Plаintiff filed suit against defendant Auto-Owners Insurance Company for breach of contract, negligence and intentional infliction of
Plaintiffs 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. Howevеr, 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 n), and intentional infliction of emotional distress in wilfully failing to settle plaintiffs collision damage claim timely and properly (Count hi). In addition to the damages recoverable under the policy for repair or replacement of the vehicle, plaintiff sought additional damagеs 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 replacemеnt 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 thе dealership in Milwaukee, Wisconsin, where it has been appraised by Auto-Owners.
Upon defendant’s motion, the circuit court dismissed plaintiffs intentional infliction of emotional distress claim (Count m), and struck plaintiff’s claims for the damages sought in a through d (hereinafter referred to as additional dаmages) 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 hi of plaintiffs 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
The first question before us involves plaintiffs claim of intentional infliction of emotional distress (Count hi). Damages for mental anguish or emotional distress for breach of a commercial contract, such as an employment contract оr 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,
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,
The next question before us is whether the circuit cоurt erred in striking plaintiffs 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 actiоn, 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,
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
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,
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 vehicle, loss of use of the settlement amount and costs arising frоm the default on the note secured by the vehicle.
In holding that damages for emotional distress and mental anguish are not generally recoverable for the breach of a commercial contract, the Supreme Court in
Kewin, supra,
expressly left open the question of whether compensation for items of pecuniary loss caused by the breach of an insurer’s contractual obligation to process a claim in good faith might be recoverable if properly pled.
3
Kewin, supra,
p 421, n 2. See
Murphy v Cincinnati Ins Co,
772 F2d 273, 276 (1985), affirming in part
In the instant case, plaintiff pled that, knowing the hardship which would be caused to plaintiff through the loss of his vehicle, defendant intentionally and wilfully breached its contract by refusing to settle plaintiff’s claim according to the terms of its contract with plaintiff. Liberally construing these allegations, we find that plaintiff alleged that defendant has breached its obligation to process plaintiff’s claim in good faith. Thus plaintiff can seek damages for defendant’s breach, subject to the limitations applicable to damages for breaches of commercial contracts.
Michigan follows the rule of
Hadley v Baxendale,
9 Exch 341; 156 Eng Rep 145 (1854), that damages recoverable for breach of a contractual obligation are those that arise naturally from the breach or those that were in the contemplation of the parties at the time the contract was made.
Kewin, supra,
p 414. Thus, for example, lost profits resulting directly from the breach of the insurer’s obligation under an insurance contract which affects a specific collateral enterprise of which both parties are aware at the time of the agreement would be recoverable. See
Parmet Homes, Inc v Republic Ins Co,
In the instant case, plaintiff alleged that defendant was aware of the fact that plaintiff was involved in a small family trucking business and that the loss of the vehicle, or a replacement, would сause an extreme financial hardship to plaintiff and his business. 5 Thus, we conclude that plaintiff has properly pled lost profits as an element of damages in his breach of contract claim.
With respect to the loss of use of the settlement amount, defendant’s refusal to pаy plaintiff’s claim would logically result in a loss of the use of the settlement amount, at least until the time the settlement was paid or a complaint was filed, at which time the prejudgment statutory interest compensating plaintiff for loss of use of the settlement would be applicable if plaintiff prevailed. Thus we hold the loss of use of the settlement amount from the date it should have been paid until the date of the filing of the complaint can be said to have naturally arisen from the breach. Similarly, loss of the use of a vehicle and costs arising from the default on the nоte secured by the vehicle can also be viewed as natural consequences of defendant’s failure to pay the settlement amount on a vehicle sustaining serious collision damage.
In summary, we find that damages in the breach of contract claim for lost profits, loss of use of the vehicle, costs arising from the default on the note
Affirmed in part and reversed in part.
Notes
Although the circuit court’s order struck these damages from Count i, "and as incorporated by reference in Count i,” it appears from the record that the court was striking these damages from Count i (breach of contract claim), and as incorporated by reference in Count ii (negligence claim) and that the second reference to Count i rather than Count ii was merely a clerical error.
We exclude the conduct of the breaching of the contract which plaintiff also incorporated from Cоunt i. The breaching of a commercial contract cannot sustain either an action for negligence or for intentional infliction of emotional distress.
Our sister jurisdictions are not in agreement as to whether any collateral damages resulting from an insurer’s wrongful delay or refusal to make payments due under the insurance contract are recoverable. See Anno: Insurer’s liability for consequential or punitive damages for wrongful delay or refusal to make payments due under contracts, 47 ALR3d 314; Appleman, Insurance Law and Practice, Vol 16A, § 8878.35, p 434.
Michigan’s рrejudgment interest statute, MCL 600.6013; MSA 27A.6013, compensates a plaintiff from the date the complaint is filed for the pecuniary loss of the use of the amount of money to which plaintiff is entitled. Also, in the context of no-fault insurance, upon a finding that the insurer has unreasonably refused or delayed payment of an insurance claim, plaintiff is statutorily entitled to attorney fees. MCL 500.3148; MSA 24.13148. (Contrast Murphy, supra, where attorney fees were awarded as pecuniary loss damages arising naturally from the breach of a fire insurance contract where no such statutory entitlement to attorney fees existed).
Although this allegation of awareness on defendant’s part appeared in plaintiff’s intentional infliction of emotional distress claim (Count hi) which was ultimately stricken, we do not ignore this allegation when considering the breach of contract claim (Count i) on the technical ground that it was physically contained in stricken Count m.