## Facts

- Hipolito and Maria Flores entered pre-need funeral and burial contracts contemplating embalming services to be provided through Sam Baca’s funeral home.
- After Hipolito died in July 1989, a daughter arranged with Baca to prepare the body and conduct funeral and burial services.
- Two weeks after burial, an exhumation for autopsy revealed the lower half of Hipolito’s body had not been embalmed.
- Maria and the children sued Baca for contract and tort theories, seeking compensatory and punitive damages based on emotional distress and alleged misconduct in the embalming and burial.
- The trial court dismissed all claims except (1) Maria’s breach of contract claim seeking emotional distress damages and (2) one daughter’s breach of contract claim for monetary damages.
- In the first trial, a jury awarded Maria $500,000 for emotional distress; the court granted a new trial on damages only as to Maria.
- In the second trial, a new jury awarded Maria $100,000 in compensatory damages for emotional distress.
- The children appealed dismissal of their individual claims; Maria appealed the directed verdict for Baca on punitive damages; Baca cross-appealed challenging liability submission, evidentiary rulings, and jury instructions on the level of distress required.

## Issues

1. Whether emotional distress damages are recoverable for breach of a funeral and burial services contract.
2. Whether the decedent’s children, as non-signatories, may sue as intended third-party beneficiaries for severe emotional distress caused by breach of the funeral contract.
3. Whether punitive damages may be submitted to the factfinder in a funeral-contract case when evidence permits a finding of willful, reckless, or knowing disregard in performance.
4. Whether alleged instructional and evidentiary errors required reversal of Maria’s compensatory award.

## Decision

- The court affirmed the compensatory judgment for Maria on her breach of contract claim for emotional distress.
- The court reversed the directed verdict for Baca on punitive damages and remanded for further proceedings on punitive damages.
- The court remanded the children’s claims for compensatory and punitive damages, holding they could proceed as intended third-party beneficiaries if they proved severe emotional distress and other required elements.
- The court rejected Baca’s challenges that would have barred submission of Maria’s contract claim to the jury and found no reversible error in the rulings supporting the compensatory award.

## Legal Principles

- Emotional distress damages may be recovered in contract when the subject matter is such that mental tranquility is a central, foreseeable object of the agreement, including funeral and burial services.
- In funeral-services contracts, close family members are generally intended beneficiaries; lack of signature or privity does not bar their contract-based claims where the contract’s purpose includes protecting the family’s emotional interests.
- Emotional distress recoverable in this setting must be serious (often framed as “severe”) and must be a foreseeable consequence of the breach.
- Punitive damages may be available in connection with a contract breach when the defendant’s conduct could be found willful, reckless, or in conscious disregard of the rights and emotional interests at stake; a directed verdict is improper if evidence would allow such a finding.

## Conclusion

The court treated funeral and burial contracts as a category where emotional well-being is a foreseeable contractual interest, upheld a spouse’s emotional-distress award for defective embalming, allowed children to pursue claims as intended beneficiaries upon proof of severe distress, and required renewed consideration of punitive damages based on the defendant’s state of mind.


Flores v. Baca, 871 P.2d 962 (N.M. 1994)