Butt v. Detroit Auto. Inter-Insurance Exchange

• Decision Date: 15 December 1983
• Docket Number: Docket No. 63243,INTER-INSURANCE
• Citation: 341 N.W.2d 474,129 Mich.App. 211
• Parties: James K. BUTT, Plaintiff-Appellee, v. DETROIT AUTOMOBILEEXCHANGE, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 474

341 N.W.2d 474

129 Mich.App. 211

James K. BUTT, Plaintiff-Appellee, v. DETROIT AUTOMOBILE INTER-INSURANCE EXCHANGE, Defendant-Appellant.

Docket No. 63243.

Court of Appeals of Michigan.

Submitted June 7, 1983.

Decided Sept. 27, 1983.

Released for Publication Dec. 15, 1983.

Lobur & Hensick, P.C. by John S. Lobur, Howell, for plaintiff-appellee.

The Heikkinen Law Firm by Thomas A. Matthews, Howell, for defendant-appellant; Gromek, Bendure & Thomas by Nancy L. Bosh, Detroit, of counsel.

Before DANHOF, C.J., and ALLEN and HANSEN, ^* JJ.

PER CURIAM.

Defendant appeals as of right from a jury verdict rendered on November 4, 1981, finding defendant liable for intentional infliction of emotional distress and awarding plaintiff $75,000 in damages.

On December 21, 1979, plaintiff sued defendant for damages resulting from an automobile accident involving plaintiff's wife, Goldie Butt, and defendant's insured, wherein Goldie Butt was killed.

Plaintiff settled the wrongful death aspects of the case against defendant's insured and defendant for the policy limit of $20,000. Plaintiff claims that, in addition, it was understood among the parties that plaintiff was to receive the maximum survivor's benefits authorized by M.C.L. § 500.3108; M.S.A. § 24.13108, namely, $20 per day for replacement services for three years. Defendant disputes this, however, and claims that it was understood that plaintiff would avail himself of the survivor's benefits under the policy of insurance and no-fault act, but denies that there was any agreement that plaintiff would receive the maximum benefits for the maximum period of time.

Defendant paid plaintiff $20 per day for the first year for the replacement services provided by plaintiff's mother. Plaintiff and his mother provided monthly documentation consisting of statements that the services were rendered and the value of the services was $20 per day. However, a year later, after review of plaintiff's account, it was concluded by defendant that $20 per day was not the reasonable value of the services provided and that further documentation was necessary to justify the amount. As a result, plaintiff's mother was asked to complete forms on a daily basis detailing the services she provided. When plaintiff protested, defendant informed plaintiff that defendant would not require the documentation if plaintiff were willing to accept $15 per day replacement services benefits. This litigation followed.

On December 21, 1979, plaintiff brought the instant action. In count I plaintiff alleged that defendant had breached the settlement agreement by refusing to pay $20 per day for replacement services. In count II, plaintiff alleged that defendant was liable for damages to plaintiff resulting from defendant's intentional infliction of mental distress.

Prior to trial, defendant moved for summary judgment pursuant to GCR 1963, 117.2(1) on the claim for intentional infliction of emotional distress. The motion was denied on September 16, 1981. The matter was tried on November 3 and 4, 1981, and, following defendant's motion for a directed verdict on the mental distress claim, the case was submitted to the jury. The jury found defendant liable on both counts and returned a verdict in the amount of $14,660 ($20 per day for the remaining 733 days of the statutory period) for replacement services benefits and $75,000 for intentional infliction of emotional distress. Defendant's motion for judgment notwithstanding the verdict or, in the alternative, a new trial was denied. After an evidentiary hearing, the trial court awarded plaintiff $8,345 in attorney fees pursuant to M.C.L. § 500.3148; M.S.A. § 24.13148.

On appeal, defendant challenges the verdict on the claim of intentional infliction of emotional distress and the award of attorney fees. Defendant does not challenge the award for replacement services benefits.

Defendant first argues that the trial court improperly denied defendant's motion for summary judgment on plaintiff's claim for intentional infliction of emotional distress. We agree.

The general rule in breach of contract actions is that damages recoverable for a breach of contract are those arising naturally from the breach or those which were within the parties' contemplation at the time of contracting. Kewin v. Massachusetts Mutual Life Ins. Co., 409 Mich. 401, 295 N.W.2d 50 (1980); Hadley v. Baxendale, 9 Exch. 341, 156 Eng.Rep. 145 (1854). Damages for mental (emotional) distress are not normally recoverable in breach of contract actions. Kewin, supra. Furthermore, absent allegation and proof of tortious conduct existing independent of the breach, mental distress damages may not be awarded in actions for breach of a commercial contract. Kewin, 409 Mich. pp. 420-421, 295 N.W.2d 50; Van Marter v. American Fidelity Fire Ins. Co., 114 Mich.App. 171, 185, 318 N.W.2d 679 (1982).

An exception to the general nonrecovery rule in breach of contract actions was announced in Stewart v. Rudner, 349 Mich. 459, 84 N.W.2d 816 (1957). Mental distress damages are recoverable for breaches of contract of a personal nature, as distinguished from contracts which are entered into for a pecuniary or commercial purpose, because injuries to the emotions are foreseeable as flowing naturally from the breach. In Kewin, the Supreme Court recognized the Stewart exception, but found it inapplicable to the contract at issue there. Kewin involved breach of an insurance contract for disability income protection. Insurance contracts, as agreements to pay a sum of money upon the occurrence of a specified event, are commercial in nature. The damage incurred upon breach of such an agreement is capable of adequate compensation by reference to the terms of the contract. The Court recognized that while breach of an insurance contract, as with almost any agreement, results in some annoyance and vexation, recovery for those consequences is generally not allowed absent evidence that they were within the contemplation of the parties at the time the contract was made.

Panels of this Court have applied Kewin and held that damages for mental distress are not recoverable for breach of an automobile no-fault insurance policy. Van Marter, supra, 114 Mich.App. p. 183, 318 N.W.2d 679; Liddell v. Detroit Automobile Inter-Ins. Exchange, 102 Mich.App. 636, 639, 649, 302 N.W.2d 260 (1981), or breach of a professional liability insurance policy, Stein v. Continental Casualty Co., 110 Mich.App. 410, 422-424, 313 N.W.2d 299 (1981). A plaintiff's remedy for its insurer's bad faith refusal to perform a no-fault insurance contract is limited to recovery of actual attorney fees and interest, as provided in M.C.L. § 500.3148; M.S.A. § 24.13148 and M.C.L. § 500.3142; M.S.A. § 24.13142. Butler v. Detroit Automobile Inter-Ins. Exchange, 121 Mich.App. 727, 735, 329 N.W.2d 781 (1982); Van Marter, supra.

We believe that Kewin and the Court of Appeals cases cited above are on point. Both the no-fault insurance contract out of which plaintiff's right to survivor's loss benefits arises and the alleged settlement agreement between plaintiff and defendant are commercial contracts involving nothing more than a promise to pay a sum of money upon the happening of certain contingencies, breach of which cannot give rise to a claim for damages for mental anguish.

We are unpersuaded by plaintiff's claim that recovery of mental distress damages was proper because he pled and proved the independent tort of intentional infliction of emotional distress. The alleged outrageous and reckless conduct upon which plaintiff based his claim for damages was set out in paragraphs four and five of the complaint:

"4. That since approximately May 24, 1979, the Defendant has refused and neglected to abide by the settlement terms as agreed upon and enumerated above. The Defendant has refused to pay SURVIVOR'S BENEFITS pursuant to M.S.A. 24.13108 as previously agreed.

"5. That in addition to ceasing payments pursuant to the settlement agreement and the SURVIVOR'S BENEFITS provisions of M.S.A. 24.13108, the Defendant has constantly requested that the Plaintiff verify that services are being rendered by his mother which were previously performed by his deceased wife, and that the value of these services is in the amount of Twenty-Dollars ($20.00) or more per day."

Clearly, in paragraph four, plaintiff has alleged no more than the failure of defendant to discharge its obligations under the settlement agreement and no-fault act. As to the allegations in paragraph five, defendant is entitled to require proof of loss accrued before paying personal protection insurance benefits under the no-fault act. M.C.L. § 500.3142; M.S.A. § 24.13142; English v. Home Ins. Co., 112 Mich.App. 468, 476, 316 N.W.2d 463 (1982). An actor is not liable for intentional infliction of emotional distress where he has done no more than insist upon his legal rights in a permissible way, even though he is aware that such insistence is certain to cause emotional distress. Warren v. June's Mobile Home Village & Sales, Inc., 66 Mich.App. 386, 391, 239 N.W.2d 380 (1976); 1 Restatement Torts, 2d, § 46, comment g, p. 76. Furthermore, while plaintiff alleges extreme and outrageous and reckless conduct, the conduct complained of in paragraph five, i.e., requests for verification of services, falls far short of the conduct which is considered tortiously outrageous. See Holmes v. Allstate Ins. Co., 119 Mich.App. 710, 326 N.W.2d 616 (1982), and cases cited therein.

The trial court erred by denying defendant's motion for summary judgment on plaintiff's claim for intentional infliction of emotional distress. Therefore, the judgment for $75,000 on this claim is vacated. In light of our disposition on this issue, we find it unnecessary to address defendant's additional allegations of error concerning the mental distress claim.

Defendant next challenges the award of attorney fees. Defendant argues that the...