Facts
- Sharon Valentine sued her former employer, General American Credit, Inc. (GAC), alleging breach of an employment agreement providing job security (termination only for cause) and intentional infliction of emotional distress.
- She claimed the job-security promise included “peace of mind” and that her discharge caused mental distress.
- Valentine sought contract damages including emotional-distress damages and exemplary damages.
- The trial court granted partial summary judgment dismissing claims for mental-distress and exemplary damages, while allowing the contract claim to proceed.
- The Michigan Court of Appeals affirmed the partial summary judgment.
- The Michigan Supreme Court granted leave to consider only whether these categories of damages were recoverable.
Issues
- Whether an employee may recover mental-distress damages for breach of an employment contract providing job security, even if such distress was foreseeable.
- Whether exemplary damages are available for breach of a commercial contract absent tortious conduct independent of the breach.
Decision
- The Michigan Supreme Court affirmed the dismissal of mental-distress damages.
- The court held that a person discharged in breach of an employment contract may not recover mental-distress damages, even if foreseeable and even if the employee would not be fully compensated without them.
- The court affirmed the dismissal of exemplary damages.
- The court held that exemplary damages are not available in a common-law action for breach of a commercial contract without proof of tortious conduct independent of the breach, and Valentine did not establish such conduct.
Legal Principles
- Breach of an employment contract is treated as a contract claim, not a tort claim; tort-style remedies are not available merely because the breach causes emotional upset.
- Foreseeability of harm under contract-damages doctrine does not, by itself, authorize recovery for emotional disturbance in ordinary commercial contracts.
- Emotional-distress damages are generally unavailable for breach of commercial contracts where the contract’s primary purpose is economic and the loss can be adequately measured in money.
- Exemplary damages are unavailable for breach of a commercial contract absent independent tortious conduct beyond the breach itself.
Conclusion
The court limited remedies for wrongful discharge under a job-security employment contract to traditional contract damages, rejecting mental-distress damages and exemplary damages in the absence of an independent tort.