Wendt v. Auto Owners Ins. Co.

• Decision Date: 09 March 1987
• Docket Number: Docket No. 82362
• Citation: 401 N.W.2d 375,156 Mich.App. 19
• Parties: Charles WENDT, Plaintiff-Appellant, v. AUTO OWNERS INSURANCE CO., Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 375

401 N.W.2d 375

156 Mich.App. 19

Charles WENDT, Plaintiff-Appellant, v. AUTO OWNERS INSURANCE CO., Defendant-Appellee.

Docket No. 82362.

Court of Appeals of Michigan.

Submitted Oct. 1, 1985.

Decided Nov. 4, 1986.

Released for Publication March 9, 1987.

Gerald Mason, Menominee, for plaintiff-appellant.

De Grand, De Grand & Reardon, P.C. by John T. Reardon, Escanaba, for defendant-appellee.

Before WALSH, P.J., and GRIBBS and SHEPHERD, JJ.

GRIBBS, Judge.

Plaintiff filed suit against defendant Auto Owners Insurance Company for breach of contract, negligence and intentional infliction of emotional distress. Plaintiff's claim in this action arose out of defendant's handling of his claim for collision damage to a diesel tractor rig, which was insured by defendant. Upon defendant's motion, the circuit court granted partial summary judgment pursuant to GCR 1963, 117.2(1), now MCR 2.116(C)(8), dismissing plaintiff's claim for intentional infliction of emotional distress, and also struck certain of plaintiff's claims for damages. Plaintiff appeals as of right. We affirm in part and reverse in part.

Plaintiff's vehicle jackknifed and sustained extensive collision damage while it was being driven on hazardous winter roads on February 3, 1982, in Eureka, Missouri. Plaintiff promptly notified defendant of the accident and was advised by defendant to attempt to drive the vehicle back to Menominee County in Michigan. However, the vehicle could be driven only as far as Milwaukee, Wisconsin, where the damage was adjusted by defendant.

On March 22, 1982, defendant made an offer of settlement to plaintiff. Plaintiff rejected the offer, contending that defendant refused to pay for total damages sustained, and that defendant had inappropriately applied a $1,000 deductible, contrary to the language of the insurance policy.

On April 30, 1982, approximately three months after the accident, plaintiff filed the instant suit in circuit court, alleging breach of contract (Count I), negligence in adjustment (Count II), and intentional infliction of emotional distress in wilfully failing to settle plaintiff's collision damage claim timely and properly (Count III). In addition to the damages recoverable under the policy for repair or replacement of the vehicle, plaintiff sought additional damages on all three counts for the following:

"A) Loss of use of the settlement amount;

"B) Default has occurred on the Note between Plaintiff and the North Menominee Credit Union under which Note the vehicle was pledged as security, and Plaintiff has incurred all costs incident thereto;

"C) Loss of use of the vehicle or its replacement with resulting loss of revenue normally generated by said vehicle;

"D) Plaintiff's overall business has declined, and is continuing to decline, as a direct result of the loss of revenue from this vehicle;

"E) Storage charges have been incurred, and are continuing to be incurred, while the vehicle remains with the dealership in Milwaukee, Wisconsin, where it has been appraised by Auto-Owners."

Upon defendant's motion, the circuit court dismissed plaintiff's intentional infliction of emotional distress claim (Count III), and struck plaintiff's claims for the damages sought in A through D (hereinafter referred to as additional damages) in the remaining breach of contract and negligence claims (Counts I and II). ¹ Determining that the amount in dispute was less than $10,000, the circuit court remanded the case to 95A District Court. On September 13, 1984, the district court awarded plaintiff $10,835.58 for the reasonable cost of repair and damages and costs.

We hold that the circuit court properly dismissed Count III of plaintiff's complaint because plaintiff did not state a claim for intentional infliction of emotional distress, but that the circuit court erred, in part, in striking plaintiff's claims for the additional damages on plaintiff's breach of contract and negligence claims.

The first question before us involves plaintiff's claim of intentional infliction of emotional distress (Count III). Damages for mental anguish or emotional distress for breach of a commercial contract, such as an employment contract or a no-fault insurance policy, are not recoverable in an action for the breach absent proof of contemplation of such damages at the time the agreement was made. Valentine v. General American Credit, Inc., 420 Mich. 256, 263, 362 N.W.2d 628 (1984); Kewin v. Massachusetts Mutual Life Ins. Co., 409 Mich. 401, 419, 295 N.W.2d 50 (1980). However, tortious conduct existing independent of the breach may give rise to an award of exemplary damages. Kewin, supra, pp. 420-421, 295 N.W.2d 50.

A claim for intentional infliction of emotional distress as a separate theory of recovery requires (1) extreme and outrageous conduct, (2) intent or recklessness, (3) causation, and (4) severe emotional distress. Roberts v. Auto-Owners Ins. Co., 422 Mich. 594, 602, 374 N.W.2d 905 (1985), citing Restatement Torts, 2d, § 46, p 71. In the case at bar, the conduct of which plaintiff complains in Count III is the negligent adjustment of plaintiff's claim (incorporated from Count II) and the intentional and willful "refus[al] to settle plaintiff's collision damage claim according to the terms of its contract with Plaintiff and according to the laws of the State of Michigan." ² Plaintiff's allegation that defendant negligently adjusted his claim falls short of the requirement that the conduct be intentional or reckless. Furthermore, plaintiff's allegation that defendant intentionally or wilfully refused to settle plaintiff's claim fails to meet the extreme and outrageous criteria that alleged conduct must meet for a claim of intentional infliction of emotional distress. The mere failure to pay a contractual obligation, without more, does not amount to outrageous conduct for purposes of this tort. Roberts, supra, p. 605, 374 N.W.2d 905. Even a wilful or bad faith failure to do so does not meet this criteria. See Roberts, supra, p. 608, 374 N.W.2d 905. Thus we find that plaintiff has failed to adequately plead the elements of an independent action for intentional infliction of emotional distress and affirm the grant of summary judgment for defendant on this claim.

The next question before us is whether the circuit court erred in striking plaintiff's claim for additional damages for loss of use of the vehicle, lost profits, loss of use of the settlement amount and costs incurred by the default on the note secured by the vehicle in the remaining negligence and breach of contract counts.

Negligence Claim

In a tort action, the tortfeasor is liable for all injuries resulting directly from his wrongful act, whether foreseeable or not, provided that the damages are the legal and natural consequences of the wrongful act and are such as, according to common experience in the usual course of events, might reasonably have been anticipated. Sutter v. Biggs, 377 Mich. 80, 139 N.W.2d 684 (1966). However, recovery of remote, contingent or speculative damages is not permitted. Sutter, supra.

In the instant case, plaintiff, in his negligence claim, sought damages for: (1) loss of use of the vehicle; (2) lost profits; (3) loss of the use of the settlement amount and, (4) costs incurred by the default on the note secured by the vehicle. The damages arising from the defendant's negligence in handling plaintiff's insurance claim, for loss of the use of the vehicle, for the decline in profits from a business use of his vehicle, and for costs incurred by the default on the note secured by the vehicle, are conceivably damages which might reasonably have been anticipated by defendant. Moreover, questions of what damages might be reasonably anticipated is a question better left to the fact finder. Thus we find that the circuit court erred in striking damages for loss of use of the vehicle, for lost profits from plaintiff's negligence claim, and for costs incurred as a result of the default on the note secured by the vehicle.

With respect to loss of use of the settlement amount, only interest from the date of injury to the date of the complaint is available as part of damages to be awarded. See Currie v. Fiting, 375 Mich. 440, 454, 455, 134 N.W.2d 611 (1965); Vannoy v. City of Warren, 26 Mich.App. 283, 288-289, 182 N.W.2d 65 (1970), aff'd 386 Mich. 686, 194 N.W.2d 304 (1972). The prejudgment interest statute, M.C.L. § 600.6013; M.S.A. § 27A.6013, which is applicable to no-fault insurance litigation, Wood v. DAIIE, 413 Mich. 573, 589, 321 N.W.2d 653 (1982); Denham v. Bedford, 407 Mich. 517, 527, 287 N.W.2d 168 (1980), provides for interest from the date of the filing of a complaint to the date of satisfaction of judgment to compensate a party for its loss of use of the funds. Osinski v. Yowell, 135 Mich.App. 279, 288, 354 N.W.2d 318 (1984). Thus, although plaintiff could plead interest as an element of damages, he could seek interest only from the date of injury, i.e., the date the settlement should have been paid, to the date of the complaint, and the circuit court should have struck the claim for interest damages only from the date of the filing of the complaint.

Thus, except for loss of use of the settlement amount after the date of the filing of the complaint, we find that the circuit court erred in striking plaintiff's additional elements of damages from his negligence claim.

Contract Claim

We now turn to the question of whether or not plaintiff could plead and recover damages on his breach of contract claim for lost profits, loss of use of the...