Court Opinion

ID: 9696530
Source: CourtListenerOpinion
Date Created: 2023-08-25 18:50:53.761893+00
Date Added: 2024-06-11T18:20:23.288907
License: Public Domain

J. H. Gillis, J.
(dissenting). I respectfully dissent. Plaintiff commenced this action for breach of an alleged implied contract of employment. The trial court granted summary judgment in favor of defendant on that portion of plaintiffs claim requesting punitive and exemplary damages for breach of the employment contract. The court also granted summary judgment on plaintiffs claim for damages for intentional infliction of emotional distress. Plaintiff appeals as of right.
The issue is whether Michigan law authorizes the award of mental distress damages and exemplary damages for breach of an employment contract.
Mental Distress Damages
Under the rule of Hadley v Baxendale, 9 Exch *528341; 156 Eng Rep 145 (1854), damages recoverable for breach of contract are those that arise naturally from the breach or those that were within the contemplation of the parties at the time the contract was made. Where the contract is commercial in nature, damages are limited to the monetary value of the contract had the breaching party fully performed under it; mental distress damages are not recoverable. Kewin v Massachusetts Mutual Life Ins Co, 409 Mich 401, 414-415; 295 NW2d 50 (1980). Mental distress damages are recoverable for breach of contract, however, where the contract is not primarily commercial in nature but, rather, involves "rights we cherish, dignities we respect, emotions recognized by all as both sacred and personal”. Stewart v Rudner, 349 Mich 459, 469; 84 NW2d 816 (1957).
In Stewart, the plaintiff alleged that the defendant doctor had breached a promise to deliver plaintiffs child by Caesarean section. Plaintiff alleged that her child was stillborn as a result of defendant’s breach, and she sought mental distress damages. The Supreme Court held that such damages were recoverable, stating:
"It is true, in the ordinary commercial contract, damages are not recoverable for disappointment, even amounting to alleged anguish, because of breach. Such damages are, in the words of defendant’s requested charge, 'too remote.’ But these are contracts entered into for the accomplishment of a commercial purpose. Pecuniary interests are paramount. In 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. [Citations omitted.]
*529"Yet not all contracts are purely commercial in their nature. Some involve rights we cherish, dignities we respect, emotions recognized by all as both sacred and personal. In such cases the award of damages for mental distress and suifering is a commonplace, even in actions ex contractu.
"* * * When we have a contract concerned not with trade and commerce but with life and death, not with profit but with elements of personality, not with pecuniary aggrandizement but with matters of mental concern and solicitude, then a breach of duty with respect to such contracts will inevitably and necessarily result in mental anguish, pain and suifering. In such cases the parties may reasonably be said to have contracted with reference to the payment of damages therefor in event of breach. Far from being outside the contemplation of the parties they are an integral and inseparable part of it.” Stewart, supra, pp 469, 471.
The Supreme Court in Kewin, supra, recognized the Stewart exception to the general rule limiting damages for breach of contract, but found it inapplicable. The Kewin Court held that an insurance contract for disability income protection was commercial in nature and that mental distress damages were therefore not recoverable. That decision has been applied by panels of this Court to other types of insurance contracts. See, e.g., Van Marter v American Fidelity Fire Ins Co, 114 Mich App 171, 183; 318 NW2d 679 (1982); Stein v Continental Casualty Co, 110 Mich App 410, 422-424; 313 NW2d 299 (1981).
The narrow issue then is whether plaintiffs employment contract with defendant was commercial or personal in nature.
Recent decisions of the Michigan Supreme Court evidence a growing recognition of the importance of continued and secure employment to a person’s *530physical and mental health. In Lowe v Hotel & Restaurant Employees Union, Local 705, 389 Mich 123, 148; 205 NW2d 167 (1973), the Court, in a different context, observed:
"Every man’s employment is of utmost importance to him. It occupies his time, his talents, and his thoughts. It controls his economic destiny. It is the means by which he feeds his family and provides for their security. It bears upon his personal well-being, his mental and physical health.
"In days gone by, a man’s occupation literally gave him his name. Even today, continuous and secure employment contributes to a sense of identity for most people.”
See, also, Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579; 292 NW2d 880 (1980).
Although plaintiff’s employment contract admittedly involved a significant commercial aspect, in my opinion it also involved important personal rights and dignities sufficient to bring it within the exception announced in Stewart, supra. The breach of an employment contract such as the one involved herein often results in serious disruption of the employee’s life and livelihood and carries with it the likelihood of severe mental and emotional disturbance such as may reasonably be said to have been within the contemplation of the parties at the time the contract was made. I believe the decision in Kewin, supra, should be distinguished because it involved a contract which was purely commercial in nature. The trial court erred in granting summary judgment on plaintiff’s claim for mental distress damages.
Punitive and Exemplary Damages
Plaintiff’s complaint sought both punitive and *531exemplary damages. Punitive damages are awarded solely to punish or make an example of a defendant because of the malice or recklessness with which he acted. Exemplary damages, on the other hand, are awarded to compensate the plaintiff for injuries to feelings and for the sense of humiliation and indignity because of injury maliciously and wantonly inflicted. American Central Corp v Stevens Van Lines, Inc, 103 Mich App 507, 514-515; 303 NW2d 234 (1981). While exemplary damages may be recoverable in the proper case, Michigan law prohibits an award of punitive damages. Kewin, supra, p 419; Jackovich v General Adjustment Bureau, Inc, 119 Mich App 221, 236; 326 NW2d 458 (1982). The trial court properly granted summary judgment as to plaintiff’s claim for punitive damages.
In Kewin, supra, the Court stated the following rule with regard to exemplary damages in commercial contract cases:
"We hold that, absent allegation and proof of tortious conduct existing independent of the breach, see, e.g., Harbaugh v Citizens Telephone Co, 190 Mich 421; 157 NW 32 (1916), exemplary damages may not be awarded in common-law actions brought for breach of a commercial contract.” (Footnote omitted.) Kewin, supra, pp 420-421.
As previously discussed, I am of the opinion that the employment contract involved herein is not a purely commercial contract as was the case in Kewin. In contrast to Kewin, the injury which arises upon the breach of an employment contract is not merely a "financial one, susceptible of accurate pecuniary estimation”. Kewin, supra, p 420. Rather, plaintiff alleged that defendant breached the employment contract with malice and as a *532result of discriminatory practices. If proven, the damages resulting from the alleged breach encompass injury to feelings which cannot be measured by reference to the terms of the contract alone. Since the contract was personal as well as commercial in nature, plaintiff should be entitled to submit the issue of exemplary damages to the jury.
However, as noted in Justice Williams’ opinion in Kewin, both mental distress damages and exemplary damages are intended to compensate for injured feelings. Since both damage claims are intended to compensate for the same injury, an award of both exemplary and emotional distress damages constitutes an improper recovery for an identical wrong. While plaintiff should be allowed to submit both issues to the jury, recovery may be had upon only one theory. See Kewin, supra, pp 460-462. I would hold that the trial court erred in granting summary judgment on plaintiff’s claim for exemplary damages.
I would affirm the judgment as to the claim for punitive damages, reverse it in all other respects and remand for trial.