Opinion ID: 2162106
Heading Depth: 1
Heading Rank: 2

Heading: Damages for Mental Suffering

Text: By special verdict Kunkel was awarded $10,000 in damages for mental suffering. United contends such damages are not recoverable in this action, or if they are, such damages are not sustained by the evidence and excessive. The only evidence pertaining thereto came from Kunkel and his wife. Kunkel at the time of judgment was 31 years old, a truck driver, had one child of his own and four stepchildren. He testified after judgment he had trouble sleeping, saw a doctor who prescribed tranquilizing pills which he was still taking at time of trial, that he has been nervous and tense since the excess judgment was entered. He also testified that his wages were garnisheed and that a body execution was outstanding against him; [6] that it had destroyed his credit. Mrs. Kunkel testified her husband was nervous, irritable and complained of headaches after the excess verdict; that he did not sleep soundly like he did before; that because of poor credit they could not buy furniture they wanted to. Although there has been much litigation against insurance companies for excess liability, there appear to be few cases where damages were sought or allowed for mental suffering claimed to have been proximately caused by an insurer's failure to settle within policy limits. Adjudicated cases have been termed as actions based on the contract or arising from the contract and perhaps more often as an action in tort or in the nature of a tort. See Annot., 12 A.L.R. 3d 1158 and Keeton Liability Insurance and Responsibility for Settlement; 67 Harvard Law Review, 1136, 1138, note 5. For tortious conduct the rule on damages is stated in SDCL 1967 21-3-1: For the breach of an obligation not arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not. For breach of contract the rule is found in SDCL 1967 21-2-1: For the breach of an obligation arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom. No damages can be recovered for a breach of contract which are not clearly ascertainable in both their nature and their origin. In Farmers Insurance Exchange v. Henderson, 82 Ariz. 335, 313 P.2d 404, where an insured's property, a laundry, was levied upon and sold under execution when no supersedeas bond was furnished pending appeal, [7] and in an action to recover an excess liability claim was also made for damages for loss of the laundry as a going business, for humiliation, pain and suffering, loss of business reputation and credit, among other things, and the court submitted such matter to the jury allowing it to assess damages therefor, the court in limiting damages to the value of the laundry as a going concern, said: The wrong involved is causing the destruction or conversion of insured's business property in satisfaction of the company's obligation. The court correctly instructed that as a general rule the damages for the loss or destruction or conversion of a going business is its value at the time and place of destruction with interest. This is in accord with the pronouncements of this court. Jones v. Stanley, 27 Ariz. 381, 233 P. 598. The humiliation, mental pain, suffering and anguish incurred by the Hendersons was the direct result of the pecuniary loss suffered. If it is to be considered a breach of contract, to recover for these items the contract must be of such a nature that its breach would cause mental suffering for reasons other than the pecuniary loss. Restatement of Law, Contracts, section 341. If the wrong be considered tortious by causing the destruction or conversion of Henderson's property, the same measure of damages should obtain as that for conversion or destruction of property, that is, the value of the property with interest. In Baker v. Northwestern Nat. Cas. Co., 26 Wis.2d 306, 132 N.W.2d 493, the insured claimed damages alleging that the excess judgment damaged his credit rating and financial reputation preventing him from entering into a hunting knife enterprise which was in the planning stage, but the product had not yet been marketed. The court said such claims were too speculative to be submitted to a jury. It is settled law in this state that a breach of duty may arise from a contractual relationship, and while matters complained of may have their origin in contract, the gist of an action may be tortious. Smith v. Weber, 70 S.D. 232, 16 N.W.2d 537. Conduct which merely is a breach of contract is not a tort, but the contract may establish a relationship demanding the exercise of proper care and acts and omissions in performance may give rise to tort liability. Weeg v. Iowa Mutual Ins. Co., 82 S.D. 104, 141 N.W.2d 913. It is fundamental that damages which are uncertain, contingent or speculative cannot be made the basis of recovery. This rule is applicable in actions of contract, and with some differentiation as to a degree of certainty, to actions in tort. 25 C.J.S. Damages § 26. Where the connection between the wrong and the consequences thereof is not direct, a nearness in the sequence of events and a closeness of cause and effect must exist so that the injurious act predominates over other probable causes to produce the consequential damage before recovery will be permitted. Sutter v. Biggs, 377 Mich. 80, 139 N.W.2d 684. In Crisci v. Security Ins. Co., 66 Cal.2d 425, 58 Cal.Rptr. 13, 426 P.2d 173, as a result of an insurer's failure to settle the insured compromised a $90,000 excess liability judgment for $22,000, a 40% interest in the insured's claim to some property, and an assignment of her claim against the insurer. The insured was a 70-year immigrant widow, became indigent, went to work as a babysitter, and her grandchildren paid her rent. As a result of the change in financial condition, her health declined, she became hysterical and attempted to commit suicide several times. Under statutes similar to ours, the California court permitted recovery for mental suffering. However, our analysis of that case leaves the impression that its application was intended for exceptional cases. The court draws the analogy between such case and one where there was an invasion of property rights without personal injury apart from mental distress and says: We are satisfied that a plaintiff who as a result of a defendant's tortious conduct loses his property and suffers mental distress may recover not only for the pecuniary loss but also for his mental distress. In State Farm Mut. Automobile Ins. Co. v. Smoot, 5 Cir., 381 F.2d 331, the second case relied upon by Kunkel on this point, there again was present an invasion of property rights. Smoot testified he tried to sell his house when he moved from the city, but was unable to do so because of the judgment and lien against it. He then lost it because of inability to make payments and as a result of a foreclosure by FHA his credit was destroyed. Thus, the court said there was some evidentiary support for an award of $10,000 in general damages recoverable in tort actions under Georgia law. Mental suffering as such was not mentioned. In the case at bar there is no evidence of what we consider an invasion of a property right similar to what occurred in the Crisci and Smoot cases. There is no evidence that Kunkel suffered any financial distress, lost either property or employment, or otherwise sustained pecuniary loss because of the excess judgment. We hold the record in this case does not support an award of damages for mental suffering. Other assignments of error have been considered and determined to be either without merit or nonprejudicial. The judgment should be modified to exclude therefrom $10,000 in damages for mental suffering, and as so modified, it is affirmed. No costs will be taxed. All the Judges concur.