                                                                                             July 8 2008


                                           DA 06-0061

                      IN THE SUPREME COURT OF THE STATE OF MONTANA

                                           2008 MT 240



ALLSTATE INSURANCE COMPANY,

              Plaintiff and Appellee,

         v.

TERRY WAGNER-ELLSWORTH and TIFFANY
RUSK, individually, and as mother and
natural guardian of BRANDON RUSK,

              Defendants and Appellants.



APPEAL FROM:            District Court of the Eighth Judicial District,
                        In and For the County of Cascade, Cause No. DDV 04-1008(C)
                        Honorable Kenneth R. Neill, Presiding Judge

COUNSEL OF RECORD:

                For Appellants:

                        Ward E.Taleff; Taleff Law Office, Great Falls, Montana
                        (Attorney for Appellant Wagner-Ellsworth)

                        Roland B. Durocher; Hartelius, Ferguson, Kazda, Baker, & Durocher,
                        P.C., Great Falls, Montana (Attorney for Appellant Rusk)


                For Appellee:

                        Mikel L. Moore; Christensen, Moore, Cockrell, Cummings & Axelberg,
                        P.C., Kalispell, Montana


                                                    Submitted on Briefs: November 9, 2006

                                                                Decided: July 8, 2008

Filed:

                        __________________________________________
                                          Clerk
Justice Jim Rice delivered the Opinion of the Court.

¶1    Terry Wagner-Ellsworth (Wagner-Ellsworth) and Tiffany Rusk (Tiffany),

individually, and as mother and natural guardian of Brandon Rusk (Brandon) appeal an

order entered in the Eighth Judicial District Court, Cascade County, granting summary

judgment in favor of Allstate Insurance Company (Allstate). We reverse.

¶2    We consider the following issue on appeal:

¶3    Did the District Court err when it denied Wagner-Ellsworth and Tiffany’s motions

for summary judgment and granted summary judgment in favor of Allstate?

                                    BACKGROUND

¶4    On February 22, 2000, Wagner-Ellsworth caused an automobile-pedestrian

collision, striking Matthew Rusk (Matthew) as he and his brother, Brandon, crossed the

street together in front of their elementary school. Matthew’s mother, Tiffany, while not

immediately present at the time of the accident, was arriving to pick up her sons from

school and came upon Matthew while he was still lying injured on the street. Matthew

suffered severe trauma and was hospitalized for an extended period of time. All of

Matthew’s claims stemming from the accident have been fully and finally settled and

released in exchange for Allstate’s payment of the per-person limit of $50,000 under

Wagner-Ellsworth’s policy.

¶5    Tiffany filed a negligence action against Wagner-Ellsworth on her own behalf and

as guardian of Brandon, claiming emotional and physical injuries to herself and to

Brandon. Tiffany and Brandon contend they were traumatized and suffered injury, not

                                         2
by being struck by the car, but rather as a result of Matthew being run over and injured.

Brandon’s injuries were allegedly the result of seeing his brother run over; Tiffany’s

injuries allegedly resulted from her arrival at the accident scene, the subsequent

ambulance ride to the hospital, and her continued care of Matthew as he recovered. The

complaint alleged that they both suffered physical and emotional injuries. Brandon

allegedly became withdrawn and Tiffany allegedly suffered from stress, migraine

headaches, a rapid heart beat when she hears sirens, physical pain, and depression. Both

Brandon and Tiffany underwent therapy.

¶6        In response to the suit, Wagner-Ellsworth sought coverage from her liability

insurer, Allstate.1 Allstate then filed this action, seeking a declaratory judgment that it

was not obligated to provide a defense or coverage to Wagner-Ellsworth for Tiffany and

Brandon’s claims of emotional and psychological injuries and any resulting physical

manifestations. The District Court granted Allstate’s motion for summary judgment, and

this appeal followed.

                                 STANDARD OF REVIEW

¶7        “We review a district court’s conclusions of law to determine whether the court’s

conclusions of law are correct.” Hern v. Safeco Ins. Co. of Illinois, 2005 MT 301, ¶ 18,

329 Mont. 347, ¶ 18, 125 P.3d 597, ¶ 18 (citations omitted). Our standard of review for

an appeal from a district court’s order granting summary judgment is de novo. Hern,

¶ 18.


1
    Wagner-Ellsworth was an insured under her mother’s Allstate policy.
                                           3
¶8    Here, the issue before this Court is whether, under the terms of Wagner-

Ellsworth’s insurance policy, Allstate was entitled to judgment as a matter of law. “The

interpretation of an insurance policy presents a question of law.” Jacobsen v. Farmers

Union Mut. Ins. Co., 2004 MT 72, ¶ 9, 320 Mont. 375, ¶ 9, 87 P.3d 995, ¶ 9 (citing

Wendell v. State Farm Mutual Ins. Co., 1999 MT 17, ¶ 10, 293 Mont. 140, ¶ 10, 974 P.2d

623, ¶ 10). Consequently, we review whether the District Court correctly interpreted the

provisions of Wagner-Ellsworth’s insurance policy. Jacobsen, ¶ 9.

                                     DISCUSSION

¶9    Did the District Court err when it denied Wagner-Ellsworth and Tiffany’s

motions for summary judgment and granted summary judgment in favor of Allstate?

¶10   At the time of the accident, Wagner-Ellsworth was covered by Allstate automobile

Policy No. 020343927. The policy’s General Statement of Coverage declared:

      If a premium is shown on the Policy Declarations for Bodily Injury
      Liability Coverage and Property Damage Liability Coverage, Allstate will
      pay damages which an insured person is legally obligated to pay because
      of:

      a. bodily injury sustained by any person . . . .

The policy defined “bodily injury” as follows:

      “Bodily Injury” means physical harm to the body, sickness, disease, or
      death, but does not include:

             a.   Any venereal disease;
             b.   Herpes;
             c.   Acquired Immune Deficiency Syndrome (AIDS);
             d.   AIDS Related Complex (ARC);
             e.   Human Immunodeficiency Virus (HIV);

                                         4
       or any resulting symptom, effect, condition, disease or illness related to a.
       through e. listed above.

¶11    The District Court held that the policy language contained in Wagner-Ellsworth’s

liability policy did not cover Tiffany and Brandon’s claimed injuries, relying on Jacobsen

v. Farmers Union Mut. Ins. Co. In Jacobsen, the plaintiff attempted to collect under his

own uninsured coverage for alleged emotional injuries he had suffered. Jacobsen was

driving his vehicle when he encountered another vehicle traveling in the opposite

direction. That vehicle suddenly crossed the center median and eventually came to rest in

a wheat field on the other side of the roadway. Jacobsen stopped to help and found the

driver lying unconscious in his vehicle, with blood flowing from a wound in his head.

Jacobsen administered aid for several minutes, but was later supplanted by a team of

paramedics. As the paramedics removed the driver from his vehicle, Jacobsen noticed a

handgun underneath the driver’s body. The cause of death was later determined to be a

suicide. Jacobsen, ¶¶ 4-5. Jacobsen claimed that his emotional injuries as well as his

resulting physical manifestations were covered under his uninsured coverage for “bodily

injury.”

¶12    After concluding there was no ambiguity in the meaning of “bodily injury,” and

with no prior Montana case addressing whether emotional or psychological injuries

constituted “bodily injury,” this Court looked to the United States District Court’s

holding in Aetna Cas. and Sur. Co. v. First Sec. Bank of Bozeman, 662 F. Supp. 1126 (D.

Mont. 1987), and concluded that the emotional injury suffered by Jacobsen, including the


                                          5
physical manifestations resulting therefrom, did not constitute “bodily injury” as defined

in that policy.2 Jacobsen, ¶¶ 23, 29.

¶13    Here, the District Court reasoned:

               The language in the Farmers’ Union policy and the Allstate policy in
       question are too similar to allow this Court to overlook the Montana
       Supreme Court’s decision in Jacobsen. The language defining “bodily
       injury” is unambiguous and does not include the injuries Brandon and
       Tiffany have claimed or any physical manifestations that may result from
       the psychological damages. The Court will not extend itself to create an
       ambiguity where there is none. While Montana law concerning insurance
       contracts has developed with the intention of providing fundamental
       protection to consumers, this does not allow this Court to simply ignore the
       clear terms of a contract.

We commend the District Court for its close adherence to precedent. However, after a

careful review of the policy language at issue here, and of the analysis employed in

Jacobsen, we ultimately conclude herein that our decision in Jacobsen was incorrectly

2
 The relevant language in Jacobsen’s policy for uninsured motorist coverage was quoted
in the Opinion:

              We will pay all sums the “insured” is legally entitled to
              recover as compensatory damages from the owner or driver of
              an “uninsured motor vehicle.” The damages must result from
              “bodily injury” sustained by the “insured” caused by an
              “accident.” The owner’s or driver’s liability for these
              damages must result from the ownership, maintenance or use
              of the “uninsured motor vehicle.”

       Consistent with the statutory language in § 33-23-201, MCA, the policy
       defines “bodily injury” as follows:

              “Bodily injury” means bodily injury, sickness or disease
              sustained by a person including death resulting from any of
              these.

Jacobsen, ¶ 11.
                                            6
analyzed and should be overruled, requiring reversal of the District Court. For purposes

of promoting clarity, we discuss the issues raised in the following three parts.

                           I. Coverage of Third-Party Claims

¶14    Tiffany argues the District Court erred by not applying the plain language of the

contract because it provides coverage for “damages” more generally, and not strictly for

bodily injury. She notes that the policy requires Allstate to pay for “damages which an

insured person is legally responsible to pay because of bodily injury sustained by any

person . . . .” Tiffany contends this language is broader than the policy language at issue

in Jacobsen. Therefore, since Tiffany and Brandon’s damages were incurred “because

of” Matthew’s bodily injury, she argues that their damages were covered whether or not

they suffered the bodily injury themselves. Wagner-Ellsworth agrees, and likewise

contends that the District Court failed to consider these material differences between the

policy language in Jacobsen and her policy with Allstate.

¶15    In response, Allstate argues this Court’s holding in Jacobsen controls the outcome

of this action because, as in Jacobsen, the unambiguous definition of “bodily injury” in

Wagner-Ellsworth’s Allstate policy does not include emotional or psychological injuries

or resulting physical manifestations. Citing Graber v. State Farm Fire and Cas. Co., 244

Mont. 265, 270, 797 P.2d 214, 217 (1990), which held an insurer was not obligated to

indemnify an insured where the claims do not come within the coverage of the policy,

Allstate reasons that Appellants’ proffered interpretation defies common sense and

ignores the “unbroken connection” in the policy language requiring the “bodily injury” to

                                          7
be sustained by the “any person” for whose damages the insured person may be legally

obligated. Appellants’ interpretation, Allstate argues, severs the link between the person

who suffers the bodily injury and the person claiming damages and re-writes the policy to

mean that “Allstate will pay damages which an insured person is legally obligated to pay

because of: bodily injury sustained by any person, whether the damages are suffered by

the person who sustained the bodily injury or by any other person . . . .” (emphasis in

Allstate’s brief). Consequently, Allstate urges that Appellants’ argument be rejected.

¶16    “This Court is bound to interpret the terms of this insurance policy according to

their usual, common sense meaning as viewed from the perspective of a reasonable

consumer of insurance products.” Stutzman v. Safeco Ins. Co. of America, 284 Mont.

372, 376, 945 P.2d 32, 34 (1997). We “may not rewrite the contract at issue, but must

enforce it as written if its language is clear and explicit.” Stutzman, 284 Mont. at 376,

945 P.2d at 34 (citation omitted).

¶17    We disagree with Allstate’s position. The language in the opening General

Statement of Coverage in Wagner-Ellsworth’s policy is indeed broader than the policy

language at issue in Jacobsen. The policy here states: “Allstate will pay damages which

an insured person is legally obligated to pay because of . . . a. bodily injury sustained by

any person.” In contrast, the uninsured coverage provision in Jacobsen stated that

“damages must result from ‘bodily injury’ sustained by the ‘insured.’” Jacobsen, ¶ 12.

While the policy in Jacobsen required that the insured be the person who suffered the

bodily injury, Wagner-Ellsworth’s policy requires payment for damages that an insured

                                          8
person is legally obligated to pay because of bodily injury sustained by any person in a

covered accident, whether to the claimant directly or to another.

¶18    The language here provides coverage to Wagner-Ellsworth for Matthew’s

damages, as he sustained a bodily injury. However, Tiffany and Brandon also allege that

they sustained damages “because of” Matthew’s bodily injury, and thus their claims

necessarily fall within the language which provides that “Allstate will pay damages

which an insured person is legally obligated to pay because of . . . a. bodily injury

sustained by any person.”

¶19    This interpretation is supported by the policy’s Limitation of Liability section,

which provides that “[t]he limit stated for each person for bodily injury is our total limit

of liability for all damages because of bodily injury sustained by one person, including all

damages sustained by anyone else as a result of that bodily injury.” (Emphasis added.)

This language contemplates third party claims such as those made here by Tiffany and

Brandon and reinforces Allstate’s obligation to insure Wagner-Ellsworth against those

claims for damages—within the applicable monetary limits of the policy.

¶20    In summary, the broad language used in the policy’s General Statement of

Coverage and the Limits of Liability section provide Wagner-Ellsworth with coverage for

the claims made by Tiffany and Brandon resulting from Matthew’s bodily injuries.

                       II. Monetary Limits for Derivative Claims

¶21    Allstate notes that because Tiffany and Brandon’s initial argument premises their

claims upon Matthew’s bodily injury, and not on their own bodily injuries, their claims

                                          9
necessarily derive from Matthew’s bodily injury. As such, Allstate argues that, even

under the interpretation of the policy rendered above in Section I, no funds are available

for Tiffany and Brandon’s derivative claims, because the policy limits for coverage have

already been exhausted for Matthew’s claim, citing to Bain v. Gleason, 223 Mont. 442,

451-52, 726 P.2d 1153, 1158-59 (1986). In Bain, this Court considered whether a

consortium claim was subject to the “each person” limit of liability in an insurance

policy, and, in doing so, examined both the policy and the mandatory motor vehicle

liability insurance law, § 61-6-103, MCA (1981). In determining that the consortium

claim came within the each person limitation, we concluded:

              Our interpretation of the Farmers’ policy in the case at bar must
       follow our interpretation of the statutes as they apply to mandatory motor
       vehicle liability insurance. It is plain under our statutes, and under the
       policy provisions here that the “each person” limitation refers to all
       damages imposed by law by whomever suffered resulting from one bodily
       injury and one accident; the “each accident” limitation applies when two or
       more persons suffer bodily injury in the same accident.

Bain, 223 Mont. at 451, 726 P.2d at 1158.

¶22    The statute governing the liability policy at issue here, § 61-6-103(2)(b), MCA

(2003), requires that the policy

       insure the . . . insured . . . against loss from the liability imposed by law for
       damages . . . subject to limits . . . as follows: . . . (i) $25,000 because of
       bodily injury to or death of one person in any one accident and subject to
       said limit for one person; (ii) $50,000 because of bodily injury to or death
       of two or more persons in any one accident[.]3


3
 The monetary limits in coverage under the subject Allstate policy are $50,000 per person
and $100,000 per occurrence for bodily injury, and $25,000 for property damage, which
exceed the statute’s minimum monetary limits.
                                           10
Thus, the statute requires that the owner or operator be insured for losses from liability

imposed by law subject to the limits stated for a single bodily injury or for bodily injuries

to two or more persons. The coverage language of the statute is similar to the language in

the Allstate policy, which provides coverage for “damages which an insured person is

legally obligated to pay because of . . . bodily injury sustained by any person,” and which

we have interpreted in Section I to include Tiffany and Brandon’s claims stemming from

Matthew’s bodily injury. However, the statute also requires that the coverage provided

for claims arising “because of” the bodily injury of another be “subject to said limit for

one person.” (Emphasis added.) Thus, the statutory monetary coverage limit specified

for a bodily injury to one person applies to others who have suffered losses arising from

the bodily injury to that one person.

¶23    An examination of the Allstate policy at issue reveals that it tracks the statutory

coverage language. Wagner-Ellsworth’s policy states, with regard to “Limits of

Liability,” that:

              The limits shown on the Policy Declarations are the maximum we
       will pay for any single accident involving an insured auto. The limit stated
       for each person for bodily injury is our total limit of liability for all
       damages because of bodily injury sustained by one person, including all
       damages sustained by anyone else as a result of that bodily injury.

               Subject to the limit for each person, the limit stated for each accident
       is our total limit of liability for all damages for bodily injury. . . .

(Emphasis added.) Like the statute, the Allstate policy applies the “each person”

monetary limit to not only the damages suffered by the person who suffered the bodily

injury, but also to the damages suffered by anyone else as a result of that bodily injury.
                                          11
The “each accident” or, as stated in the policy, “each occurrence” monetary limitation

applies only when two or more persons suffer bodily injury in one accident.

¶24    Therefore, Allstate is correct that, even though Tiffany and Brandon’s claims for

damages because of Matthew’s bodily injury are covered under Wagner-Ellsworth’s

policy, those damages are subject to the “each person” monetary limit applicable to

Matthew, which amount was exhausted in Matthew’s settlement. Therefore, despite

coverage, there are no additional funds available under this policy for Tiffany and

Brandon’s derivative claims. Only if Tiffany and Brandon can establish that their claims

likewise fall within the policy’s definition of “bodily injury,” thus establishing that there

are two or more bodily injury claims in this accident, will the higher “each accident”

monetary limits of the policy be triggered.

      III. Emotional Distress with Physical Manifestations as “Bodily Injury”

¶25    We then turn to Appellants’ argument that Tiffany and Brandon’s emotional

injuries, with resulting physical manifestations, fall within the Allstate policy’s definition

of “bodily injury.” The policy defines “bodily injury” as “physical harm to the body,

sickness, disease, or death . . . [listing exceptions].” As noted, the District Court relied on

Jacobsen in granting summary judgment in favor of Allstate, reasoning that

       [t]he language in the Farmers’ Union policy and the Allstate policy in
       question are too similar to allow this Court to overlook the Montana
       Supreme Court’s decision in Jacobsen. The language defining “bodily
       injury” is unambiguous and does not include the injuries Brandon and
       Tiffany have claimed or any physical manifestations that may result from
       the psychological damages.


                                          12
¶26    Tiffany argues that she and Brandon suffered “shock and fright” when Matthew

was run over, leading to physical symptoms that should constitute a “bodily injury.”

Wagner-Ellsworth agrees, and contends the Allstate policy is distinguishable from the

policy in Jacobsen, providing broader coverage. Wagner-Ellsworth argues that because

“bodily injury” is defined in the Allstate policy as “physical harm to the body, sickness,

disease, or death,” this definition creates a disjunctive list based on the use of commas

which creates coverage for Tiffany and Brandon’s asserted emotional injuries as a

“sickness” or “disease.” Alternatively, she argues that if the definition did not create a

disjunctive list, then the definition is ambiguous and, either way, Tiffany and Brandon’s

emotional injuries should be covered without an underlying physical injury.

¶27    Allstate responds that the mere use of the word “or” in the definition of bodily

injury does not make the definition disjunctive or otherwise turn the individual

components of the definition into separate bases for coverage. Moreover, Allstate argues

that, consistent with Jacobsen, the definition of “bodily injury” in the policy is

unambiguous and does not include emotional or psychological injuries or resulting

physical manifestations. In reply, Appellants respectfully suggest that the Court “revisit”

Jacobsen, noting that stare decisis does not require the Court to follow “a manifestly

wrong decision.”

¶28    We agree with Allstate and the District Court that the definition of “bodily injury”

in this case is substantially similar to the definition at issue in Jacobsen (“bodily injury,

sickness or disease sustained by a person including death resulting from any of these”).

                                          13
We are not persuaded by Wagner-Ellsworth’s argument that the policy’s use of commas

and the word “or” within the definition requires a different outcome than we reached in

Jacobsen. Jacobsen thus requires a decision for Allstate if it was correctly decided.

However, we accept Appellants’ invitation to revisit and reconsider our holding in

Jacobsen.

¶29    In reaching our decision in Jacobsen, this Court relied heavily on the United States

District Court’s 1987 Aetna decision. In Aetna, the insurer brought a declaratory action

seeking judgment that the liability insurance policy it had issued to a bank did not

provide coverage for certain damages claimed by an employee who had been discharged,

including damages for emotional distress. Aetna, 662 F. Supp. at 1127. The parties

argued over whether a claim for emotional distress came within the term “bodily injury.”

Aetna, 662 F. Supp. at 1128. After noting that Montana law contained no authority on

point, the United States District Court stated: “[w]here it appears that the highest court of

Montana has not squarely addressed a particular question, this court must forecast what

the Montana Supreme Court would do were it confronted with the same question.” Aetna,

662 F. Supp. at 1127 (citations omitted).

¶30    The Aetna court first stated that courts which had interpreted the term “bodily

injury” as used in comprehensive general liability insurance policies “have determined

that it limits coverage to physical injury to the body” and cited to several cases. Aetna,

662 F. Supp. at 1128. The court then observed that “[i]n tort actions alleging mental

suffering, the Montana Supreme Court has distinguished mental and emotional harm

                                          14
from physical harm.” Aetna, 662 F. Supp. at 1128 (citation omitted). The court thus

concluded:

       In light of the Montana court’s recognition that “there is a difference
       between (physical) injury and (mental) distress,” Johnson [v. Supersave
       Markets, Inc., 211 Mont. 465, 472, 686 P.2d 209, 212 (1984)], it is likely
       the Montana Supreme Court would follow the lead of the above-cited
       decisions and hold that the term “bodily injury,” as used in the liability
       insurance policy at issue, limits coverage to physical injury, sickness or
       disease.

Aetna, 662 F. Supp. at 1128.

¶31    In Jacobsen, we concurred with the rationale set forth in Aetna and concluded that

“the term ‘bodily injury,’ as defined in Farmers Union UM policy, is limited to physical

injury to a person caused by an accident and does not include emotional and

psychological injuries stemming therefrom.” Jacobsen, ¶ 29. We thus held that

Jacobsen’s emotional injuries, “including his physical manifestations resulting therefrom,

do not constitute ‘bodily injury’ as that term is defined in the contract of insurance

between Farmers Union and Jacobsen . . . .” Jacobsen, ¶ 29 (emphasis added).

¶32    We are troubled by the analysis we employed in Jacobsen in a couple respects.

First, Aetna was decided prior to the development of a significant body of court decisions

which perceived a distinction between mental injuries and mental injuries with physical

manifestations. See e.g. Twin City Fire Ins. Co. v. Colonial Life & Acc. Ins. Co., 124

F. Supp. 2d 1243, 1247 (M.D. Ala. 2000) (applying South Carolina law, emotional

trauma can constitute “bodily injury” unless the complaint contains no allegations of

physical damages); Am. Motorists Ins. Co. v. S. Sec. Life Ins. Co., 80 F. Supp. 2d 1280,

                                          15
1283 (M.D. Ala. 2000) (under Florida law, allegation of physically manifested mental

anguish met insurance policy’s definition of “bodily injury”); Gen. Star Indem. Co. v.

Sch. Excess Liability Fund, 888 F. Supp. 1022, 1027 (N.D. Cal. 1995) (“Physical injury

resulting from emotional distress, however, constitutes ‘bodily injury.’”); State Farm

Fire & Cas. Co. v. Nikitow, 924 P.2d 1084, 1089 (Colo. App. 1995) (although the term

“bodily injury” in insurance contract did not encompass purely emotional harm, coverage

was available if injury was accompanied by physical manifestations); Garvis v.

Employers Mut. Cas. Co., 497 N.W.2d 254, 257 (Minn. 1993) (“emotional distress with

appreciable physical manifestations can qualify as a ‘bodily injury’ within the meaning of

the insurance policy”); Voorhees v. Preferred Mut. Ins. Co., 607 A.2d 1255, 1262 (N.J.

1992) (emotional distress resulting in headaches, stomach pains, nausea, and body pains

constituted “bodily injury” under homeowner’s insurance policy).

¶33   Reliance on Aetna may well have led the Jacobsen Court to overlook this later

development in the law which addressed the distinction between these injuries. However,

without an understanding of this development, the Court was unequipped to recognize

that none of the cases upon which Aetna relied, American and For. Ins. Co. v. Church

Schools, Diocese of Virginia, 645 F. Supp. 628 (E.D. Va. 1986), St. Paul Fire and

Marine Ins. Co. v. Campbell County Sch. Dist. No. 1, 612 F. Supp. 285 (D.Wyo. 1985),

and Rolette County v. Western Cas. & Sur. Co., 452 F. Supp. 125 (D.N.D. 1978),

involved mental injuries accompanied by physical manifestations. To the contrary, they

addressed whether strictly mental injuries were included within the term “bodily injury.”

                                        16
Thus, this precedent did not provide precise authority for Jacobsen’s conclusion that a

mental injury with physical manifestations could not constitute a bodily injury.

¶34       To further explain, American and For. Ins. Co. held that “bodily injury” did not

include emotional damages in the absence of physical injury. American and For. Ins.

Co., 645 F. Supp. at 632. However, the injured party alleged “purely emotional harm,”

with no assertion regarding physical manifestations. American and For. Ins. Co., 645 F.

Supp. at 632. Similarly, in St. Paul Fire and Marine Ins. Co., the court found that

“[s]ince Ms. Worth is not suing for a physical injury or disease, the Court concludes that

plaintiff insurance company has no duty to defend or cover any losses” and further held

that emotional suffering “without physical changes” did not constitute bodily injury. St.

Paul Fire and Marine Ins. Co., 612 F. Supp. at 287-88. Finally, the court in Rolette

County held that the insurer was not required to defend the insured against a complaint

alleging the injured party was embarrassed and humiliated and suffered great mental

anguish and emotional distress. Rolette County, 452 F. Supp. at 129-30. Again, the

injured party in that case alleged no physical manifestations arising from the emotional

injury.

¶35       Given the clear development in the law which distinguished mental injuries from

mental injuries with physical manifestations, Aetna and the aforementioned cases it relied

upon did not provide current, on-point support for Jacobsen’s holding that emotional

injuries, “including . . . physical manifestations resulting therefrom, do not constitute

‘bodily injury’ as that term is defined in the contract of insurance . . . .” Jacobsen, ¶ 29.

                                           17
None of those cases involved mental injuries accompanied by physical manifestations

and, without more, this critical distinction was missed entirely. We should have

examined the plentiful authority addressing such injuries which had developed by the

time Jacobsen was decided in 2004 in order to provide a more accurate analysis of

relevant authority. We now make the belated effort to do so.

¶36    A review of our sister states’ case law, including those cases referenced above in

¶ 32, reveals that various courts have held that allegations of physically-manifested

emotional distress fall within bodily injury coverage in the insurance context. See also

Keri Farrell-Kolb, General Liability Coverage for Claims of Emotional Distress—An

Insurance Nightmare, 45 Drake L. Rev. 981, 993 (1997) (“many courts agree that

allegations of emotional distress or mental anguish come within bodily injury coverage if

accompanied by allegations of physical manifestations”). The Washington Court of

Appeals has observed that “many courts have held that allegations of physically-

manifested emotional distress fall within ‘bodily injury’ coverage in the insurance

context.” Trinh v. Allstate Ins. Co., 37 P.3d 1259, 1262 (Wash. App. Div. 2002)

(citations omitted).

¶37    In Trinh, the plaintiff, after witnessing her friend’s death in a car accident, began

to experience emotional trauma accompanied by multiple physical ailments including

headaches, nausea, hair loss, and weight loss. At issue was whether her injuries

constituted “bodily injury” under the insurance policy, which defined bodily injury as

“bodily injury, sickness, disease or death[.]” Trinh, 37 P.3d at 1261. The Washington

                                          18
Court of Appeals first observed that Washington followed the view that “‘in the context

of purely emotional injuries, without physical manifestations, the phrase ‘bodily injury’ is

not ambiguous. Its ordinary meaning connotes a physical problem.’” Trinh, 37 P.3d at

1261-62 (citation omitted). However, the Washington Court of Appeals also noted that

“many jurisdictions that deny ‘bodily injury’ coverage for purely emotional injuries have

indicated that there would be coverage if an emotional injury were accompanied by

physical manifestations.” Trinh, 37 P.3d at 1263 (citations omitted). Persuaded by this

authority, it concluded that the term bodily injury “includes emotional injuries that are

accompanied by physical manifestations.” Trinh, 37 P.3d at 1264.

¶38    In State Farm Fire and Cas. Co. v. Basham, 520 N.W.2d 713 (Mich. App. 1994),

the insurer filed a declaratory action to determine its obligations under a homeowner’s

insurance policy. The Michigan Court of Appeals held that “absent physical

manifestations, the phrase ‘bodily injury’ does not include a claim for psychiatric

damage” but, on the other hand, noted that “allegations of physical manifestations

supported by sufficient documented evidence” would be sufficient to trigger coverage as

bodily injury. State Farm Fire and Cas. Co., 520 N.W.2d at 715.

¶39    We are cognizant that “[v]ery weighty considerations underlie the principle that

courts should not lightly overrule past decisions.” Moragne v. States Marine Lines, Inc.,

398 U.S. 375, 403, 90 S. Ct. 1772, 1789 (1970). We have held, in this regard, that “stare

decisis is a fundamental doctrine which reflects our concerns for stability, predictability

and equal treatment . . . .” Formicove, Inc. v. Burlington Northern, Inc., 207 Mont. 189,

                                         19
194, 673 P.2d 469, 472 (1983). “Court decisions are not sacrosanct, however, and stare

decisis is ‘not a mechanical formula of adherence to the latest decision[.]’” State v.

Gatts, 279 Mont. 42, 51, 928 P.2d 114, 119 (1996) (quoting Patterson v. McLean Credit

Union, 491 U.S. 164, 172, 109 S. Ct. 2363, 2370 (1989)). We have held, as noted by

Appellants, that stare decisis does not require us to follow “a manifestly wrong decision.”

Formicove, 207 Mont. at 194, 673 P.2d at 472 (citations omitted).

¶40    We now conclude that we manifestly erred in Jacobsen by failing to recognize the

development in the law with regard to mental injuries with physical manifestations.

Many courts have concluded in insurance interpretation cases like this one that the term

“bodily injury” is ambiguous when applied to physical problems arising from a mental

injury. “An ambiguity exists when an insurance contract, taken as a whole, is reasonably

subject to two or more different interpretations.” Heggem v. Capitol Indem. Corp., 2007

MT 74, ¶ 22, 336 Mont. 429, ¶ 22, 154 P.3d 1189, ¶ 22 (citation omitted). The definition

of “bodily injury” in the Allstate policy—“physical harm to the body, sickness, disease,

or death”—could mean a strictly physical injury or could also include physical

manifestations arising from a mental injury or sickness. “Any ambiguity in an insurance

policy must be construed in favor of the insured and in favor of extending coverage.”

Travelers Cas. & Sur. Co. v. Ribi Immunochem Research, 2005 MT 50, ¶ 17, 326 Mont.

174, ¶ 17, 108 P.3d 469, ¶ 17 (citation omitted). We thus join other courts which have

construed the term “bodily injury” within an insurance policy to include a mental or

psychological injury that is accompanied by physical manifestations. We therefore hold

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that Tiffany and Brandon’s claims, to the extent they are based on physical

manifestations, fall within the “bodily injury” definition of Wagner-Ellsworth’s Allstate

policy and may be asserted on that basis. We agree, in light of the preceding analysis,

that in the context of purely emotional injuries without physical manifestations, the

phrase “bodily injury” is not ambiguous and its ordinary meaning connotes a physical

problem and not purely emotional injuries. See Trinh, 37 P.3d at 1263; see also Kolb, 45

Drake L. Rev. at 986-89.

¶41    We recognize that distinguishing between injuries which have physical

manifestations from those which do not can be challenging. See Pekin Ins. Co. v. Hugh,

501 N.W.2d 508 (Iowa 1993) (noting the belief that “‘every emotional disturbance has a

physical aspect and every physical disturbance has an emotional aspect.’”) (citation

omitted). It has been held that “there is no litmus test for determining where to draw the

line between emotional and physical injuries. . . .” SL Industries, Inc. v. American

Motorists Ins. Co., 607 A.2d 1266, 1273 (N.J. 1992). Courts have struggled with these

distinctions, focusing on the facts of each case. Compare State Farm Fire & Cas. Co. v.

Westchester Inv. Co., 721 F. Supp. 1165, 1167 (C.D. Cal. 1989) (dry throat, rise in body

temperature, and knot in stomach were sufficient physical manifestations of emotional

distress to constitute bodily injury), W. Cas. & Sur. Co. v. Waisanen, 653 F. Supp. 825,

832 (D.S.D. 1987) (allegation of high blood pressure was sufficient to bring within

definition of bodily injury), and Trinh, 37 P.3d at 1264 (bodily injury includes emotional

distress where it is accompanied by physical symptoms such as weight loss, sleep loss,

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headaches, stomach pains, and muscle aches) with Farm Bureau Mut. Ins. Co. of

Michigan v. Hoag, 356 N.W.2d 630, 633 (Mich. App. 1984) (“bodily injury” does not

encompass damages for humiliation, mental anguish, and mental suffering; at a

minimum, physical manifestation of mental suffering is necessary to satisfy bodily injury

requirement), Economy Preferred Ins. Co. v. Jia, 92 P.3d 1280, 1284 (N.M. App. 2004)

(“crying, shaking, and sleep difficulties are not enough”), and SL Indus., Inc., 607 A.2d at

1273-75 (“bodily injury” does not include emotional distress claims accompanied only by

allegations of “loss of sleep, loss of self esteem, humiliation and irritability”).

¶42    We echo the statement made by the Supreme Court of New Jersey in a similar

case that although, as a result of this holding, “a few plaintiffs may be tempted to assert

emotional distress with accompanying physical manifestations more often, that will not

necessarily obligate insurers to undertake unbounded duties to defend and indemnify.

When an emotional distress claim is not supported factually, the insurer can and should

move to dismiss the meritless claims.” Voorhees, 607 A.2d at 1262. Each case must

necessarily be judged by its own facts to determine whether the alleged injuries are

sufficiently akin to physical injuries to fall within coverage for “bodily injury.” Such

conditions include those which are susceptible to medical diagnosis and treatment in a

manner which distinguishes them from mental injuries. See State Farm Fire and Cas.

Co., 520 N.W.2d at 715 (“At a minimum, there must be allegations of physical

manifestations supported by sufficient documented evidence in order for insurance

coverage to be triggered.”).

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                                    CONCLUSION

¶43    Appellants have raised a genuine issue of material fact about whether Tiffany and

Brandon suffered mental injuries with physical manifestations. Such injuries would be

covered within the subject policy’s definition of “bodily injury.” Accordingly, we

reverse the trial court’s summary judgment order. Appellants have requested an award of

attorney fees, which is denied.

¶44    Reversed and remanded for further proceedings consistent with this Opinion.


                                                /S/ JIM RICE


We concur:


/S/ KARLA M. GRAY
/S/ JAMES C. NELSON
/S/ BRIAN MORRIS
/S/ PATRICIA COTTER
/S/ W. WILLIAM LEAPHART
/S/ JOHN WARNER




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