Claims Alleging Seller’s Failure to Disclose Property’s Prior Use as a Junkyard are Not Covered by His Homeowner’s Policy, Maine’s Top Court Decides

The Supreme Judicial Court of Maine has affirmed a lower court’s ruling in favor of Allstate Insurance Company, finding that claims that its insured had misrepresented the condition of property he sold and failed to disclose the property’s prior use as a junkyard were not covered by his homeowner’s insurance policy.   

The Case 

After Patrick and Cora P. Langevin purchased property in Hollis, Maine, from Charles Johnson for $315,000, they sued him for negligence, negligent misrepresentation, negligent infliction of emotional distress, and intentional infliction of emotional distress.  They claimed he misrepresented the condition of the property and failed to disclose its prior use as a junkyard. 

Johnson tendered the complaint to Allstate Insurance Company, his homeowner’s insurer.  Allstate denied coverage. Following that denial, the Langevins and Johnson settled.  A judgment was entered against Johnson for $330,000.  The Langevins agreed not to execute the judgment against Johnson personally; instead, they sued Allstate. 

The trial court ruled in favor of Allstate, and the case reached the Supreme Judicial Court of Maine. 

The Court’s Decision 

The court affirmed. 

Allstate’s policy required that “property damage” be caused by an “occurrence.” The court found that any physical damage to the property resulted from its actual use as a junkyard.  According to the underlying complaint, such use predated Johnson’s statements regarding the condition of the property.  Therefore, the court held that damages for any undisclosed physical problems were not covered by the policy because those physical problems had not resulted from the “occurrence” alleged in the underlying complaint. 

The court reached the same conclusion with respect to the Langevins’ claim for emotional distress damages.  It found that emotional distress damages did not constitute “bodily injury,” defined as “physical harm to the body, including sickness or disease, and resulting death.”  The court ruled that this definition “quite clearly” restricted “bodily injury” to “physical ailments and/or resulting death” and that an “ordinary person” would understand that it did not encompass emotional pain and suffering.  It concluded that 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” did not include emotional distress, the Allstate policy did not cover any part of the judgment attributable to emotional distress damages. 

The case is Langevin v. Allstate Ins. Co.,66 A.3d 585 (Me. 2013).