Negligent Infliction of Emotional Distress: The Physical Injury Requirement

Ultimate_Post_wCat__V402326037_“Maggie”, “Mr. Kitty” and “Carmel Cream.”

Are they the stage names of the um, “dancers”, at your local gentleman’s club, peut-etre?

Not sure. But they are the names of the plaintiff’s cats who figure prominently in Myers v. Condominiums of Edelweiss, Inc., 2013 WL 4597973 (N.D.Ill. August 29, 2013). 

Myers examines what happens when a condominium association’s no-pet policy collides with a Federal discrimination statute.

The plaintiff lived in a condominium unit managed by defendant (which has a recorded no-pet policy) for over 15 years.  For that entire time, plaintiff has had multiple cats in her unit: a clear violation of the no-pet rule. 

After several years of litigation in Illinois eviction court (ultimately resolved in plaintiff’s favor), plaintiff sued in Federal court alleging that the defendants (condominium association and individual board members) violated the Fair Housing Act (42 U.S.C. § 3601 et seq.)(FHA) and joined state law claims for intentional and negligent infliction of emotional distress against the defendants.

Held: Defendants’ summary judgment motion on negligent infliction claim granted.

Reasoning:

cats) was reasonable and necessary under the FHA standard. *6.

Intentional Infliction of Emotional Distress

The court denied summary judgment for the defendant on this count.  An intentional infliction plaintiff must allege (1) defendant’s conduct was “extreme and outrageous”; (2) defendant intended to inflict severe emotional distress or knew there was high probability that his conduct would do so; (3) defendant’s conduct actually caused severe emotional distress. *7. 

To determine whether conduct is extreme and outrageous, the court considers  (a) the power and control the defendant has over plaintiff; (b) whether defendant believed his objective was legitimate; and (c) defendant’s awareness of plaintiff’s susceptibility to mental distress.  *7. 

The court found that a jury could find the Association’s conduct extreme and outrageous.  The Association, knowing of plaintiff’s chronic depression (supported by a doctor’s opinion), still sued to evict her and didn’t follow its by-laws by not first calling a meeting to discuss the no-pets infraction. *3, 8.  The Association’s decision to try and force plaintiff from her home instead of “less disruptive” measures raised a question of fact on the extreme and outrageous element.  *8.

Negligent Infliction of Emotional Distress (the ‘Impact Rule’)

Defendant’s motion on plaintiff’s negligent infliction claim was  granted.

A Negligent infliction plaintiff must satisfy the impact rule: a plaintiff can’t recover for emotional distress suffered due to a defendant’s negligence unless the emotional distress is accompanied “by a contemporaneous physical injury or impact to the plaintiff.”  *8. 

Emotional pressure, loss of business, and reputational damage do not constitute sufficient physical injury or impact.  *9.  Since plaintiff didn’t offer any physical harm or injury (beyond mental anguish) evidence, she failed to raise a genuine fact question on whether she suffered physical impact sufficient to survive summary judgment.

Take-aways:

– Whether given conduct is extreme and outrageous for an intentional infliction claim is a highly fact-specific calculus with no bright-line rules;

– For a negligent infliction claim, physical injury is required.  Mental distress, economic and reputational harm don’t suffice;

 

 

N.D.Ill. Examines Res Judicata and Claim-Splitting Doctrines

In Tank v. T-Mobile USA, Inc., 2013 WL 4401375, the Northern District of Illinois examined the reach of the res judicata and claim-splitting doctrines in an employment discrimination suit. 

In 2012, the plaintiff sued T-Mobile, his former employer, for employment discrimination and for violating the Telecommunications Act of 1996, 47 U.S.C. § 201 et seq. (the “TCA”), which outlaws employers accessing “customers’ proprietary network information” (basically, “cell phone records”) without the customer’s consent.  Plaintiff’s TCA count claimed the defendant accessed plaintiff’s cell phone records without his permission while looking into plaintiff’s EEOC claim against the telecom giant. 

This was plaintiff’s second discrimination suit against T-Mobile. In 2011, he filed similar Federal employment discrimination claims (but not a TCA claim) which were defeated on T-Mobile’s summary judgment motion.  After plaintiff filed his second action in 2012, T-Mobile moved to dismiss on the basis of res judicata and improper claim-splitting.  T-Mobile argued that plaintiff’s 2012 case was based on the same operative facts as his 2011 suit (which T-Mobile won on summary judgment) and so the 2012 case was defeated by res judicata’s and claim-splitting.

Held: The Court denied defendant’s motion to dismiss plaintiff’s TCA claim and granted the motion to dismiss plaintiff’s employment discrimination claims.

Reasoning/Rules: 

Res judicata and claim-splitting both aim to prevent repetitive and duplicative litigation; ensuring that all factually-related claims are brought in a single case. 

Res judicata’s elements:

(1) an identity of causes of actions (that is, the second claim is based on the same core of operative facts as the previously litigated “first” claim);

(2) identity of parties or their privies (a fact-specific inquiry decided on case-by-case basis); and

(3) a final judgment on the merits (final judgment = judgment based on the parties’ legal rights as opposed to matters of practice, procedure, jurisdiction or form)  

Claim-Splitting Doctrine

Related to res judicata, claim-splitting differs in only a single sense: while res judicata contemplates a final judgment and separate, sequential lawsuits, claim-splitting applies to two currently pending lawsuits that have not yet reached the final judgment stage.  The claim-splitting doctrine provides the basis for dismissal where two pending lawsuits are duplicative of  one another.    

The ‘Single Core of Operative Facts’ Element 

The Court held that plaintiff’s TCA claims (based on T-Mobile’s (alleged) cell phone snooping) were not barred by res judicata or claim-splitting.  While both the 2011 and 2012 suits pled T-Mobile’s discriminatory conduct, only the 2012 suit alleged T-Mobile violated the TCA’s privacy provisions by scouring plaintiff’s cell phone.  As a result, the Court found that the core of underlying facts giving rise to the 2011 suit (which exclusively involved employment discrimination claims) differed from the 2012 suit (which additionally involved T-Mobile’s violation of the TCA).  *5-6. 

Take-aways: Res judicata and claim-splitting are properly brought as part of a Rule 12(b)(6) motion.  The Tank Court gives content to the same claim/same core of operative facts element of res judicata/claim-splitting and shows a willingness to look into factual differences between two separate lawsuits which look on the same on the surface.

Tank provides ammunition to litigants opposing res judicata or claim-splitting pleadings motions by highlighting what a court should focus on when analyzing the same cause/identity of cause action element of the defenses.

The Contractual ‘Pay-If-Paid’ Clause – How Broad Is Its Scope?

A pay-if-paid (PIP) clause in a construction contract says “I, the general contractor, will only have to pay you, the subcontractor, if the owner – the guy I contract with – pays me.”  Substitute “when” for “if” in the above example and you have a pay-when-paid clause.  Both of these clauses are standard in multi-layered construction projects (ones that involve multiple contractors and contracts). 

Neither term can be used to defend a mechanics’ lien foreclosure suit, though.  Section 21(e) of the Illinois Mechanics’ Lien Act (770 ILCS 60/21(e)) prevents a general contractor from using pay-if-paid or pay-when-paid provisions as a defense to a subcontractor’s mechanics’ lien claim.  But the terms are valid defenses to regular breach of contract claims. 

BMD Contractors, Inc. v. Fidelity and Deposit Company of Maryland, 679 F.3d 643 (7th Cir. 2012), examines whether a third party (i.e., a guarantor or surety) can use a PIP clause in defense of a subcontractor’s payment bond claim.  Under Indiana law, the answer is yes.

Facts:  When an Indiana manufacturer declared bankruptcy, it caused a chain reaction of defaults starting with the prime contract between the owner and the general contractor and cascading down to lower tier subs.

When the entity that hired plaintiff failed to pay, plaintiff sued the subcontractor’s bonding company under a payment bond.  The bonding company moved for summary judgment because of a PIP clause in the sub-subcontract. 

The bonding company said that since the subcontractor – the bonding company’s principal – wasn’t paid by the general contractor, the subcontractor didn’t have to pay the plaintiff.  The District Court agreed and granted summary judgment.  The plaintiff appealed.

Held: District Court affirmed.

Why?:

The Court defined a PIP clause as one that provides a subcontractor will be paid only if the contractor is paid by the owner; with each contractor bearing the risk of loss.  By contrast, a pay-when-paid (PWP) clause denotes a timing issue: the general contractor is obligated to pay the subcontractor – but only when or within a fixed time after the contractor is paid by the owner.  (p. 648). 

The Court, looking to other jurisdictions, held that the term “condition precedent” in a construction contract usually signals a PIP provision.  And viewing the unambiguous language of the operative contracts, the plaintiff’s right to  payment was only triggered if the subcontractor was paid by the general contractor.  (pp. 649-650)

Public Policy and Surety (Guarantor) Liability

The Court found that PIP terms don’t violate Indiana public policy reflected by two statutes that (1) prohibit contractual waivers of payment bond claims and (2) prevent conditioning a contractor’s right to record a lien on first receiving payment from a third person.  Indiana Code 32-28-3-16(b), 18(c). 

The Seventh Circuit held that these statutes didn’t apply to whether a contractual PIP term was a defense to a breach of contract suit.  Based on Indiana’s strong policy favoring freedom of contract, and because no statute outlaws PIP provisions as a breach of contract defense, the PIP term didn’t violate public policy. BMD at 652.

Summary judgment for the bonding company was also proper based on the general rule that a surety’s (the person guaranteeing another’s debt) obligations mirror those of its principal.  A surety can have no greater liability than its principal (the person whose debts are being guaranteed). 

In Indiana, payment bonds and the contracts they secure are construed together.  BMD at 654.  And since the subcontractor didn’t have to pay the plaintiff unless the subcontractor was paid by the general contractor, the bonding company’s obligations weren’t triggered and it didn’t have to pay the plaintiff.

Conclusions

(1) if a contract contains “condition precedent” (to payment) or similar language, this will signal a pay-if-paid clause and it will present a valid defense to a breach of contract suit;

2) lower-tier subcontractors should actively monitor the financial health of  the project so they aren’t caught off-guard by an owner’s or higher-tier contractor’s default.