Summary
In Riggs v Fremont Mutual Ins Co, 85 Mich. App. 203; 270 N.W.2d 654 (1978), this Court held that a contract to insure a dwelling against a fire loss is not a contract of a personal nature, and thus plaintiffs were not entitled to recover exemplary damages when payment was denied based on defendant's belief that plaintiffs had themselves set the fire.
Summary of this case from Liddell v. DaiieOpinion
Docket No. 77-2716.
Decided June 9, 1978.
Terrence R. Thomas, for plaintiffs.
Reber Reber, for defendant.
Before: D.E. HOLBROOK, JR., P.J., and BASHARA and R.M. MAHER, JJ.
Plaintiffs are the owners of a one-story dwelling which was insured by defendant against fire loss. While the policy was in effect, the dwelling was destroyed by fire. Plaintiffs timely filed their proof of loss, but it was rejected since defendant claimed that the fire was incendiary in nature and that one or both of the plaintiffs had set the fire.
Following rejection of their claim, plaintiffs brought suit against the insurer for $18,000 in damages under the policy and for mental pain and anguish suffered as a result of defendant's wrongful failure to pay according to the policy. Defendant raised an affirmative defense of arson.
After a bench trial, the court awarded plaintiffs $15,000 for loss of the house. Also, the court awarded Emily Riggs $6,000 in exemplary damages for personal mental anguish, humiliation, and emotional distress and the court awarded Roger Riggs $2,000 in exemplary damages for mental anguish and "humility" (sic). Defendant appeals as of right.
As noted earlier, defendant argued arson as an affirmative defense. The trial court found that, even assuming the fire was incendiary in nature, defendant failed to prove plaintiffs were the ones who started it. We conclude the trial court's finding is not clearly erroneous. A review of the evidence indicates plaintiffs were at a conference at the time the fire destroyed the dwelling. Defendant failed to prove its affirmative defense of arson by a preponderance of the evidence.
The $15,000 award was within the policy limits and within the conflicting estimates of the parties. We conclude that the trial court's finding as to the amount of compensatory damages was not clearly erroneous. GCR 1963, 517.1.
We reverse, however, the lower court's award of exemplary damages. In Michigan, only exemplary damages which are compensatory in nature are allowed. Such damages are recoverable for humiliation and indignity resulting from an injury which has been maliciously or wantonly inflicted. Ray v Detroit, 67 Mich. App. 702; 242 N.W.2d 494 (1976), lv den, 397 Mich. 828 (1976).
Exemplary damages generally are not recoverable for even intentional breaches of commercial contracts. Caradonna v Thorious, 17 Mich. App. 41, 46; 169 N.W.2d 179 (1969). Those contract cases allowing recovery either involve a contract of a personal nature (for example, breach of promise to marry, breach of promise to deliver a baby by Caesarean section) Isagholian v Carnegie Institute of Detroit, Inc, 51 Mich. App. 220, 222; 214 N.W.2d 864 (1974), lv den, 392 Mich. 763 (1974), or involve some malicious, reckless or negligent conduct. Isagholian, supra, at 222.
A contract to insure against fire loss is an ordinary commercial contract and is not a contract of a personal nature. Further, we find no evidence that defendant's refusal to pay was malicious, reckless or negligent. Insurers have a duty to defend against what they believe to be fraudulent claims. The fact that defendant was not able to prove its affirmative defense of arson does not automatically lead to the conclusion that defendant was in any sense malicious, reckless or negligent. Defendant's belief that the fire was deliberately set was supported by the conclusions of qualified experts who advised defendant and testified at trial.
Since this case involved neither a contract of a personal nature nor malicious, reckless or negligent conduct by the insurer, the court erred by awarding plaintiffs any exemplary damages.
Affirmed in part; reversed in part. No costs; neither party having prevailed in full.