In its recent decision Evanston Insurance Co. v. Legacy of Life, Inc., 2011 U.S. App. LEXIS 13367 (5th Cir. June 30, 2011), the United States Court of Appeals certified to the Texas Supreme Court the questions of whether a lawsuit arising out of the insured’s body harvesting operations alleged “personal injury” and “property damage” for the purpose of a general and professional liability policy.  

The insured, Legacy of Life, had been given consent to harvest certain organs and tissues of the underlying plaintiff’s mother, who was suffering from a terminal illness. Plaintiff claimed that she only consented to this because Legacy, a not-for-profit company, represented that the harvested tissues would be distributed on not-for-profit basis. The lawsuit alleged, however, that Legacy actually transferred the tissues to a related for-profit company, which in turn sold the harvested bone and tissues to hospitals for a profit. In addition to asserting causes of action for breach of contract, fraud, and civil conspiracy, the underlying suit alleged a cause of action for intentional infliction of emotional distress. Plaintiff also sought recovery of “the reasonable value of the benefits of the tissue and bones provided.”

In the ensuing coverage litigation, the trial court granted Legacy’s motion for partial summary judgment on the duty to defend, holding that the underlying claim for emotional distress potentially fell within the policy’s definition of “personal injury” (i.e., “bodily injury, sickness, or disease … .”) and that the underlying claim for loss of use of the tissues and bone potentially fell within the policy’s definition of “property damage” (viz., “loss of use of tangible property which has not been physically injured or destroyed … .”).  

On appeal, the Fifth Circuit concluded that there was no controlling Texas precedent on either issue. With respect to coverage for emotional distress, the Fifth Circuit acknowledged that the decision by the Texas Supreme Court in Trinity Universal Insurance Co. v. Cowan, 945 S.W.2d 819 (Tex. 1997) established that purely emotional injuries do not fall within the definition of “bodily injury” as that term ordinarily is defined in a general liability policy. The Evanston policy, however, used the term “personal injury” rather than “bodily injury.” While the Evanston policy’s definition of “personal injury” is identical to the standard definition of “bodily injury,” the Fifth Circuit nevertheless concluded that there was no certainty that the Trinity holding would apply to the term “personal injury.” On the issue of “property damage,” the Fifth Circuit concluded that while Texas law “seems clear that full property rights to not exist in the body of a decedent,” it does recognize a “quasi” interest in such body parts. The court, however, was not certain as to whether the deprivation of such quasi interest constitutes “loss of use of tangible property” for the purpose of an insurance policy. In light of these uncertainties, the Fifth Circuit certified both questions to the Texas Supreme Court for resolution.