Brief Fact Summary.
Sharon Valentine (Plaintiff) sought to recover mental distress damages from General American Credit (Defendant) arising out of the alleged breach of an employment contract, claiming that she was entitled to job security and the peace of mind associated with job security.
Synopsis of Rule of Law.
A person discharged in breach of an employment contract may not recover mental distress damages. Exemplary damages may not be awarded in common-law actions for breach of commercial contracts without proof of tortuous conduct existing independent of the breach.
Absent a contractual provision for job security, either the employer or the employee may ordinarily terminate an employment contract at any time for any, or no, reason.View Full Point of Law
In asserting her claim, the Plaintiff relied on the general Hadley v. Baxendale (Hadley) rule that a plaintiff may recover for foreseeable damages. The trial court dismissed the claims for mental distress and exemplary damages, and the Court of Appeals affirmed.
Was the Plaintiff entitled to mental distress damages from the Defendant’s alleged breach of the employment contract?
The general rule is to uniformly deny recovery for mental distress damages, although they are foreseeable within Hadley. The courts instead consider whether a contract has “elements of personality” and whether the “damage suffered upon the breach of the agreement is capable of adequate compensation by reference to the terms of the contract.” The Plaintiff’s monetary loss could be estimated certainty according to the contract terms and the market value of her service, so she could not recover mental distress damages.
The Plaintiff failed to plead the requisite purposeful tortuous conduct on the part of the Defendant, and could not recover exemplary damages?
The primary purpose of forming employment contracts is economic, and not to secure personal interests. Since pecuniary damages can be estimated with reasonable certainty in breach of contract cases, mental distress damages may not be awarded.