Farmers Ins. V.

Henderson

Facts: Henderson had purchased insurance resulting from the operation of his car
with certain limits: Bodily injury of $5,000 for one person, $10,000 per
accident and $5,000 for property. One of Henderson’s employees,
Whitehead, got into an accident with Breesman. Breesman sued
Henderson and there was an opportunity to settle within the limits of the
insurance coverage but the insurance did not wish to settle at that point.
Henderson ended up having to sell the company to pay for liability in
excess of the limit. He sued the Ins company and was awarded a verdict
of $45,000. Farmers is not appealing.

Issue: Is the insurance company obliged to settle within the policy limits and if
so what is the correct measure of the insured’s damages?

Rule: If it is to be considered a breach of contract, to recover for these items

(humiliation, mental pain and suffering) the contract must be of such a
nature that its breach would cause mental suffering for reasons other than
the pecuniary loss.

Holding: No emotional distress damages awarded.

Fogleman v. Peruvian Associates

Ariz 1980

Facts: Fogleman was hired by mining company on a 2 year contract to pay

$1,700 a month plus housing. The company terminated his contract after
6 months. Fogleman sued for wrongful termination of employment
contract and was awarded $14,989.33. He is appealing for general
damages.

Issue: Are consequential damages allowed in a breach of contract action?

Rule: Consequential damages are not allowed in a breach of contract action, and
so stated in conclusion of law number 15.

Browning v. Fies
Ala 1912

Facts: P tendered $5 for the use of a carriage to transport himself and friends
from his house to a wedding, about 3 miles. The carriage was to arrive at
7:30pm. The carriage never arrived and provided no explanation why.
 The wedding party had to ride public cars to the wedding and walk some
distance, the wedding was delayed 45 min.

Issue: Is mental suffering and physical pain a recoverable damage for breach of
contract?

Rule: Damages recoverable for the breach of a contract are measured, not only
by the actual loss sustained that naturally results as the ordinary
consequence of the breach, but extend to consequences which may, under
the circumstances of entering into the contract, be presumed to have been
in the contemplation of both parties as the probable result of a breach.
And, if the special circumstances are communicated, they become an
element of the contract.