Our order granting leave to appeal in this case directed the parties to brief the following two issues:
Since we conclude that plaintiff failed even to meet the threshold requirements of proof to make out a prima facie claim of intentional infliction of emotional distress, we are constrained from reaching the issue as to whether this modern tort should be formally adopted into our jurisprudence by the well-settled rule that statements concerning a principle of law not essential to determination of the case are obiter dictum
Plaintiffs Delores and Ralph Roberts brought this action, individually and on behalf of their minor daughter, Christine Rodzos, seeking recovery of certain no-fault benefits from their no-fault insurer, defendant Auto-Owners Insurance Company. The claims arose when Christine was struck by a motor vehicle while riding her bicycle, resulting in her hospitalization for several days and her missing of school for a total of three weeks. Auto-Owners paid plaintiffs' medical and ambulance bills. The instant lawsuit concerns only plaintiffs' claim for replacement benefits under MCL 500.3107(b); MSA 24.13107(b).
Before trial, Auto-Owners moved for summary judgment, arguing that mental anguish, exemplary or punitive damages are not available in an action claiming replacement benefits. The motion was denied, as was defendant's subsequent motion for reconsideration, apparently
In the Court of Appeals, Auto-Owners relied on this Court's then-recent pronouncement in Kewin v Massachusetts Mutual Life Ins Co, 409 Mich. 401; 295 N.W.2d 50 (1980), contending that mental distress damages are unavailable in what is essentially a breach of contract action. In affirming the judgment of the lower court, the Court of Appeals distinguished Kewin by finding sufficient evidence of tortious conduct — independent of the contract breach — to justify the award of mental distress damages in this case. Roberts v Auto-Owners Ins Co, 135 Mich.App. 595; 354 N.W.2d 271 (1983).
We granted leave to consider the viability of plaintiffs' tort theory on the facts of this case, and directed the parties to brief the issues set forth above.
In Kewin, supra, we held that a disability insurance policy did not involve matters of mental concern and solicitude that would justify an award of mental distress damages for its breach.
The tort theory forwarded by plaintiffs has been recognized elsewhere to permit recovery of mental distress damages separate and apart from the recovery of contractual damages for breach of an insurance policy. See, e.g., Eckenrode v Life of America Ins Co, 470 F.2d 1 (CA 7, 1972); Strader v Union Hall, Inc, 486 F.Supp. 159 (ND Ill, 1980); Amsden v Grinnell Mutual Reinsurance Co, 203 N.W.2d 252 (Iowa, 1972); Fletcher v Western National Life Ins Co, 10 Cal.App.3d 376; 89 Cal.Rptr. 78; 47 ALR3d 286 (1970); see, generally, Holmes, Is there life after Gilmore's death of contract? — Inductions from a study of commercial good faith in first-party insurance contracts, 65 Cornell L R 330, 356-359 (1980). Indeed, although the instant case apparently marks the first appellate affirmance of a mental distress award in this context, our Court of Appeals has previously acknowledged (at least implicitly) the viability of the intentional infliction theory in insurance suits alleging dilatory handling of claims. See Butt v DAIIE, 129 Mich.App. 211, 218-219; 341 N.W.2d 474 (1983); Butler v DAIIE, 121 Mich.App. 727, 735-737; 329 N.W.2d 781 (1982); Holmes v Allstate Ins Co, 119 Mich.App. 710, 713-718; 326 N.W.2d 616 (1982) (workers' compensation action); Frishett v State Farm Mutual
Those courts which have recognized intentional infliction of emotional distress as a separate theory of recovery have generally embraced the Restatement definition of the tort:
Four elements are identified in this definition: (1) "extreme and outrageous" conduct, (2) intent or recklessness, (3) causation, and (4) "severe emotional distress." See, e.g., Ross v Burns, 612 F.2d 271, 273 (CA 6, 1980).
We find that plaintiffs herein failed to make the minimum showing of proof of either "extreme and outrageous" conduct or "severe emotional distress" required to withstand defendant's motion for a directed verdict.
A. Extreme and Outrageous Conduct
An oft-quoted Restatement comment summarizes the prevailing view of what constitutes "extreme and outrageous" conduct:
Another Restatement comment further qualifies the conduct proscribed by this tort:
Further, in a contractual setting, a tort action must rest on a breach of duty distinct from contract.
Moreover, in Kewin, supra, we declined to recognize a separate cause of action for bad-faith breach of an insurance contract, although some of our sister states have chosen to do so. 409 Mich. 423.
The instant plaintiffs rely on the following facts as establishing Auto-Owners' "extreme and outrageous" conduct: (1) Auto-Owners' failure to supply plaintiffs with a form for claiming replacement services benefits, even though the statutory no-fault provision relating thereto had been in effect for six years; (2) Auto-Owners' delay in responding to the claim for replacement services (roughly six months after the accident, and two months after plaintiffs created and submitted their own document claiming replacement benefits); (3) Auto-Owners'
We disagree with this assessment of the evidence. While Auto-Owners' conduct is hardly praiseworthy, plaintiffs alleged no more than the failure by Auto-Owners to facilitate the filing of a replacement services claim, a delay of at most six months in responding to the claim as filed, and the denial of benefits owed. Such conduct may properly be considered unreasonable for purposes of assessing the statutory penalty for overdue payments as well as plaintiffs' attorney fees against
B. Severe Emotional Distress
The Restatement commentary explains the emotional distress requirement as follows:
Further, although bodily injury need not result, the Restatement commentary suggests that "more in the way of outrage" may be required where a claim is based on emotional injury alone. Id., comment k, p 78.
Plaintiffs' evidence of severe emotional distress consisted entirely of the following testimony by Ralph and Delores Roberts:
Ralph Roberts — Direct Examination
Q. Have you ever been paid one nickel of this?
A. Not of the — on that paper there.
A. Well, it make me kind of disappointed or mad.
Q. Get upset about that?
Q. Why does it make you mad?
A. (No response.)
Q. Does it make you mad, really?
Delores Roberts — Direct Examination
A. That's correct.
Q. How does that make you feel?
A. It makes me feel mad.
Q. How long have you felt this way?
A. Yes, it does.
A. No, sir.
Although anger may be an indicia of emotional distress, the reaction testified to does not even approach the level of emotional distress contemplated by the Restatement drafters in requiring that "no reasonable man could be expected to endure it." Rather, plaintiffs' anger is more consistent
Judging from the seventy-six pages of annotations that currently accompany § 46 of the Second Restatement of Torts, it is clear that the tort of intentional infliction of emotional distress has gained widespread acceptance, in a variety of factual contexts, in the courts of our sister states. Because we find that plaintiffs' proofs failed even to make out a prima facie claim for relief under the Restatement definition, our review both of the policy implications for adopting this tort in general and of the propriety of allowing such recovery in the insurance context must await a case in which those concerns are necessarily presented.
We reverse the judgment of the Court of Appeals and modify the judgment of the trial court by vacating the award of mental distress damages.
RYAN, BRICKLEY, CAVANAGH, and RILEY, JJ., concurred with BOYLE, J.
WILLIAMS, C.J. (concurring).
I concur in the result on these facts, but would have this Court join the growing trend in the courts of our sister states recognizing the tort of intentional infliction of emotional distress as exemplified by § 46 of the Restatement Torts, 2d.
LEVIN, J. (separate opinion). I agree with the signers of the opinion of the Court that the plaintiffs failed to meet the threshold requirements of
Although the Court draws back from "formally adopt[ing]" the tort of intentional infliction of emotional distress into this state's jurisprudence, recognizing that the question whether it should be adopted need not be decided on these facts, it intimates that the Court is prepared to look favorably on this "modern tort."
The civil justice system is beleaguered with unjustified litigation from both the plaintiff and defendant sides of a lawsuit — nuisance actions commenced by some plaintiffs and stonewall tactics by some insurers and other defendants.
As the judicial body that has the ultimate responsibility to address the problems in the judicial system that make delay, harassment, and unnecessary litigation effective tactics for both an insured and an insurer, we should question whether recognition of still another cause of action — that would increase the burden of litigation and randomly provide a fortuitous amount of compensation in a handful of isolated cases, Friedman v Dozorc, 412 Mich. 1, 57; 312 N.W.2d 585 (1981) (opinion of LEVIN, J.) — is the most efficacious means of addressing the problems which continue to beset us.
I am of the opinion that this Court should
The actual holding in this case, that the Roberts failed to meet the threshold requirements of proof to make out a prima facie claim of intentional infliction of emotional distress, is well supported in the cases. There appears to be general agreement, as expressed in the opinion of the Court, that the "mere failure to pay a contractual obligation, without more, will not amount to outrageous conduct...."
All would agree that unfair claim-settlement practices are contrary to public policy, some might say "outrageous." While this Court does not recognize a cause of action on the facts of the present case, it indicates that in a limited range of circumstances a prima facie showing of outrageous conduct can be made in the insurance context. This suggestion of a cause of action for "intentional and outrageous conduct" is made without boundaries or guidelines for the bench or bar. Nor are the boundaries properly spelled out by references to the Restatement Torts, 2d, § 46, the accompanying commentary, or to "seventy-six pages of annotations that currently accompany § 46...."
The twenty-two illustrations in the commentary accompanying the blackletter of the Restatement Torts, 2d, § 46, are based on the cases that had
Surely this Court has not, and cannot properly, adopt either the blackletter or the commentary accompanying § 46 or the seventy-six pages of annotations.
One might rationalize that unfair claim-settlement practices can have consequences that to some people are as serious as those that might result from abusive language and threats of physical injury or the other conduct described in the twenty-two illustrations in the commentary accompanying the Restatement. But the argument can also be made that the recognition of a tort in the cases described in the twenty-two illustrations does not justify an extension of whatever principle may have been developed in those circumstances to refusals to pay money, however wilful and unjustified. The law frequently finds it necessary to draw lines lest a principle developed in one context be run into the ground in another.
This Court declared in Kewin v Massachusetts Mutual Life Ins Co, 409 Mich. 401, 423; 295 N.W.2d 50 (1980) that, "absent allegation and proof of tortious conduct independent of the breach," exemplary damages are not recoverable for breach of a commercial contract. In so declaring, this Court declined to follow a decision of the California Supreme Court "and to declare the mere bad-faith breach of an insurance indemnity contract an independent and separately actionable tort and to thereby open the door to recovery for mental pain and suffering caused by breach of a commercial contract."
It makes little difference to the insured or an insurer whether mental distress damages are allowed as contract or tort damages. Changing the form of action to one labeled in tort does not, in the same factual context, justify a rule of damages different from that stated in Kewin and Valentine v General American Credit, Inc, 420 Mich. 256; 362 N.W.2d 628 (1984). In Valentine, this Court declared that mental distress damages were not recoverable in an action for breach of an employment contract although the denial of such damages would leave the plaintiff with less than full recovery. We said that the law does not seek to compensate for all losses suffered.
The key question is under what circumstances — not under what label — mental distress damages are collectible.
The opinion of the Court cites four decisions standing for the proposition that the tort theory of intentional infliction of emotional distress has been recognized to permit recovery of mental distress damages separate from the recovery of contractual damages for breach of an insurance policy. Both Eckenrode v Life of America Ins Co, 470 F.2d 1 (CA 7, 1972), and Strader v Union Hall, Inc, 486 F.Supp. 159 (ND Ill, 1980), are federal cases purporting to apply Illinois law.
Subsequent to Eckenrode and Strader, the Illinois
The third case cited in the majority opinion is Amsden v Grinnell Mutual Reinsurance Co, 203 N.W.2d 252 (Iowa, 1972), where the Iowa Supreme Court "recognized" the tort of intentional infliction of emotional distress, but went on to hold that the conduct in the case then before the Court did not even begin to approach "outrage." In the only
Fletcher v Western National Life Ins, 10 Cal.App.3d 376; 89 Cal.Rptr. 78 (1970), the fourth case cited, does indeed recognize this theory of recovery.
The underlying premise of the present controversy is that the defendant insurer unreasonably withheld payment of benefits owing to the plaintiffs. The issue presented by this appeal — unjustified litigation in the insurance context — is a subset of the larger problem of unjustified commencement of actions and unjustified defense.
In Friedman v Dozorc, supra — a countersuit commenced by physicians against lawyers who had previously unsuccessfully brought a malpractice action against them — this Court was asked to modify the common law to provide an expanded tort remedy by eliminating the special injury requirement in actions for malicious prosecution. In declining to do so, this Court said:
I remain of the opinion, expressed at the time Friedman v Dozorc was decided,
If the basis of the plaintiff's claim is the interposition of an unwarranted defense, it might be difficult to confine the scope of the action to a claim by an insured against an insurer. Since the commencement of this action, this Court has adopted a court rule, MCR 2.114(D) and (E),
If that view is sound, then recognition of an action in tort for unjustified litigation may open the door to countersuits in a large number of cases. Physicians turned back in Friedman v Dozorc, might be encouraged to assert a claim of unwarranted or unjustified litigation against a plaintiff who has filed a medical malpractice action, and a plaintiff in such an action might be enabled to respond with a like claim against the physician who, it might be alleged, should have acknowledged the wrongdoing rather than have attempted to cover it up. The lawyers representing the parties might also find themselves subjected to suit. Once this becomes fashionable, I expect a deluge of litigation and attendant increase in the cost of insurance long before this Court is likely to respond to the questions that it has left open by its pronouncement today.
I would favor enlarging the recently adopted court rule to expressly permit the assessment of
Having such a determination made by a judge, in this framework, has a number of advantages over allowing a jury to award damages for emotional distress. First, a strategy for evaluating the propriety of litigation which is administered exclusively by judges is more susceptible of consistent application and careful supervision than a strategy which relies on a group of laymen chosen at random often for one day and one trial. Second, the meritorious question whether a defendant is subject to liability to the plaintiff for breach of contract or otherwise and, if so, the amount of the damages, is tried without the opportunities for confusion and prejudice attendant to allowing the trial at the same time of both the meritorious question and the separate question whether the defendant (or, indeed, the plaintiff) acted outrageously in defending (or commencing) the action. Third, limiting recovery to actual pecuniary loss,
Such an enlargement of the court rule, and enforcement of the court rule, would go a long way towards addressing the problem that, in a few states, has been addressed by the recognition and application in the insurance context of the so-called tort of outrage.
"Personal protection insurance benefits are payable for the following:
* * *
(b) Work loss consisting of loss of income from work an injured person would have performed during the first 3 years after the date of the accident if he had not been injured and expenses not exceeding $20.00 per day, reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he had not been injured, an injured person would have performed during the first 3 years after the date of the accident, not for income but for the benefit of himself or of his dependent."
"The Court: As you've indicated, counsel, this matter has been considered by the Court previously, and nothing has happened to change my mind. I found then and find again that the tort of intentional infliction of mental distress was well pled and the Plaintiff may proceed with his proofs. Motion for summary judgment is denied."
We express no opinion at this time whether existing legislative remedies should similarly preclude recognition of the tort of intentional infliction of emotional distress in the insurance context.
Letter of January 8, 1980
"Dear Mr. Bankson:
"This is to acknowledge receipt of your letters of November 19, 1979 and December 13, 1979.
"Under `Description of Services' in your affidavit, we would consider only two [sic] and from the doctor and would need mileage verification in support. Under the medical portion of the No-Fault law, we would consider the other items under "Description of Services" in the affidavit only if verified by the doctor. These listed items do not come under the work loss portion of the No-Fault law (see Section #3107, part b). They come under Section #3107 part a.
Although the letter is not a model of clarity, inasmuch as the claim for replacement services (under MCL 500.3107[b]; MSA 24.13107[b]) was treated by Auto-Owners as a claim for expenses (under MCL 500.3107[a]; MSA 24.13107[a]), the letter may reasonably be construed as a denial of the replacement services claim as submitted.
After plaintiffs received the foregoing letter, there was no further communication with Auto-Owners until this suit was instituted shortly thereafter. Thus, this was unlike the situation where an insurer through ongoing exchanges with the insured has knowledge of the necessity for payment, but adamantly and in bad faith denies liability — facts on which a claim of outrageous conduct might be based. See Eckenrode, supra.
The Alabama Supreme Court, in Vincent v Blue Cross-Blue Shield of Alabama, Inc, 373 So.2d 1054 (Ala, 1979), found the evidence insufficient to support the claim of the insureds for intentional infliction of emotional distress resulting from the insurer's initial disallowance of claims under a preexisting condition exclusion and rude treatment of the insureds. But see also National Security Fire & Casualty Co v Bowen, 447 So.2d 133 (Ala, 1983), n 21 infra, where the insured recovered damages on more egregious facts.
In Davis v First National Bank of Arizona, 124 Ariz.App. 458; 605 P.2d 37 (1979), the Arizona intermediate appellate court concluded that a bank and insurer were not liable for emotional distress alleged to have resulted from attempts to rescind a loan contract, delays in payment of disability benefits, and attempts to restrict coverage of disability benefits.
The Florida Supreme Court quashed the decision of the district court holding that a deceased had a civil action for intentional infliction of emotional distress sufficient to support an action for wrongful death, where the insurance company demanded proof of eligibility and withheld payments of benefits, even though lack of money forced the removal of deceased to a nursing home, the stress of which probably contributed to her death. Metropolitan Life Ins Co v McCarson, 467 So.2d 277 (Fla, 1985).
In Robertson v Travelers Ins Co, 95 Ill.2d 441; 448 N.E.2d 866 (1983), the Illinois Supreme Court held that vexatious delay alone will not support an action for the tort of outrage. And in Tobolt v Allstate Ins Co, 75 Ill.App.3d 57; 393 N.E.2d 1171 (1979), an insurer's refusal to pay proceeds under a homeowner's policy was not outrageous conduct even though the insureds were rendered indigent as a result of the fire loss and were unable to provide the necessities of life for themselves and their son.
An insurer's failure immediately to pay on a fire insurance policy did not even "begin to approach outrageous conduct" where the delay was due to an arson investigation in the Iowa Supreme Court case of Amsden v Grinnell Mutual Reinsurance Co, 203 N.W.2d 252, 255 (Iowa, 1972).
The Minnesota Supreme Court, in Haagenson v National Farmers Union Property & Casualty Co, 277 N.W.2d 648, 652 (Minn, 1979), held, notwithstanding the jury's finding that an insurer's conduct in delaying payment of no-fault benefits was "intentional, malicious and in bad faith," that emotional and punitive damages were not recoverable for bad-faith breach of contract and stated that a malicious motive did not convert a contract action into a tort action.
In the New York case of Riffat v Continental Ins Co, 104 A.D.2d 301; 478 N.Y.S.2d 635 (1984), the intermediate appellate court concluded that an insurer's refusal to pay accidental dismemberment benefits did not state a cause of action in tort; the remedy was an action for breach of contract. Accord Bruno v Home Mutual Ins Co of Binghamton, 91 A.D.2d 1169; 459 N.Y.S.2d 136 (1983); Manolis v International Life Ins Co of Buffalo, 83 A.D.2d 784; 443 N.Y.S.2d 461 (1981).
In Sere v Group Hospitalization, Inc, 443 A.2d 33 (DC App, 1982), cert den 459 U.S. 912 (1982), the court concluded that a directed verdict on the issue of "extreme and outrageous conduct" was proper where the insurer failed to pay because the request for additional information from insured was not honored.
"A, the president of an association of rubbish collectors, summons B to a meeting of the association, and in the presence of an intimidating group of associates tells B that B has been collecting rubbish in territory which the association regards as exclusively allocated to one of its members. A demands that B pay over the proceeds of his rubbish collection, and tells B that if he does not do so the association will beat him up, destroy his truck, and put him out of business. B is badly frightened, and suffers severe emotional distress. A is subject to liability to B for his emotional distress, and if it results in illness, A is also subject to liability to B for his illness."
"A, a creditor, seeking to collect a debt from B, sends B a series of letters in lurid envelopes bearing a picture of lightning about to strike, in which A repeatedly threatens suit without bringing it, reviles B as a deadbeat, a dishonest man, and a criminal, and threatens to garnish his wages, to bother his employer so much that B will be discharged, and to "tie B up tight as a drum" if he does not pay. B suffers severe emotional distress. A is subject to liability to B."
"As a practical joke, A falsely tells B that her husband has been badly injured in an accident, and is in the hospital with both legs broken. B suffers severe emotional distress. A is subject to liability to B for her emotional distress. If it causes nervous shock and resulting illness, A is subject to liability to B for her illness."
"A, a private detective, calls on B and represents himself to be a police officer. He threatens to arrest B on a charge of espionage unless B surrenders letters of a third person which are in her possession. B suffers severe emotional distress and resulting illness. A is subject to liability to B for both."
and see Illustration Number 6:
"A, the principal of a high school, summons B, a schoolgirl, to his office, and abruptly accuses her of immoral conduct with various men. A bullies B for an hour, and threatens her with prison and with public disgrace for herself and her parents unless she confesses. B suffers severe emotional distress, and resulting illness. A is subject to liability to B for both."
"A is invited to a swimming party at an exclusive resort. B gives her a bathing suit which he knows will dissolve in water. It does dissolve while she is swimming, leaving her naked in the presence of men and women whom she has just met. A suffers extreme embarrassment, shame, and humiliation. B is subject to liability to A for her emotional distress."
"A, an eccentric and mentally deficient old maid, has the delusion that a pot of gold is buried in her back yard, and is always digging for it. Knowing this, B buries a pot with other contents in her yard, and when A digs it up causes her to be escorted in triumph to the city hall, where the pot is opened under circumstances of public humiliation to A. A suffers severe emotional disturbance and resulting illness. B is subject to liability for both."
The reporter's notes to Illustration No. 7 — the bullying tactics of creditors — cites the analogous behavior of insurance adjusters in two Oklahoma and one Mississippi case. In National Life & Accident Ins Co v Anderson, 187 Okla. 180; 102 P.2d 141 (1940), an insurance agent's behavior at an insured's home — berating her in uncomplimentary language, and charging that she was not sick — caused physical injury as a result of mental shock and was sufficient to defeat a motion for directed verdict. The judgment for the plaintiff, however, was reversed, and the cause was remanded for a new trial because of erroneous jury instructions. Accord Pacific Mutual Life Ins Co of California v Tetirick, 185 Okla. 37; 89 P.2d 774 (1938). In Continental Casualty Co v Garnett, 173 Miss. 676; 161 So 753 (1935), a jury verdict for wilful and wanton conduct was affirmed where an insurance agent went to the home of an insured and denied a claim for compensation under a health policy and used insulting and abusive language in charging that the insured was presenting a false and fraudulent claim.
Illustration No. 12 is drawn largely from the Georgia case of Interstate Life & Accident Co v Brewer, 56 Ga.App. 599; 193 SE 458 (1937). There the plaintiff recovered damages where an insurance representative, with knowledge of an insured's physical condition, went to her sick room and persisted in forcing a settlement upon her by throwing a handful of coins in her face and yelling that "[y]ou don't need a doctor; you ought to die ...."
"that the application of a common-law rule to a particular set of facts does not turn upon whether those facts can be characterized in the language of the Restatement section corresponding to the common-law rule. Unlike a statute, which expresses a legislative directive for the treatment of future cases, the Restatement seeks primarily to distill the teachings of decided cases and is descriptive. While its drafters may sometimes strive to choose `the better rule' or to predict or shape the development of the law, its influence depends upon its persuasiveness. Even where a particular Restatement section has received specific judicial endorsement, cases where that section is invoked must be decided by reference to the policies and precedents underlying the rule restated. Textual analysis of the Restatement is useful only to the extent that it illuminates these fundamental considerations."
The Illinois courts distinguish the California cases such as Fletcher v Western National Life Ins, 10 Cal.App.3d 376; 89 Cal.Rptr. 78 (1970), on which plaintiffs relied for the theory of intentional infliction of emotional distress, on the basis that California did not have a statutory provision analogous to the Illinois provision which permits an insured to recoup additional costs (e.g., attorney fees) where an insurer's refusal to pay has been vexatious and unreasonable. Tobolt v Allstate Ins Co, 75 Ill.App.3d 71.
The analogous Michigan legislative provision is discussed in n 27.
The California court allowed recovery in tort on two theories: (1) intentional infliction of emotional distress and (2) "tortious interference with a property interest of its insured" — later to become bad-faith breach of contract sounding in tort.
The California Supreme Court, in another leading first-party case, developed an action in tort for bad faith withholding of insurance benefits. In Gruenberg v Aetna Ins Co, 9 Cal.3d 566; 108 Cal.Rptr. 480; 510 P.2d 1032 (1973), the insured was allowed to recover all damages, including for mental distress, caused by the insurer's scheme to deprive the insured of benefits due on a fire insurance policy. The agent encouraged the bringing of criminal charges against the insured by falsely implying that he had a motive to commit arson, and, knowing that the insured would not appear for an insurance examination during the pendency of criminal charges, the insurer relied on the failure to appear as a pretense for denying liability on the policy. This Court in Kewin expressly declined to follow Gruenberg.
The Alabama Supreme Court affirmed a jury verdict on claims of malicious prosecution and intentional infliction of emotional distress in National Security Fire & Casualty Co v Bowen, 447 So.2d 133 (Ala, 1983). The conduct of the private investigators hired by National Security to investigate the fire loss of equipment included flashing their badge, bribing or threatening persons they interrogated to implicate the insured in arson, and physically threatening the insured at gunpoint after forcing him off the road. The court characterized such conduct as "so atrocious and so barbaric ... that no civilized person could be expected to endure the acts committed without suffering mental distress."
In Vernon Fire & Casualty Ins Co v Sharp, 264 Ind. 599; 349 N.E.2d 173 (1976), the Indiana Supreme Court found that the insurer's attempt to exact additional consideration from the plaintiff with regard to a separate lawsuit before performing its obligations under the contract was "intentional and wanton" conduct and affirmed a jury award of punitive damages.
The complaint in Dominguez v Equitable Life Assurance Society, 438 So.2d 58 (Fla App, 1983), aff'd 467 So.2d 281 (Fla, 1985), stated a cause of action for outrageous conduct where the insured alleged that the insurer's agent falsely represented that she had a letter from a doctor saying that the plaintiff was not disabled and that coverage of the policy was no longer in force and attempted to obtain the plaintiff's signature surrendering the policy. In World Ins Co v Wright, 308 So.2d 612 (Fla App, 1975), cert den 322 So.2d 913 (Fla, 1975), the court affirmed a jury award for intentional infliction of emotional distress where an insured's bad-faith conduct included attempts to "buy up" the policy. No additional facts were given. And in Miller v Mutual of Omaha Ins Co, 235 So.2d 33 (Fla App, 1970), cert den 238 So.2d 423 (Fla, 1970), a jury verdict was affirmed, and a judgment notwithstanding the verdict reversed, on a count of intentional infliction of emotional distress where an insurer's salesman went to the plaintiff's home after she became ill and charged that she had taken out the policy with knowledge of prior illness. The agent then physically took the policy from the plaintiff and walked out the door.
In Rounds v Union Bankers Ins Co, 22 Wn.App. 613; 590 P.2d 1286 (1979), the Washington intermediate appellate court affirmed a denial of a motion to dismiss a claim for emotional distress for cancellation of a hospital policy.
A United States district court in Virginia held that allegations that an insurer issued an insurance policy without the intent to perform, and in bad faith refused to pay cancer benefits, stated a cause of action for intentional infliction of emotional distress. Morgan v American Family Life Assurance Co of Columbus, 559 F.Supp. 477 (WD Va, 1983).
The United States Court of Appeals for the Ninth Circuit, applying Oregon law, affirmed a jury's conclusion in Green v State Farm Fire & Casualty Co, 667 F.2d 22 (CA 9, 1982), that the behavior of a State Farm agent was "outrageous" where, after the State Farm adjuster knew that the state police had abandoned the investigation of Green for arson, the adjuster identified himself as a policeman and questioned Green's neighbors about the fire, implying that Green had set it and told Green that he would be charged with arson if he pressed his claim against State Farm.
The decision of the United States district court in Illinois in Strader v Union Hall is discussed in n 3 supra, and the Seventh Circuit's application of Illinois law in Eckenrode v Life of America is discussed in n 4 supra.
In many of the cases where recovery of emotional distress damages against an insurance company was not allowed, the courts, in dicta, indicated that recovery might be allowed in another case. See, for example, Jarvis v Prudential Ins Co of America, 122 N.H. 648; 448 A.2d 407 (1982), n 22 infra, Metropolitan Life Ins Co v McCarson, n 2 supra, and Employers' Fire Ins Co v Love It Ice Cream Co, 64 Or.App. 784; 670 P.2d 160 (1983), stating that an insurer's egregious conduct amounting to outrageous conduct — independent of bad-faith refusal to pay — could give rise to a tort action.
In Cluff v Farmers Ins Exchange, 10 Ariz.App. 560; 460 P.2d 666 (1969), the Arizona intermediate appellate court concluded that an insured failed to state a claim for intentional infliction of emotional distress based on the actions of an insurance adjuster who attempted to "threaten and cajole" the insured to accept a settlement for the wrongful death of her son without the benefit of counsel. The Illinois intermediate appellate court concluded that an insurer's denial of liability under a disability policy, referral of the claim between offices and offer to repurchase the policy in settlement of a disputed claim did not state a cause of action for intentional infliction of emotional distress. Debolt v Mutual of Omaha, n 5 supra. In Jarvis v Prudential Ins Co of America, n 21 supra, an insurance company terminated reimbursement for nursing services in disregard of a provision in a policy indicating that some services were indeed compensable; the New Hampshire Supreme Court concluded, as a matter of law, that this was not "outrageous conduct." And in Farris v United States Fidelity & Guaranty Co, 284 Or. 453; 587 P.2d 1015 (1978), the Oregon Supreme Court concluded that an insurer's refusal to defend its insured under a liability policy, with knowledge that it has no good reason not to perform, did not justify recovery for emotional distress or punitive damages.
Statements in decisions of the Court of Appeals indicating that it has adopted the definition set forth in Restatement Torts, 2d, § 46, providing that a cause of action is made out by proof of "extreme and outrageous conduct [which] intentionally or recklessly causes severe emotional distress to another," do not indicate that such a cause of action could be established on evidence of an insurer's dilatory handling of a claim. This appears on a comparison of the facts in often cited Court of Appeals cases. In Warren v June's Mobile Home Village & Sales, Inc, 66 Mich.App. 386; 239 N.W.2d 380 (1976), the Court of Appeals quoted extensively from both the Restatement of Torts and the accompanying commentary defining the type of situations where liability may result. The Court held that a landlord's actions in verbally harassing the plaintiff in retaliation for her complaints about electric bills, and his attempts to defeat plaintiff's sale of her mobile home, did not constitute the tort of intentional infliction of emotional distress. The Court said, in part, that the defendant may have simply been relying on his legal right to refuse a prospective tenant in the trailer park he owned. The United States Court of Appeals for the Sixth Circuit, applying Michigan law in Ross v Burns, 612 F.2d 271 (CA 6, 1980), looked to the standards of § 46 to determine that a newspaper's publication of photographs of an undercover police officer in a public place, along with his identity, did not amount to "extreme and outrageous conduct." Similarly, in Fry v Ionia Sentinel-Standard, 101 Mich.App. 725; 300 N.W.2d 687 (1980), the Court held that a newspaper report of the accidental death of the plaintiff's husband and that a female body was found with his, did not constitute "outrageous" conduct. Cf. Ledsinger v Burmeister, 114 Mich.App. 12; 318 N.W.2d 558 (1982), where the Court concluded that the plaintiff stated a cause of action for intentional infliction of emotional distress on allegations of racial epithets uttered by a retail merchant while ejecting Ledsinger from his place of business. And in Rosenberg v Rosenberg Bros Special Account, 134 Mich.App. 342; 351 N.W.2d 563 (1984), the Court concluded that a widow's complaint that her deceased husband's brother engaged in a course of extreme and outrageous conduct to inflict severe emotional distress on her for the purpose of forcing her to sell her interest in her deceased husband's business stated a claim upon which relief could be granted.
In often cited Frishett v State Farm Mutual Automobile Ins Co, 3 Mich.App. 688; 43 N.W.2d 612 (1966), lv den 378 Mich. 733 (1966), the plaintiff alleged that agents of an insurance company made false statements, unjustly withheld payment of benefits, and misused private information, and as a result the plaintiff became distressed and suffered emotional upset. The Court of Appeals reversed a summary judgment for the defendant, granted on the basis that Michigan courts do not allow recovery for mental distress unless accompanied by a physical injury, and stated that "the law of Michigan as set forth in Stewart v Rudner [349 Mich. 459; 84 N.W.2d 816 (1957)] and Carter v General Motors Corp [361 Mich. 577; 106 N.W.2d 105 (1960)] is consistent with the principles enunciated in the Restatement of the Law 1948 Supp, Torts § 46 ...." In Stewart v Rudner, this Court affirmed a jury verdict against the defendant doctor for mental distress damages arising out of the breach of a contract to perform a Caesarean section. This Court has said that an exception, allowing the recovery of mental distress damages, to the general limitation on the damages recoverable for breach of contract was made in Stewart because of the "personal nature" of the contract. Kewin v Massachusetts Mutual Life Ins Co, supra, 409 Mich. 415-416. At the same time this Court in Kewin held that insurance contracts are commercial in nature and do not come within the reach of Stewart. In Carter v General Motors, this Court recognized that mental injury may result from emotional stress although there was no physical effect and permitted recovery of workers' compensation benefits under the circumstances. Neither Stewart nor Carter relied on § 46 or the concept of "outrageous conduct," nor did either case involve the dilatory handling of an insurance claim.
"Although there has been confusion regarding a cause of action for intentional infliction of emotional distress, as distinguished from damages for mental anguish incident to an independent tort, and the Michigan Supreme Court has not ruled on this issue, the Michigan Court of Appeals has delineated intentional infliction of emotional distress as a separate cause of action which is not necessarily parasitic to another cause of action as an aggravating element of damages."
On the basis of the standards set forth in the Restatement Torts, 2d, § 46, the Court agreed with the trial judge that the erroneous termination of plaintiff's workers' compensation benefits when he failed to attend vocational rehabilitation and failure to give permission for treatment of plaintiff's back did not present evidence of an intent to cause plaintiff severe emotional distress, nor was there any conduct that could be viewed as "extreme and outrageous." Defendant's motion for directed verdict was properly granted.
The following are hereby defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance:
* * *
"(9) Unfair Claim Settlement Practices.
Committing or performing with such frequency as to indicate a general business practice any of the following.
(a) misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;
(b) failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;
(c) failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;
(d) refusing to pay claims without conducting a reasonable investigation based upon all available information;
(e) failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;
(f) not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;
(g) compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds;
(h) attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application;
(i) attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of the insured;
(j) making claims payments to insureds or beneficiaries not accompanied by statement setting forth the coverage under which the payments are being made;
(k) making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;
(l) delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;
(m) failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;
(n) failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement." An Act Relating to Unfair Methods of Competition and Unfair and Deceptive Acts and Practices in the Business of Insurance, § 4(9), in Ashley, Bad-Faith Actions Liability and Damages, Appendix I, pp 2, 6-7.
The Pennsylvania Supreme Court, in D'Ambrosio v Pennsylvania National Mutual Casualty Ins Co, 494 Pa. 501, 507-509; 431 A.2d 966 (1981), said that the insured may not supplement remedies in the Pennsylvania Unfair Insurance Practice Act by an action to obtain damages for emotional distress.
In Kansas, the legislative provisions authorizing certain penalties, including imposition of costs and attorney fees, against an insurer for lack of good faith were seen as sufficient remedies and as an indication that the legislature did not intend damages for emotional suffering to be recoverable by an insured through a tort action for bad faith. See Spencer v Aetna Life & Casualty Ins Co, 227 Kan. 914, 923-924; 611 P.2d 149 (1980).
The Minnesota Supreme Court, in Haagenson v National Farmers Union Property & Casualty, n 2 supra, denied emotional distress damages, but the insured was entitled to recover the ten percent statutory penalty for delay in payment of no-fault benefits.
In Lawton v Great Southwest Fire Ins Co, 118 N.H. 607, 613-615; 392 A.2d 576 (1978), the availability of legislative remedies militated against the recognition of an independent action in tort for an insurer's wrongful refusal to settle or delay in settling a first-party insurance claim.
The Oregon Supreme Court rejected a claim for emotional distress damages in the third party context saying "[i]t was certainly not intended by the legislature that additional pressure to perform the contract be exerted by allowing the recovery of damages for emotional distress, since the statute provides for civil damages recoverable by the state for that purpose." Farris v United States Fidelity & Guaranty Co, 284 Or. 453, 458; 587 P.2d 1015 (1978).
And the Illinois appellate court said, "[W]here the legislature has provided a remedy on the subject matter we are not only loathe but in addition harbor serious doubts as to the desirability and wisdom of implementing or expanding the legislative remedy by judicial decree." Debolt v Mutual of Omaha, n 5 supra. Accord Smith v Metropolitan Life Ins Co, 550 F.Supp. 896, 899-900 (ND Ill, 1982); Anderson v Mutual of Omaha Ins Co, 594 F.Supp. 726 (SD Ill, 1984).
(a) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue.
(b) Failing to acknowledge promptly or to act reasonably and promptly upon communications with respect to claims arising under insurance policies.
(c) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies.
(d) Refusing to pay claims without conducting a reasonable investigation based upon the available information.
(e) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed.
(f) Failing to attempt in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.
(g) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts due the insureds.
(h) Attempting to settle a claim for less than the amount to which a reasonable person would believe the claimant was entitled, by reference to written or printed advertising material accompanying or made part of an application.
(i) Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured.
(j) Making a claims payment to a policyholder or beneficiary omitting the coverage under which each payment is being made.
(k) Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.
(l) Delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring subsequent submission of formal proof of loss forms, seeking solely the duplication of a verification.
(m) Failing to promptly settle claims where liability has become reasonably clear under 1 portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy.
(n) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement." MCL 500.2026(1)(a)-(n); MSA 24.12026(1)(a)-(n).
"(1) he or she has read the pleading;
"(2) to the best of his or her knowledge, information, and belief formed after reasonable inquiry, the pleading is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and
"(3) the pleading is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
"(E) Sanctions for Violation. If a pleading is signed in violation of this rule, the court, on the motion of a party or on its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, including reasonable attorney fees." MCR 2.114.