Michigan Court of Appeals; Docket No. 120495; Unpublished
Judges Michael J. Kelly, Doctoroff, and Neff; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Extra Contractual / Mental Anguish Damages
CASE SUMMARY:
In this unanimous per curiam Opinion, the Court of Appeals affirmed the trial court grant of summary disposition on plaintiff’s claim for emotional distress or mental anguish damages arising from an alleged "bad faith" breach of the no-fault insurance contract.
Plaintiff sought recovery of medical expenses from his no-fault insurance company, Allstate Insurance. Plaintiff was also insured by a group health insurer, Prudential, but that policy had a coordination of benefits provision. Additionally, the group health policy had a "third party liability clause" which generally denied benefits for injuries caused by liable third parties. Prudential's policy would, however, pay claims for such injuries if the insured agreed to reimburse Prudential to the extent of any payments made by the liable third party. The plaintiff refused to sign such a reimbursement agreement; and consequently, Prudential refused to pay plaintiff’s medical expenses. Allstate also refused to pay plaintiff’s claim on the ground that Prudential was primarily liable to plaintiff, pursuant to the coordination of benefits clause. The trial court found Prudential's "third party liability" provision valid and granted summary disposition to Prudential. On appeal, the Prudential claim was dismissed by stipulation of the parties and the "Court of Appeals specifically stated its decision would not address the issues pertaining to Prudential.
The remaining issue on appeal concerned whether Allstate was liable for "mental anguish or emotional distress" damages based upon its alleged bad faith denial of plaintiff’s claim for benefits. The trial court had concluded that Allstate was secondarily liable for any excess above Prudential's policy and had acted properly in denying plaintiff’s claim. The Court of Appeals, while not directly addressing this issue, did rule that the trial court was correct in dismissing plaintiff’s claim for mental anguish or emotional distress. The court held that an allegation of a bad faith breach of an insurance contract does not support recovery of damages for mental distress in Michigan. Although some panels of the Court have identified an exception to the general rule against recovery for emotional distress in contract actions, these cases hold that such damages must be recoverable for tortious conduct existing independent of the breach of contract. Such a claim requires allegations of extreme and outrageous conduct, combined with intent or recklessness, causation, and severe emotional distress. Roberts v Auto Owners Insurance Company, 422 Mich 594 (1985).
In this case, plaintiff alleged that Allstate had acted in bad faith in denying him benefits and that it had intentionally humiliated him by its outrageous conduct. The court held that such allegations are insufficient to state a claim for emotional distress damages in an action for breach of a commercial contract Therefore, summary disposition for Allstate was appropriate on the bad faith claim.
The Court of Appeals also held that the trial court did not err in failing to award plaintiff’s counsel an attorney fee, since the trial court found that Allstate had acted properly in denying plaintiff’s claim for all of his expenses. The benefits, therefore, were not overdue under the statute.
