D'Ambrosio v. Pennsylvania Nat. Mut. Cas. Ins. Co.

• Decision Date: 28 March 1979
• Citation: 396 A.2d 780,262 Pa.Super. 331
• Parties: Anthony E. D'AMBROSIO, Jr., Appellant, v. PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY.
• Court: Pennsylvania Superior Court

Page 780

396 A.2d 780

262 Pa.Super. 331

Anthony E. D'AMBROSIO, Jr., Appellant, v. PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY.

Superior Court of Pennsylvania.

Submitted June 14, 1978.

Decided Dec. 29, 1978.

Petition for Allowance of Appeal Granted March 28, 1979.

Joel S. Robbins, Philadelphia, for appellant.

Timothy B. Barnard, Media, for appellee.

Before JACOBS, President Judge, and HOFFMAN, CERCONE, PRICE, VAN der VOORT, SPAETH and HESTER, JJ.

PER CURIAM:

The six Judges who decided this appeal being equally divided, the order is affirmed.

An opinion per curiam in support of affirmance is filed in which PRICE, VAN der VOORT and HESTER, JJ., join.

PER CURIAM opinion in support of affirmance:

This is an appeal from an order of the Court of Common Pleas, Civil Division, of Delaware County which sustained appellee's preliminary objection in the nature of a demurrer to Count Two of appellant's complaint.

Appellant, Anthony E. D'Ambrosio, Jr., was an insured of appellee's whereby a boat owned by the appellant was covered by the appellee-company. The boat allegedly was damaged in a storm and a claim was filed under the policy. After investigation by an adjuster, the claim was denied. The reason for denial does not appear in the record.

The appellant filed his action on the policy in assumpsit in Count One of the complaint, and in Trespass in Count Two, alleging the denial of the claim to be outrageous, malicious and oppressive, and as a result of this behavior, that appellant suffered severe mental distress, anxiety, embarrassment and humiliation. He further alleged that appellee's breach of the contract amounted to a willful, wanton and malicious tort, claiming punitive damages.

Appellant relies on Section 46 of the Restatement of Torts which states:

"(1) One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress, and if bodily harm to the other results from it, for such bodily harm."

Pennsylvania courts have recognized mental distress or emotional distress without physical injury or impact, but in very narrow and clear factual situations and never in a simple breach of contract situation. See Niederman v. Brodsky, 436 Pa. 401, 261 A.2d 84 (1970); Bowman v. Sears Roebuck & Co., 245 Pa.Super. 530, 369 A.2d 754 (1976).

To overrule the demurrer in this case would be to place insurance companies into a situation wherein they would be risking a tort action every time they denied insurance coverage no matter how frivolous the claim. Such a situation would ultimately result in ever-increasing insurance premiums to the benefit of no one. We cannot see how a refusal by an insurance company to pay an $832.23 claim can justifiably give rise to a cause of action for intentional infliction of mental distress or any other cause of action for mental distress. Because we find no authority for the tort action under Pennsylvania law we hold that the court below was correct in its dismissal of that cause of action.

Order affirmed.

HOFFMAN, J. did not participate in the consideration or the decision in this case.

PRICE, VAN der VOORT, and HESTER, JJ., join in a Per Curiam opinion in support of affirmance.

SPAETH, J., files an opinion in support of reversal in which CERCONE, J., joins.

JACOBS, President Judge, joins in Part I of the opinion in support of reversal and would reverse.

SPAETH, Judge, in support of reversal:

This action arose because the defendant-insurer refused to pay a claim filed by the plaintiff-insured for damages to the plaintiff's boat. The complaint is in two counts, one in assumpsit, the other in trespass. The count in assumpsit alleges that the damages to the boat were covered by an insurance policy issued to the plaintiff by the defendant and demands damages in the amount of $832.23 as the cost of repairing the boat. The count in trespass alleges that the defendant denied the plaintiff's claim, refused to tell the plaintiff why, refused to pay the claim even after the plaintiff had conducted his own investigation and had informed the defendant that it was in error, and insinuated that the plaintiff was submitting a fraudulent claim. This count further alleges that the defendant's actions were outrageous, malicious, and constituted oppressive behaviour, and that as a result of them the plaintiff suffered severe emotional distress and undue worry about his credit standing and professional reputation as a police officer, and has been subjected to repeated demands for payment from the party who repaired the boat. The court below sustained a demurrer to the count in trespass. I should reverse.

It is established that a demurrer should be sustained only where it appears with certainty that upon the facts averred the law will not permit the plaintiff to recover. Papieves v. Kelly, 437 Pa. 373, 381, 263 A.2d 118, 122 (1970). All well-pleaded facts, and all inferences that may fairly be deduced from those facts, must be taken as true. City of Philadelphia v. Penn Plastering Corp., 434 Pa. 122, 253 A.2d 247 (1969). Any doubt must be resolved in favor of refusing to sustain the demurrer. Hoffman v. Misericordia Hospital of Philadelphia, 439 Pa. 501, 267 A.2d 867 (1970). Here, while not a model pleading, the count in trespass alleges that the insurer breached the contract, refused to tell the plaintiff why it did, and refused to consider the plaintiff's own independent investigation. Taken as true, these allegations sufficiently state not merely one but two causes of action in trespass: an action for intentional infliction of emotional distress; and an action for a breach by the defendant of its duty as the plaintiff's insurer.

I.

Pennsylvania law recognizes a cause of action in trespass for intentional infliction of emotional distress. See Beasley v. Freedman, --- Pa.Super. ---, 389 A.2d 1087 (1978); Fair v. Negley, --- Pa.Super. ---, 390 A.2d 240 (1978); See also Restatement of Torts (Second) § 46. The opinion in support of affirmance says that such an action will "never" lie "in a simple breach of contract situation." I do not know what the opinion in support of affirmance means by a simple breach of contract situation, ¹ but I do know that this court has allowed a trespass action for emotional distress where the basis of the action was a breach of contract. Thus in Beasley v. Freedman, supra, and in Fair v. Negley, supra, this court held that where there is a breach of an implied warranty of habitability in a lease an action for emotional distress may lie. For purposes of deciding whether a trespass action for emotional distress may result from outrageous actions in conjunction with a breach of contract, I see no difference between a contract of lease and a contract of insurance.

My conclusion that there is no difference is supported by cases in other jurisdictions permitting recovery in tort for intentional infliction of emotional distress where an insurer has acted outrageously in refusing to pay a claim by the insured. See Eckenrode v. Life of America Ins. Co., 470 F.2d 1 (7th Cir. 1972) (interpreting Illinois law); Fletcher v. Western National Life Ins. Co., 10 Cal.App.3d 376, 89 Cal.Rptr. 78 (1970); Amsden v. Grinnel Mutual Reinsurance Co., Iowa, 203 N.W.2d 252 (1972).

II.

I agree that it is not entirely clear that Pennsylvania law recognizes a cause of action in trespass for a breach by the defendant of its duty as the plaintiff's insurer. An examination of the cases will show, however, that such a cause of action will lie.

-A-

The tort of breach of insurer's duty is of recent origin, and as is so of many developments in the law of tort, the jurisdiction in which it originated was California. See generally Greenman v. Yuba Power Products, 59 Cal.2d 57, 27 Cal.Rptr. 697, 377 P.2d 897 (1963) (strict liability for defective products); State Rubbish Collectors Assn. v. Siliznoff, 38 Cal.2d 330, 240 P.2d 282 (1952) (intentional infliction of emotional distress).

In Fletcher v. Western National Life Ins. Co., supra, the insured sought compensatory and punitive damages from his insurer and the claim supervisor. The theory of the action was that the insurer's actions in handling the claim caused the insured severe emotional distress. The insured was a 41 year old married man with eight children who was forced to leave work because of several injuries. The insurer refused to make disability payments to the insured despite clear evidence that the insured was in fact disabled. The insurer also sent a letter to the insured accusing him of fraud and stating that the policy would be discontinued. At the time of this letter the insurer apparently knew that the insured was in financial straits and thought that it could coerce a settlement of the claim. The jury awarded damages for emotional distress, and the California Court of Appeals affirmed, holding that when the insurer's actions were in bad faith and malicious, the insured could recover damages in tort for emotional distress. The court did not stop there, however, but continued:

We further hold that, independent of the tort of intentional infliction of emotional distress, such conduct on the part of a disability insurer constitutes a tortious interference with a protected property interest of its insured for which damages may be recovered . . . .

10 Cal.App.3d at 401, 89 Cal.Rptr. at 94.

Three years later, in Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566, 108 Cal.Rptr. 480, 510 P.2d 1032 (1973), the California courts were again confronted with a complaint alleging that the insurer's actions in refusing a claim by the insured caused severe emotional distress. In Gruenberg the insured alleged that three insurers wilfully and maliciously entered into a scheme to deprive him of the benefits of the fire insurance policies he held on his restaurant. Besides encouraging the institution of criminal charges against the insured, by...