Opinion ID: 2518281
Heading Depth: 3
Heading Rank: 4

Heading: Cabaness May Recover Damages for Mental Distress Related to His Contract Claim

Text: ¶ 71 Bountiful Power argues that damages for emotional or mental distress are not recoverable on Cabaness' contract claim. Given the unusual nature of the contract at issue here, we hold that compensation for emotional distress and mental suffering may be available where emotional distress and mental suffering naturally flow from a breach of the terms of the contract between Bountiful Power and were within the contemplation of the contracting parties. Because questions of fact remain regarding whether these damages were within the contemplation of the parties at the time the contract was formed, the district court erred in granting defendants' summary judgment on this issue. ¶ 72 A non-breaching party may recover both general damages, which flow naturally from the breach, and consequential damages, which, while not an invariable result of breach, were reasonably foreseeable by the parties at the time the contract was entered into. Mahmood v. Ross, 1999 UT 104, ¶ 19, 990 P.2d 933 (internal quotation marks omitted). Generally, there is no recovery of damages for mental anguish stemming from a breach of contract. Ams. Disabled for Accessible Pub. Transp. v. SkyWest Airlines, Inc., 762 F.Supp. 320, 326 (D.Utah 1991). But we have recognized an exception to this general rule in unusual circumstances. In the context of a breach of a first-party insurance contract, we held that consequential damages for mental anguish might be provable because insurance frequently is purchased not only to provide funds in case of loss, but to provide peace of mind for the insured or his beneficiaries. Beck v. Farmers Ins. Exch., 701 P.2d 795, 802 (Utah 1985). Although our analysis in Beck was based on the unique nature and purpose of an insurance contract and has not yet been applied to other types of breach of contract cases, we find the analysis instructive in the case before us. Id. ¶ 73 In Beck, we stated that the foreseeability of contractual damages related to economic distress or mental anguish will always hinge upon the nature and language of the contract and the reasonable expectations of the parties. Id. While this statement was made within the context of an insurance contract, we believe it applies to all contract actions. Other jurisdictions have similarly recognized that contractual damages related to emotional distress may be an appropriate remedy depending on the foreseeability of such damages and the specific nature of the contract at issue. See, e.g., Sullivan v. O'Connor, 363 Mass. 579, 296 N.E.2d 183, 188-89 (1973) ([T]here is no general rule barring such items of [emotional] damage[s] in actions for breach of contract. It is all a question of the subject matter and background of the contract....); Stewart v. Rudner, 349 Mich. 459, 84 N.W.2d 816, 824 (1957) (holding that economic distress is a recoverable contract damage when the contract concerns matters of mental concern or solicitude and such damages were within the contemplation of the parties); Lamm v. Shingleton, 231 N.C. 10, 55 S.E.2d 810, 813 (1949) (Where the contract is personal in nature and the contractual duty or obligation is so coupled with matters of mental concern or solicitude, or with the sensibilities of the party to whom the duty is owed, that a breach of that duty will necessarily or reasonably result in mental anguish or suffering, and it should be known to the parties from the nature of the contract that such suffering will result from its breach, compensatory damages therefor may be recovered.); see also, Restatement (Second) of Contracts § 353 (1981) (stating that a non-breaching party may recover emotional damages whenever the contract or the breach is of such a kind that serious emotional disturbance was a particularly likely result). ¶ 74 In a recent decision discussing this issue, the United States Court of Appeals for the Eleventh Circuit made the following statement: Although the general rule is that emotional damages for breach of contract will not lie, this rule is simply a shorthand way of saying that emotional distress is usually not a foreseeable consequence of breach. But when the nature of the contract is such that emotional distress is foreseeable, emotional damages will lie. Sheely v. MRI Radiology Network, P.A., 505 F.3d 1173, 1200 (11th Cir.2007) (internal citations omitted). We agree and recognize that emotional distress is typically not recoverable in an action for breach of contract because such damages are rarely a foreseeable result of breach. To be sure, in the ordinary commercial contract, damages are not recoverable for disappointment, even amounting to alleged anguish, because of breach. Stewart, 84 N.W.2d at 823. This is so because, although [i]n such cases breach of contract may cause worry and anxiety varying in degree and kind from contract to contract, depending upon the urgencies thereof, the state of mind of the contracting parties, and other elements, but it has long been settled that recovery therefor was not contemplated by the parties as the natural and probable result of the breach. Id. Indeed, [s]ome type of mental anguish, anxiety, or distress is apt to result from the breach of any contract which causes pecuniary loss. Yet damages therefor are deemed to be too remote to have been in the contemplation of the parties at the time the contract was entered into to be considered as an element of compensatory damages. Lamm, 55 S.E.2d at 813. ¶ 75 But we also agree that in rare cases the non-breaching party to a contract may recover damages for emotional distress. Accordingly, given our discussion above, we hold that a non-breaching party may recover general and/or consequential damages related to emotional distress or mental anguish arising from a breach of contract when such damages were both a foreseeable result of the breach of contract and explicitly within the contemplation of the parties at the time the contract was entered into. As we stated in Beck, the applicability of such damages will always hinge upon the nature and language of the contract and the reasonable expectations of the parties. 701 P.2d at 802. ¶ 76 In this case, Bountiful Power contracted with Cabaness and agreed, among other things, that it would not tolerate verbal or physical conduct by any employee which harasses, disrupts, or interferes with another's work performance or which creates an intimidating, offensive, or hostile work environment. Because this contractual provision of the Employee Manual is specifically directed toward matters of mental concern and solicitude, any breach thereof may result in emotional distress and mental anguish. Further, the unusual nature of the contractual obligations and the specific language of the contractual provisions give rise to the possibility that emotional damages were within the contemplation of the parties at the time the contract was entered. Therefore, the district court erred when it granted summary judgment in favor of Bountiful Power on this issue. We therefore remand to the trial court the questions of whether emotional damages were within the contemplation of the parties at the time of the contract was formed and whether such damages are therefore recoverable.