Hall v. Citizens Insurance Co. of America ( 1985 )

Per Curiam.

Defendants appeal as of right from a judgment entered on a jury award (No. 75597) and from an order granting plaintiff costs, including attorney fees, pursuant to GCR 1963, 316.7 (No. 75792).

Plaintiff was insured by defendant Citizens through defendant insurance agencies. ¹ In 1973 an accident occurred involving a person insured by Citizens and an automobile owned by one Patricia Hall, not the plaintiff herein. As a result of a series of mistakes on the part of defendants and Citizens’ attorney, Shaker Brackett, Citizens erroneously pursued a subrogation claim against plaintiff herein. Despite plaintiff’s numerous attempts to convince Citizens and Attorney Brackett that she had not been involved in the 1973 accident, a subrogation lawsuit was commenced which resulted in a default judgment in 1979. One of plaintiff’s paychecks was garnisheed before the matter was straightened out.²

Plaintiff brought the present action against Attorney Brackett and defendants herein.³ A mediation panel entered awards of $27,500 against Brackett and $27,500 against the remaining defendants. The awards were accepted by plaintiff and Brackett,⁴ but rejected by defendants herein. Following trial, the jury returned a special verdict:

"We, the jury, find in favor of the plaintiff, Patricia Hall, against the defendants, Conklin-Palmer-Blanchard Insurance Agency, Conklin-Palmer Insurance Agency, Spencer J. Palmer, Jack R. Blanchard and Richard Goglewski [sic] and assess her damages at $5,000.

"We, the jury, find in favor of the plaintiff, Patricia Hall, against Citizens Insurance Company of America and assess her damages as follows:

"a) Breach of Contract: No —; Yes $5000

"b) Malicious Prosecution: No —; Yes $2000

"c) Intentional Infliction of

Emotional Distress: No —; Yes $3500

"d) Invasion of Privacy: No —; Yes $3500

"e) Defamation: No —; Yes $1500

"0 Exemplary Damages: No —; Yes $9000”

Defendants’ motion for directed verdict, which had been held in abeyance, was subsequently denied. Plaintiff was subsequently granted costs, including attorney fees, pursuant to GCR 1963, 316.7. Defendants filed separate appeals from the judgment and from the order awarding costs, and the matters were consolidated._

I

Defendants first challenge the trial court’s denial of their motion for a directed verdict. In reviewing this issue, we must view the evidence in a light most favorable to plaintiff and determine whether a prima facie case was established. If there were material issues of fact upon which reasonable minds might differ, they were properly submitted to the jury. Taylor v Wyeth Laboratories, Inc, 139 Mich App 389; 362 NW2d 293 (1984). We address this issue with regard to each of the theories presented to the jury. The breach of contract claim applies to all defendants; the remaining counts apply only to defendant Citizens.

Breach of Contract. The jury awarded damages for breach of contract in the amounts of $5,000 against Citizens and $5,000 against defendant agencies. Defendants concede on appeal that there was evidence of a breach, but argue that a directed verdict should have been granted because there was no evidence of legally cognizable damages. Defendants contend that the jury’s verdict improperly included mental anguish and related damages, which they assert are not recoverable for breach of a commercial contract under Kewin v Massachusetts Mutual Life Ins Co, 409 Mich 401; 295 NW2d 50 (1980), reh den 409 Mich 1116 (1980).

It is true that under Kewin, supra, damages for mental distress are not generally recoverable in a breach of contract action absent evidence that they were within the contemplation of the parties at the time the contract was made. Although the instructions in this case can be read as permitting recovery of mental anguish and related damages on the breach of contract claim, defense counsel did not object to the instructions or request any special instruction precluding the award of such damages on the breach of contract theory. Defendants cannot now claim that the jury was improperly permitted to award such damages.

Malicious Prosecution. The jury awarded $2,000 on this count. The elements of the tort of malicious prosecution are (1) the present defendant instituted a prior legal action against the present plaintiff, (2) the prior action was terminated in favor of plaintiff, (3) defendant lacked probable cause to bring the prior action, (4) defendant acted maliciously in bringing the prior action, and (5) plaintiff suffered special injury. Friedman v Dozorc, 412 Mich 1; 312 NW2d 585 (1981); Pauley v Hall, 124 Mich App 255, 260-261; 335 NW2d 197 (1983), lv den 418 Mich 870 (1983).

We find that plaintiff presented sufficient proof on each of the elements of malicious prosecution to avoid a directed verdict as to this count. Citizens concedes the existence of the first two elements. With regard to the remaining elements, there was clearly sufficient evidence that Citizens lacked probable cause to proceed against plaintiff, especially in light of plaintiff’s several communications to Citizens and Attorney Brackett that she had not been involved in the accident.⁵ As to the malice element, we find that the evidence establishing a lack of probable cause also supports a reasonable inference that Citizens acted in reckless disregard of plaintiffs rights in bringing the prior action. Finally, we believe the garnishment action brought by Citizens against the plaintiff is sufficient to establish special injury in this case. We conclude that plaintiff presented a prima facie case of malicious prosecution.

Intentional Infliction of Mental Distress. The jury awarded $3,500 on this cause of action. This Court has adopted the definition found in 1 Restatement Torts, 2d, § 46, pp 71-72, which provides that the cause of action is made out by proof of "extreme and outrageous conduct [which] intentionally or recklessly causes severe emotional distress to another”. The theory refers to conduct which is " 'so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community’ ”. Warren v June’s Mobile Home Village & Sales, Inc, 66 Mich App 386, 391; 239 NW2d 380 (1976), quoting 1 Restatement Torts, 2d, § 46, Comment d, p 73. See also Rosenberg v Rosenberg Bros Special Account, 134 Mich App 342; 351 NW2d 563 (1984), and Swenson-Davis v Martel, 135 Mich App 632; 354 NW2d 288 (1984).

We agree with Citizens that plaintiff failed to establish a prima facie case of intentional infliction of mental distress. Viewing the evidence in a light most favorable to plaintiff, we do not believe that a reasonable factfinder could conclude that Citizens’ conduct met the standard described above. The trial court erred in denying the motion for a directed verdict as to this count.

Invasion of Privacy. The jury returned a verdict of $3,500 on this count. This tort was described in Lewis v Dayton-Hudson Corp, 128 Mich App 165, 168; 339 NW2d 857 (1983):

"The tort of invasion of privacy has been divided into four separate types of claims. See Prosser, Torts (4th ed), § 117, p 804. The four are: (1) intrusion upon plaintiffs seclusion or solitude, or into his private affairs; (2) public disclosure of embarrassing private facts about the plaintiff; (3) publicity which places the plaintiff in a false light in the public eye; and, (4) appropriation, for the defendant’s advantage, of the plaintiff’s name or likeness. Beaumont v Brown, 401 Mich 80, 95; 257 NW2d 522 (1977).”

According to the instructions given by the trial court, the present case involves only the first type of claim, intrusion upon plaintiffs seclusion. In order to maintain an action for intrusion, plaintiff must prove that there was:

"(1) an intrusion by defendant; (2) into a matter which plaintiff has a right to keep private; (3) by the use of a method which is objectionable to the reasonable person.” Lewis, supra, p 169, citing Earp v Detroit, 16 Mich App 271, 276-277; 167 NW2d 841 (1969).

This type of claim is analogous to trespass, except that it is unnecessary to show physical invasion onto a person’s property. Lewis, supra, p 168. See also Beaumont v Brown, 65 Mich App 455; 237 NW2d 501 (1975), rev’d on other grounds 401 Mich 80; 257 NW2d 522 (1977).

This Court agrees with Citizens that plaintiff failed to establish a prima facie case of this type of invasion of privacy. No secret or private matter was discovered by Citizens. We conclude that the elements of the intrusion form of invasion of privacy were not shown and that the trial court erred in denying the motion for a directed verdict as to this count.

Defamation. The jury returned a verdict of $1,-500 on this claim. The elements of defamation have been stated as follows:

"(a) a false and defamatory statement concerning plaintiff; (b) an unprivileged publication to a third party; (c) fault amounting at least to negligence on the part of the publisher; and (d) either actionability of the statement irrespective of special harm (defamation per se) or the existence of special harm caused by the publication (defamation per quod). Restatement Torts (2d), § 558.” Postill v Booth Newspapers, Inc, 118 Mich App 608, 618; 325 NW2d 511 (1982), lv den 417 Mich 1050 (1983).

Citizens concedes on appeal that plaintiff established all the elements of this tort except the existence of "special harm”. Although the terms "special harm” or "special injury” have different meanings in different contexts, we believe that, in Michigan’s law of defamation, the terms merely refer to actual harm resulting from the defamatory statement. Actual harm includes not only out-of-pocket losses, but also damages for mental and emotional suffering. See Peisner v The Detroit Free Press, Inc, 421 Mich 125; 364 NW2d 600 (1984); 3 Restatement Torts, 2d, Comments to §§620, 621, pp 316-321; MCL 600.2911; MSA 27A.2911. We find that plaintiff in the instant case presented sufficient evidence of actual damages to warrant submission of the defamation claim to the jury.

Exemplary Damages. The jury awarded $9,000 in exemplary damages. Citizens now challenges the award, contending that its effect was to grant a double recovery for plaintiff’s mental distress damages.

The form of the jury verdict makes it impossible to determine which of the substantive tort theories formed the basis of the jury’s award of exemplary damages. Defense counsel did not object to the verdict form or to the instructions on exemplary damages, and, in fact, the exemplary damages instruction was drafted and expressly approved by defense counsel. Citizens cannot now be heard to complain that the instruction unfairly permitted double compensation for plaintiffs mental distress damages. Citizens’ failure to object has waived this issue.

II

Citizens next argues that the trial judge erred in denying its motion to set off against the judgment a portion of the amount paid to plaintiff in settlement of her claim against Attorney Brackett. Citizens relies on MCL 600.2925d(b); MSA 27A.2925(4)(b), which states:

"When a release or a covenant not to sue or not to enforce judgment is given in good faith to 1 of 2 or more persons liable in tort for the same injury or the same wrongful death:

"(b) It reduces the claim against the other tort-feasors to the extent of any amount stipulated by the release or the covenant or to the extent of the amount of the consideration paid for it, whichever amount is the greater.”

Citizens concedes that there can be no setoff against the breach of contract damages⁶ but argues that the tort damages must be set off by plaintiff’s settlement with Attorney Brackett. We agree in part.

The statute plainly applies where a release is obtained by "1 of 2 or more persons liable in tort for the same injury”. The trial court found the statute inapplicable because Citizens and Brackett were not joint tortfeasors and because Citizens’ liability was, at least in part, vicarious liability for the acts of its agents. We find, however, nothing in the plain language of the statute which would limit its application to joint tortfeasors. Plaintiff’s allegations of tort applied to both Citizens and Attorney Brackett; there were no separate or severable claims against Brackett. Furthermore, we do not believe the setoff provided in § 2925d(b) is rendered inapplicable merely because a portion of Citizens’ liability may have been based on vicarious liability for the acts of Attorney Brackett. See Piper Aircraft Corp v Dumon, 421 Mich 445; 364 NW2d 647 (1984).

Plaintiff asserts that, in any event, the $9,000 exemplary damages award is not subject to setoff because it was based solely upon the specific conduct of Citizens. We agree. Although plaintiff’s theory against Citizens was based both on Citizens’ own wrongful conduct and on its vicarious liability for the acts of its agents, the exemplary damages instruction stated:

"I charge you that you are entitled to award exemplary damages to Patricia Hall, if you find that the defendant Citizens Insurance Company’s conduct was malicious or so reckless and wanton as to demonstrate a reckless disregard of the plaintiffs rights.

"Exemplary damages are additional compensation to the plaintiff for humiliation, sense of outrage and indignity resulting from the defendant’s action and not as punishment of the defendant.” (Emphasis added.)

In view of this instruction, we conclude that the exemplary damages award was based solely on Citizens’ own wrongful conduct. Since Attorney Brackett was not liable in tort for the injury underlying the exemplary damages award, the setoff provided by § 2925d(b) is inapplicable. We conclude that defendant Citizens is entitled to a setoff against the judgment except as to the breach of contract award and the exemplary damages award.

Ill

Defendants finally challenge the trial court’s award of costs, including attorney fees, under GCR 316.7. The court rule provides in pertinent part:

"7. Effect of Mediation.

"(a) If all the parties accept the panel’s evaluation, judgment will be entered in that amount, which includes all fees, costs, and interest to the date of judgment.

"(b) If any party rejects the panel’s evaluation, the case proceeds to trial in the normal fashion.

"(2) If the plaintiff accepts the evaluation but the defendant rejects it and the case proceeds to trial, the defendant must obtain a verdict in an amount which, when interest on the amount and assessable costs from the date of filing of the complaint to the date of the mediation evaluation are added, is more than 10 percent below the panel’s evaluation or pay actual costs to the plaintiff.”

"Actual costs” are defined in GCR 1963, 316.8 to include reasonable attorney fees.

Defendants contend that subrule 316.7(b)(2) applies to their net position after the setoff. We do not agree. Since the rule refers to the amount of the verdict, we believe that post-trial reductions pursuant to statute, which are made by the trial judge,⁷ are not to be considered under GCR 1963, 316.7(b)(2).

We have found that the trial judge erred in failing to direct a verdict as to the intentional infliction of mental distress and invasion of privacy counts. The awards on those counts are vacated, thus reducing the total amount of the verdict by $7,000. The case is remanded to the trial judge to determine whether, in view of the reduction of the verdict on appeal, plaintiff is entitled to actual costs pursuant to GCR 1963, 316.7.

Affirmed in part, reversed in part and remanded for entry of judgment in accordance with this opinion.

1 Plaintiff alleged that she was insured through Conklin-PalmerBlanchard Insurance Agency or, in the alternative, by ConklinPalmer Agency. The individual defendants are partners in the agencies. The term "agencies” as used in this opinion refers collectively to the insurance agencies and the individual defendants.

2 The garnisheed wages were ultimately returned to plaintiff.

3 The complaint alleged the following:

Count I, breach of contract against Citizens and the agencies. ,

The remaining counts were against Citizens and Attorney Brackett:

Count II, abuse of process (later amended to malicious prosecution);

Count III, intentional infliction of emotional distress;

Count IV, defamation;

Count V, invasion of privacy.

Plaintiff sought consequential and exemplary damages on all counts.

4 Judgment was entered in favor of plaintiff and against Attorney Brackett in the amount of the mediation award.

5 It should be noted that, although the question of probable cause was submitted to the jury in this case, where, as here, the facts are not in dispute, the probable cause element should be decided as a matter of law. See Pauley v Hall, 124 Mich App 255, 265; 335 NW2d 197 (1983), lv den 418 Mich 870 (1983).

6 This is apparent because the statute concerns only persons "liable in tort”. Furthermore, no breach of contract claim was alleged against Attorney Brackett.

7 See Brewer v Payless Stations, Inc, 412 Mich 673, 679; 316 NW2d 702 (1982).