contend that our decision in Vigna conclusively

establishes that emotional distress constitutes “bodily injury” regardless of how

that term is defined in an insurance policy.8 We disagree. In Vigna, we held that

Allstate had a duty to defend a couple against a complaint alleging emotional

distress resulting from their failure to pay a contractor for home renovations.

686 A.2d at 599, 601.               Allstate had issued two policies to the couple, a

homeowners policy and an umbrella policy. Id. at 599. The homeowners policy

provided coverage for “bodily injury . . . arising from an accident” and the

umbrella policy provided “coverage for personal injury . . . caused by an

occurrence.” Id. at 599-600 (quotation marks omitted). Based on the possibility,

observed in Maine Bonding & Casualty Co. v. Douglas Dynamics, Inc., 594 A.2d

1079, 1081 (Me. 1991), that “bodily injury, sickness or disease” could result from

emotional distress, we concluded that “[u]nless excluded, a claim for emotional


   8
      The Langevins also contend that our decision in Jacobi stands for the same proposition, but we did
not discuss the question of whether emotional distress constituted “bodily injury” in Jacobi. The outcome
of that case turned on other policy language, and Jacobi does not, therefore, stand for the proposition that
emotional distress constitutes “bodily injury” regardless of a policy’s definition of “bodily injury.”
Jacobi, 2011 ME 56, ¶¶ 16, 18, 17 A.3d 1229.
12

distress triggers an insurer’s duty to defend under ‘bodily injury’ coverage if the

emotional distress is caused by an ‘accident or occurrence’ within the meaning of

the policy.” Vigna, 686 A.2d at 600 (emphasis added). Vigna did not establish

that emotional distress always constitutes “bodily injury” when determining

whether an insurer has a duty to indemnify.         It determined that, given the

allegations made in that complaint, and the language of the applicable policy,

emotional distress could constitute “bodily injury” and, therefore, that the insurer

was obligated to defend the claim. Vigna, 686 A.2d at 599-601.

      [¶17] More recently, in Ryder v. USAA General Indemnity Co., a couple

sought a declaratory judgment to determine whether “their bystander claims for

negligent infliction of emotional distress” constituted claims for “bodily injury”

pursuant to a policy defining “bodily injury” as “bodily harm, sickness, disease or

death.” 2007 ME 146, ¶¶ 1, 6, 938 A.2d 4 (quotation marks omitted). Rather than

holding that emotional distress always constitutes “bodily injury” regardless of the

policy definition, we evaluated the policy’s definition of that term and concluded

that the term was ambiguous as a result of the definition’s grammatical structure.

Id. ¶ 17. In reaching that decision, we also noted that when a policy defined

“bodily injury” as “injury [or harm], sickness or disease,” a majority of

jurisdictions have held that the definition is “unambiguous and encompasses only

physical harm.” Id. ¶ 15 (alteration in original). In short, we affirmed that the
                                                                                   13

question of whether a policy affords coverage for emotional distress still depends

in the first instance on whether emotional distress constitutes “bodily injury” or

some other type of damage for which coverage is available pursuant to the

language of the policy.

      [¶18] The Allstate policy at issue here defines “bodily injury” in relevant

part as “physical harm to the body, including sickness or disease, and resulting

death.” Unlike the definition of “bodily injury” at issue in Ryder, this definition is

unambiguous. See, e.g., Allstate Ins. Co. v. Russo, 829 F. Supp. 24, 26 (D.R.I.

1993); Black’s Law Dictionary 784 (9th ed. 2009) (defining “physical harm” as

“[a]ny physical injury or impairment of land, chattels, or the human body”). The

definition in this policy quite clearly restricts “bodily injury” to physical ailments

and/or resulting death such that an ordinary person would understand that it does

not encompass emotional pain and suffering.         See Bryant, 2012 ME 38, ¶ 9,

38 A.3d 1267 (stating that policy language is ambiguous if its meaning is not

readily understandable by an ordinary person). Because the Langevins’ claim did

not include any sort of bodily injury, physical harm, sickness or disease, and

because the policy definition of “bodily injury” does not include emotional

distress, the Allstate policy also does not cover any part of the judgment

attributable to emotional distress damages.
14

       The entry is:

                       Judgment affirmed.

__________________________________

On the briefs and at oral argument:

       Peter Clifford, Esq., Hodsdon & Clifford, LLC, Kennebunk, for appellants
       Cora P. Langevin and Patrick Langevin

       Martica S. Douglas, Esq., Douglas, Denham, Buccina & Ernst, Portland, for
       appellee Allstate Insurance Company



Cumberland County Superior Court docket number CV-2011-340
FOR CLERK REFERENCE ONLY
