Opinion ID: 835945
Heading Depth: 1
Heading Rank: 4

Heading: emotional distress damages for breach of fiduciary duty

Text: Plaintiffs argue that they properly were awarded emotional distress damages arising from their claim for breach of fiduciary duty. As plaintiffs acknowledge, Oregon allows recovery for emotional distress without accompanying physical injury under narrow circumstances, including when a defendant's conduct infringes on a plaintiff's legally protected interest. See Hammond v. Central Lane Communications Center, 312 Or. 17, 23, 816 P.2d 593 (1991) (so stating). Plaintiffs argue that defendants infringed on their legally protected interest created by the disclosure requirements and delineation of agency duties of ORS 696.810 (1997), ORS 696.820 (1997), and ORS 696.830 (1997). The purpose of enacting the disclosure requirements, plaintiffs contend, was to protect real estate consumers. According to plaintiffs, Zobel's failure to fulfill his duties as a buyer's agent is the type of harm that the agency disclosure requirements are designed to prevent. Thus, plaintiffs conclude that they had a legally protected interest in having Zobel act as a buyer's agent on their behalf. If Zobel failed to act on their behalf, plaintiffs argue, and breached the duties that he owed to them, then he infringed on that protected interest, giving rise to liability for emotional distress damages. Defendants respond that plaintiffs cannot recover under the legally protected interest rule set out in Hammond. They assert that the legally protected interest rule is not the proper analytical framework for the issue presented in this case. Instead, defendants assert that plaintiffs' claim for emotional distress damages should be analyzed within the framework of this court's decision in Curtis v. MRI Imaging Services II, 327 Or. 9, 956 P.2d 960 (1998), and that, when considered within that framework, plaintiffs' claim fails. In Curtis, the plaintiff alleged that the defendant, by negligently performing a medical procedure, caused the plaintiff severe emotional harm. The plaintiff alleged no physical injury; the parties argued the case within the framework of a claim for negligent infliction of emotional distress. This court determined, however, that the proper analytical framework for the case was professional malpractice because the most obvious claim stated by the pleadings [was] a straightforward claim for medical malpractice. Curtis, 327 Or. at 13, 956 P.2d 960. This court went on to hold that, to state a claim for emotional distress damages in a medical malpractice setting not involving physical harm, a plaintiff must plead and prove a standard of care that includes a duty to protect against psychic harm. Id. at 14-15, 956 P.2d 960. Defendants ask us to apply the reasoning in Curtis to all types of professional malpractice, not just to medical malpractice. According to defendants, if a medical professional, in the absence of a specific duty, does not have a general duty to protect patients against psychic harm, a real estate professional also does not have that general duty. Because plaintiffs failed to plead or prove any duty of real estate professionals to protect their clients from emotional harm, defendants argue, plaintiffs have failed to establish a claim for emotional distress damages. The Court of Appeals did not decide whether this case should be analyzed under the legally protected interest rule of Hammond or under the duty to protect rule of Curtis. Rathgeber, 176 Or.App. at 145, 30 P.3d 1200. Instead, that court concluded that, under either rule, plaintiffs' emotional distress claim could not succeed. We first address the proper analytical framework within which to analyze plaintiffs' claim for emotional distress damages. In Hammond, the plaintiff brought separate claims for negligent and reckless infliction of emotional distress. Emotional harm was the only harm alleged. This court affirmed summary judgment for the defendant, holding that a plaintiff cannot recover emotional distress damages for negligent infliction of emotional harm without pleading and proving that the defendant had violated a legally protected interest of the plaintiff. Hammond, 312 Or. at 24, 816 P.2d 593. [7] In Curtis, the parties argued their case within the framework of the legally protected interest rule in Hammond. However, this court recognized that the claim properly was characterized as a malpractice claim, not as a claim for negligent infliction of emotional distress, and analyzed the claim in the framework of a malpractice case. In this case, the pleadings allege a breach of fiduciary duty by a real estate professional acting for a client in a business relationship. Plaintiffs sought economic and emotional distress damages arising from that breach of fiduciary duty. It is clear from the pleadings that plaintiffs' claim for breach of fiduciary duty is, essentially, a claim for real estate professional malpractice. [8] Plaintiffs alleged (and proved to the satisfaction of the jury) that Zobel had failed to meet the standard of care of a real estate professional. Thus, the professional malpractice analysis in Curtis is the proper framework within which to analyze this case. In Curtis, this court held that the plaintiff's claim survived summary judgment because the claim invoke[d] specific duties imposed on a group of medical professionals to guard against recognized medical risks that happen to be psychological in nature. Curtis, 327 Or. at 15, 956 P.2d 960 (emphasis in original). This court further stated: Our holding should not be read to mean that medical professionals operate under a general duty to avoid any emotional harm that foreseeably might result from their conduct. In that regard, their duty is no greater than that of the population at large. But, where the standard of care in a particular medical profession recognizes the possibility of adverse psychological reactions or consequences as a medical concern and dictates that certain precautions be taken to avoid or minimize it, the law will not insulate persons in that profession from liability if they fail in those duties, thereby causing the contemplated harm. Id. at 15-16, 956 P.2d 960. Thus, in the absence of allegations that the standard of care requires something more, medical professionals have no unique duty to avoid emotional harm. Applying the analysis in Curtis to this case, we conclude that if, in the absence of a particular standard of care, doctors do not have the general duty to guard against emotional harm, then real estate professionals similarly do not have that general duty. It is always foreseeable that some emotional harm might result from the negligent performance of real estate professional services, as it might from legal, accounting, or other varieties of professional malpractice. That possibility, however, cannot give rise to emotional distress damages unless a standard of care that includes the duty to protect a client from emotional harm governs the professional's conduct. Because plaintiffs did not plead such a duty, the trial court erred in denying defendants' motion to strike plaintiffs' request for emotional distress damages. The decision of the Court of Appeals is affirmed. The judgment of the circuit court is affirmed in part and reversed in part, and the case is remanded to the circuit court for further proceedings.