Coverage Analysis
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BODILY INJURY

Held not to encompass claims for mental distress.  Chatton v. National Union Fire Ins. Co., 10 Cal. App. 4th. 486, 13 Cal. Rptr.2d 318 (1992)(disgruntled investors); Allstate Ins. Co. v. LaPore, 762 F.Supp. 268 (N.D. Cal. 1991)(defamation); United Pacific Ins. Co. v. The McGuire Co., 222 Cal. App.3d 467 (1990).  

Further, apart from the issue of whether such damages are for "bodily injury", the Supreme Court has refused to allow recovery for emotional distress that is based solely on an economic loss.  See Waller v. Truck Ins. Exchange, 11 Cal.4th 1 (1995)(no coverage for emotional distress flowing from claims for breach of contract) and Ticor v. Employers Ins. of Wausau, 40 Cal. App.4th 1699 (1995).  Recovery will not be permitted even if the emotional distress resulted in a physical manifestation of injury. American International Bank v. Fidelity & Deposit Co. of Maryland, 49 Cal. App.4th 1558, 57 Cal Rptr.2d 567 (1996).  Earlier, in Bank of the West v. Atlantic Mut. Ins. Co., 1993 U.S. Dist. LEXIS 10520 (N.D. Cal. July 22, 1993), the court ruled that emotional anxiety that investors claimed as a result of Peat Marwick's allegedly improper audits, was held not to be covered since it arose out of economic loss which was not "property damage," even though the anxiety had manifested itself as a bodily injury in some cases.

Similarly, an action for conversion or replevin has been held to be outside the scope of liability insurance for tort damages.  Dynamic Concepts, Inc. v. Truck Ins. Exchange, 61 Cal.App.4th 999, 71 Cal. Rptr.2d 882 (1st Dist. 1998) and Collin v. American Empire Ins. Co., 21 Cal. App. 4th 787, 816, 26 Cal. Rptr. 2d 391 (1994).

The California Court of Appeal has ruled in Commercial Underwriters Insurance Company v. Superior Court, No. B139105 (Cal. App. October 16, 2000) that a plaintiff’s allegation that he suffered stomach problems, skin problems and back pain as a consequence of emotional anguish resulting from the insured’s sexual abuse of an employee were sufficient to give rise to a claim for “bodily injury” within the scope of the defendants’ liability policies.  

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