Nord v. Shoreline Sav. Ass'n

• Decision Date: 28 February 1991
• Docket Number: No. 57206-2,57206-2
• Citation: 805 P.2d 800,116 Wn.2d 477
• Court: Washington Supreme Court
• Parties: Richard G. NORD and Dawn M. Nord, husband and wife; and Roger Childs and Mary Childs, husband and wife, Petitioners, v. SHORELINE SAVINGS ASSOCIATION, a Washington Corporation; Marvin Wright and Jane Doe Wright, husband and wife, Defendants, Robert Monson, Respondent. En Banc

Page 477

116 Wn.2d 477

805 P.2d 800

Richard G. NORD and Dawn M. Nord, husband and wife; and Roger Childs and Mary Childs, husband and wife, Petitioners, v. SHORELINE SAVINGS ASSOCIATION, a Washington Corporation Marvin Wright and Jane Doe Wright, husband and wife, Defendants Robert Monson, Respondent.

No. 57206-2.

Supreme Court of Washington,

En Banc.

Feb. 28, 1991.

M. Scott Dutton, Seattle, Wash., for petitioners.

Freese & Freese, Ralph I. Freese, Edmonds, Wash., for respondent.

Sheila Malloy Huber, Bryan P. Harnetiaux, Robert H. Whaley, Spokane, amicus curiae for petitioners on behalf of Washington State Trial Lawyers Ass'n.

Mark E. Cavanaugh, Seattle, amicus curiae for respondent on behalf of Washington Defense Trial Lawyers.

BRACHTENBACH, Justice.

The issue is whether recovery for emotional distress is allowable in an action for an intentional tort other than outrage absent proof that the emotional distress is "severe." The Court of Appeals held that severe emotional distress must be shown. Nord v. Shoreline Sav. Ass'n, 57 Wash.App. 151, 163, 787 P.2d 66 (1990). We reverse.

Richard Nord and Roger Childs (plaintiffs) and Robert Monson (defendant) formed a corporation in 1977 to develop and sell real estate. Financial difficulties led to the breakup of the corporation. In 1981 each party took over some of the troubled projects as individual business ventures. Defendant received a development project at Lake Stevens, which he sought to complete through his solely owned corporation, Shomon Homes, Inc.

The parties were also partners in a partnership which acted as a holding company for completed development projects and other real estate developed by the parties. This partnership remained intact during the relevant time period. One asset of the partnership was Bo Van, a group of four-plexes maintained as rental units. The partnership's interest in Bo Van was subject to a first deed of trust and mortgage held by Shoreline Savings Association.

Defendant needed funds to complete the Lake Stevens Project, and asked Shoreline for additional financing. Shoreline refused. Defendant then obtained a loan commitment from Cascade Savings, a part of which was to be used to pay off the first mortgage on Bo Van. The Cascade loan commitment was contingent on defendant's obtaining financing from some other lender for a sum needed to pay off a sewer assessment at Lake Stevens. Defendant eventually gained Shoreline's agreement to finance the sewer assessment and to subordinate its loan to Cascade's loan, on condition that Shoreline be granted second deeds of trust on the Bo Van and Lake Stevens properties. Defendant alone signed, as president of Shomon Homes, the second deed of trust. Plaintiffs testified they did not consent to this transaction.

The financial difficulties of the parties continued, and about May 1982 defendant suggested to plaintiffs that they let the Bo Van property go back to Shoreline. Plaintiffs did not want to do so, thinking they had equity in the property. After attempts to sell the property at a price which their realtor said was too high but was insisted upon by defendant, the parties executed a quit claim deed in favor of Shoreline in lieu of a deed of foreclosure.

In 1984 plaintiffs mortgaged their homes to satisfy debt for which defendant was also liable. Plaintiff Nord ultimately lost his house.

In the spring of 1986, while looking into another matter, plaintiff Nord learned of the second deed of trust on the Bo Van property (the deed was originally filed in the wrong county by defendant). Plaintiffs sued defendant and others asserting several theories of liability.

Because of dismissal of claims and parties, by the time of trial the present parties were the only ones who proceeded to trial. During the 6-day trial, plaintiffs testified, in relevant part, as follows: Nord testified that when he began understanding what happened he was "shocked," and "very hurt," Report of Proceedings (July 7, 1988), at 49; he was "upset" and "incensed," Report of Proceedings (July 7, 1988), at 90. He testified that he found it very disturbing that they could have sold Bo Van. Report of Proceedings (July 7, 1988), at 140. He also testified that he trusted defendant "completely." Report of Proceedings (July 8, 1988), at 16, 17. Nord believed defendant when he said the property had to be deeded back to the bank because it would not sell. Report of Proceedings (July 8, 1988), at 26. Nord and Childs believed they had been duped. Report of Proceedings (July 7, 1988), at 122. Nord stated "I think we lost that property because Mr. Monson gave us advice and the advice served his best interest. I think that's very unfortunate. I just feel very badly about everything." Report of Proceedings (July 7, 1988), at 118. Childs testified that he was astonished and angered when he learned of defendant's Bo Van second. Report of Proceedings (July 8, 1988), at 145.

Prior to resting, plaintiffs took a voluntary nonsuit on all claims remaining against defendant except fraud and breach of fiduciary duty. At close of trial, the trial court refused defendant's proposed jury instructions which defined emotional distress damages for the tort of outrage and for breach of contract. Clerk's Paper, at 229 (outrage), Clerk's Papers, at 230 (breach of contract) (Clerk's Papers filed May 25, 1989 in the Court of Appeals). The court instructed the jury that if it found that "defendant engaged in intentional wrongdoing which proximately caused damage to plaintiffs," then its verdict should include "[a]n amount to compensate plaintiffs for the emotional distress if any, they suffered as a result of defendant's wrongful conduct." Instruction 13, Clerk's Papers, at 265 (filed May 25, 1989 in the Court of Appeals).

The jury returned a verdict in favor of plaintiffs for $5,000 in economic damages and $15,000 each in emotional distress damages.

Defendant moved for a judgment n.o.v. or a new trial. The trial court denied the motion. Defendant appealed, raising a number of issues. The Court of Appeals affirmed the jury award of economic damages, but reversed the award of emotional distress damages, holding that plaintiffs must show "severe" emotional distress in order to recover such damages, and that plaintiffs here had not done so. Plaintiffs petitioned for review; the petition was granted.

Plaintiffs maintain that the Court of Appeals erred in holding that emotional distress must be severe before they are compensable in an action based upon intentional wrongdoing.

"This court has liberally construed damages for emotional distress as being available merely upon proof of 'an intentional tort'." Cagle v. Burns & Roe, Inc., 106 Wash.2d 911, 916, 726 P.2d 434 (1986); Cherberg v. Peoples Nat'l Bank, 88 Wash.2d 595, 602, 564 P.2d 1137 (1977); see also Hunsley v. Giard, 87 Wash.2d 424, 431, 553 P.2d 1096 (1976). In none of these cases has the court required that emotional distress be severe in order to be compensable as an element of damages based upon intentional wrongdoing.

However, the Court of Appeals relied upon language in Browning v. Slenderella Sys., 54 Wash.2d 440, 341 P.2d 859 (1959) for the proposition that a plaintiff must show severe emotional distress to recover emotional distress damages for injury resulting from an intentional tort. The Court of Appeals concluded that in this case there is no evidence that plaintiffs suffered severe emotional distress.

In Browning, a black woman was not given a courtesy demonstration of salon treatments for which she made arrangements. The court held that she could sue for damages based upon violation of the public accommodation laws, notwithstanding the fact that they were criminal in nature. Browning, at 445, 341 P.2d 859. The court also held that damages could be awarded "for mental or emotional distress, even in the absence of any physical injury, when caused by a wrongful act intentionally done." Browning, at 446, 341 P.2d 859. The court said, however, that not all emotional distress warrants a judgment for substantial damages, rather, only "severe emotional distress" will suffice. Browning, at 447, 341 P.2d 859. The court relied upon the 1948 Supplement to the Restatement of Torts § 46, which stated one is liable for "intentionally caus[ing] severe emotional distress to another...." Browning, at 447, 341 P.2d 859. This section was changed from a prior version, and represented the then current state of the evolving law of intentional infliction of emotional distress. ¹ Browning thus required the degree of emotional distress which must be shown to establish liability for the independent tort of intentional infliction of emotional distress (outrage).

By imposing the severity requirement, the Court of Appeals effectively required the same degree of emotional distress required to establish liability for intentional infliction of emotional distress to be shown to recover compensatory emotional distress damages for an intentional wrongdoing other than the tort of outrage.

Despite language in Browning which seemingly supports the Court of Appeals' decision, we do not agree that it dictates the rule which the Court of Appeals adopted. In cases preceding and succeeding Browning emotional distress damages have been allowed as part of the recovery for intentional wrongdoing without reference to whether the emotional distress claimed was "severe." Compensatory emotional distress damages have been awarded in cases involving actions for public nuisance, Miotke v. Spokane 101 Wash.2d 307, 678 P.2d 803 (1984), intentional interference with business relationships, Cherberg, noncompliance with the fair credit reporting act, Rasor v. Retail Credit Co., 87 Wash.2d 516, 554 P.2d 1041 (1976), nuisance, Wilson v. Key Tronic Corp., 40 Wash.App. 802, 701 P.2d 518 (1985), common law fraud, McRae v. Bolstad, 32 Wash.App. 173, 646 P.2d 771 (1982), aff'd on other grounds, 101 Wash.2d 161, 676 P.2d...