Opinion ID: 2178388
Heading Depth: 1
Heading Rank: 8

Heading: plaintiff's pleadings were sufficient to allege a claim of emotional distress arising from defendant's breach of contract

Text: Having ruled that emotional distress damages may be recovered for breach of a disability insurance contract, the question remains whether plaintiff has sufficiently pled such a claim. There is no dispute that plaintiff sufficiently pled a contract cause of action; rather, the dispute involves whether plaintiff sufficiently pled a claim for emotional distress damages resulting from that breach. Contrary to the Court of Appeals determination, we hold that plaintiff made sufficient allegation to support a recovery of mental distress damages arising from breach of contract. [T]he function of the pleadings is to act as a guide rope, not as a snare or a hangman's noose. Olson v Dahlen, 3 Mich App 63, 72; 141 NW2d 702 (1966). The General Court Rules of 1963 were drafted to substitute notice or fact pleading for rigid forms of action. See GCR 1963, 111, Committee Note (2) (This requirement is liberalized to the extent that no pleading shall be deemed insufficient if it reasonably informs the adverse party of the nature of the cause he is called upon to defend), 1 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), p 191. Thus, Rule 111.1 provides that complaints must contain the following: (1) a statement of the facts without repetition upon which the pleader relies in stating his cause of action with such specific averments as are necessary reasonably to inform the adverse party of the nature of the cause he is called upon to defend;   . In those instances where special damages are claimed, GCR 1963, 112.8 provides that they shall be specifically stated. The Committee Notes indicate that this subrule on special damages was drafted in accordance with the following statement from McDuffie v Root, 300 Mich 286, 293-294; 1 NW2d 544 (1942): In some jurisdictions it is held that an injury must be specifically alleged, or must be the natural and necessary result of injury complained of in the pleadings, to justify the admission of evidence of such injury. Such is not the Michigan law. In this State, it is merely required that the injury sought to be proved must be the natural result of the injury complained of in the pleadings. If such injury can be traced to the act complained of, and is such as would naturally follow from the alleged injury, it need not be specifically averred. Groat v Detroit United Railway, 153 Mich 165 [116 NW 1081 (1908)]. (Emphasis changed.) Thus, while both the subrule on complaints and the subrule on special damages literally require specific averments, it is apparent that the pleading need only reasonably inform the adverse party of the alleged injury from which the cause of action naturally flows. Plaintiff's complaint set forth the nature of the disability policy and the circumstances under which his claim for policy benefits arose. The complaint alleged in part: that defendant had exhibited a negative, skeptical, and defensive attitude toward his claim; that defendant's investigative measures violated the spirit and intent of the policy and the spirit and intent of the representations made to plaintiff by defendant's agent; that plaintiff sought to avoid further `hassle', which was distasteful to him while plaintiff was disabled, was without income, was under the care of physicians, was suffering the effects of his injury; that defendant has, by its course of conduct, evidenced a breach of this [fiduciary trust] relationship amounting to utter lack of good faith and bordering on the deceitful. These allegations were amplified in plaintiff's reply to affirmative defenses with the additional allegation that plaintiff is entitled to an award of punitive damages because of the conduct of the defendant, which was coercive bad-faith conduct inducing duress, conduct involving misrepresentation, concealment of material facts, deceitful and amounting in law to malicious conduct. Concluding, plaintiff requested damages by way of breach of contract, express or implied, misrepresentation and deceit, breach of a fiduciary duty, both express in amount as provided for in the policy and punitive in nature. On the fifth day of trial, plaintiff sought to amend the complaint for the purpose of introducing evidence of emotional distress. After recognizing that complaints serve a notice function with flexibility, the court ruled that amendment was unnecessary since there is a general claim that there is emotional distress and difficulties that may have arisen,    within the context of the original complaint; I will allow that testimony    within the framework of emotional distress arising out of the failure or alleged failure of a defendant company to meet its obligations under an insurance contract. We agree with the trial court that plaintiff's factual statements and averments were sufficient to put defendant on notice that plaintiff was seeking emotional distress damages for breach of contract. As we earlier outlined, and as the McDuffie Court imparted, since emotional distress can be traced to the act complained of, and is such as would naturally flow from the alleged injury, it need not be specifically averred. McDuffie, supra, 293-294. Furthermore, plaintiff's claim for punitive damages was akin to a specific averment of emotional distress since such damages have traditionally encompassed compensation for injured feelings, Detroit Daily Post Co v McArthur, 16 Mich 447, 453-454 (1868), Ray v Detroit, 67 Mich App 702, 704; 242 NW2d 494 (1976), and earlier cases have evidenced a lenient attitude toward the requirement that the mental anguish basis for exemplaries be specially pleaded. See Wise v Daniel, 221 Mich 229, 234; 190 NW 746 (1922); Smith v Jones, 382 Mich 176, 206-207; 169 NW2d 308 (1969) (ADAMS, J., concurring). Finally, GCR 1963, 118.3 provides for great liberality in the amendment of pleadings; even substantial omissions from a complaint should be overlooked if the complaint is nonetheless sufficient to provide the defendant with notice of the claims against which defendant must defend. City of Auburn v Brown, 60 Mich App 258; 230 NW2d 385 (1975). Even though the trial court found amendment unnecessary, the sense of the above authorities indicates that plaintiff should have been permitted to pursue the emotional distress claim in any event. The novel nature of plaintiff's claim in contract, premised on the dearth of Michigan cases issued prior to this 1976 trial allowing emotional distress damages against insurers, should not add to plaintiff's burden of pleading. If we were to so rule today, we would likely deter future filings of untested, imaginative and persuasive claims. Indeed, defendant cannot argue that it has been unfairly surprised if plaintiff's novel claim unexpectedly succeeds, so long as defendant had been reasonably notified from the pleadings that such a claim would be made. In substance, then, we find that defendant had been reasonably informed of the nature of the claim that defendant was called upon to defend pursuant to Rule 111.1(1) and that the claim for emotional distress was sufficiently alleged as required by the rule of McDuffie and memorialized in Rule 112.8. No abuse of discretion having been shown in the trial court's ruling that plaintiff's emotional distress claim was adequately framed in its complaint, the Court of Appeals determination that the complaint was insufficient is reversed. VI. WHERE AN INSURANCE CONTRACT HAS BEEN DETERMINED TO BE PERSONAL IN NATURE, PLAINTIFF MAY NOT RECOVER BOTH EMOTIONAL DISTRESS AND EXEMPLARY DAMAGES After recognizing that a contract cause of action for emotional distress damages may lie for breach of a disability contract, the Court of Appeals reversed the jury's award of such damages on the ground that they were not sufficiently pled. Turning its attention to plaintiff's request for punitive or exemplary damages, the panel concluded: The exemplary damage question is the most difficult one for us. In the first section of this opinion, we held that exemplary damages could not be recovered in this type of case because it was possible to recover damages for mental anguish and exemplary damages were intended to compensate for the same injuries. But, defects in the pleadings have prevented recovery of mental anguish damages. The plaintiff did not specifically request exemplary damages. But he did request punitive damages. Historically, punitive damages have overlapped exemplary damages. And exemplary damages in turn have overlapped damages for mental anguish which we have held are recoverable in this type of breach of contract action. This multiple overlap factor weighs in favor of allowing some recovery.  Kewin, supra, 656-657. It is a close question, but we believe that the allegations were sufficient to support an exemplary damage recovery in this case since there will be no direct recovery for mental anguish damages. Id., 657. (Footnote omitted, emphasis supplied.) We agree with both the Court of Appeals and our Brother KAVANAGH'S assessment that exemplary damages, much like emotional distress damages, are intended to compensate for injured feelings. See Detroit Daily Post Co v McArthur, 16 Mich 447, 453-454 (1868); McFadden v Tate, 350 Mich 84, 89; 85 NW2d 181 (1957); Ray v Detroit, 67 Mich App 702, 704; 242 NW2d 494 (1976). The focus of the trial court's instruction on both exemplary and emotional distress damages was likewise directed to the alleged injury to plaintiff's feelings occasioned by defendant's conduct. [24] Since both damage claims are intended to compensate for the same injury and since the trial court's instruction on both claims focused on the same injury resulting from the same conduct, the conclusion is inescapable that the jury's award of both exemplary and emotional distress damages constituted double recovery for an identical wrong. Where damages are intended to compensate, as in the case of exemplary damages, rather than to punish, this Court will not indulge a double recovery. Unlike the Court of Appeals, our finding that plaintiff sufficiently alleged a claim for emotional distress resulting from breach of contract requires us to uphold the jury's award of $75,000 for such damages. Since the jury's award of $50,000 for exemplary damages compensated for the same injury resulting from the same conduct, we must vacate that award as constituting an impermissible double recovery in this instance. [25]