Abouzaid v. Mansard Gardens Associates, LLC, 207 N.J. 67 (2011). The holding of this decision, a unanimous opinion written by Justice Long, is fairly straightforward: an insurer has a duty to defend a claim for negligent infliction of emotional distress if there is even a chance that “bodily injury,” as defined in the insurance policy, may be involved in the litigation. That is so even though negligent infliction claims are not required to allege physical injury. In fact, in this case, the complaint did not allege any bodily injury but did not disclaim it either.
The duty to defend is “not necessarily limited to the facts asserted in the complaint,” but will be triggered by “facts indicating potential coverage that arise during the resolution of the underlying dispute,” even where the complaint is poorly pleaded or the claim seems unlikely to succeed. “[T]he burden of defense must be borne by the insurer until the question of physical injury clearly drops out of the case.”
This decision contains a lengthy review of the history of claims for negligent infliction of emotional distress claims, beginning with the time when physical injury was required as a condition for asserting negligent infliction, and eventually leading to the rule of Portee v. Jaffee, 84 N.J. 88 (1980), a name that has become a shorthand for such claims. Justice Long also surveys in detail the law governing an insurer’s duty to defend. The decision is an excellent reference source on those two subjects.