Tacket v. General Motors Corp., Delco Remy Division
1993 WL 319547, 830 F. Supp. 468, 1993 U.S. Dist. LEXIS 11570 (1993)
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Rule of Law:
Under Indiana law, damages for emotional distress are not recoverable for a breach of an employment contract, even if the breach is intentional, because an employment contract is not the type of contract for which serious emotional disturbance is a particularly likely result of a breach.
Facts:
- David Tacket was employed by General Motors (GM) for approximately seventeen years under a written, month-to-month employment contract.
- In 1985, GM suspected Tacket of a conflict of interest, suspended him, and, although he was returned to work, never communicated that he was cleared of wrongdoing.
- As a result of the suspension and its impact on his reputation, Tacket filed a defamation lawsuit against GM in 1985 while still employed.
- Tacket alleged that in retaliation for the lawsuit, GM subjected him to a continuous pattern of intentional and outrageous conduct.
- On March 6, 1987, shortly after a court ruling in the initial defamation suit, GM terminated Tacket's employment.
- GM's termination letter stated that Tacket was fired because he had lost the trust and confidence of his superiors by making what they believed were groundless and untrue statements.
Procedural Posture:
- David Tacket filed a complaint against his former employer, General Motors Corporation (GM), in federal district court.
- The court previously granted Tacket leave to amend his complaint to plead an independent tort.
- Tacket filed a Second Amended Complaint alleging three counts: (I) Breach of Contract, (II) Breach of Contract seeking emotional distress damages, and (III) Intentional Infliction of Emotional Distress.
- GM filed a motion to dismiss Counts II and III of the Second Amended Complaint for failure to state a claim upon which relief can be granted.
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Issue:
Under Indiana law, may a plaintiff recover damages for emotional distress resulting from an intentional breach of an ordinary employment contract?
Opinions:
Majority - Barker, District Judge
No, a plaintiff may not recover damages for emotional distress resulting from an intentional breach of an ordinary employment contract. Indiana law generally excludes recovery for mental anguish in breach of contract actions. The court, guided by the Restatement (Second) of Contracts § 353, found that an exception exists only when the breach also causes bodily harm or when the contract is of a kind where serious emotional disturbance is a particularly likely result. Examples of such contracts involve carriers, innkeepers, the disposition of dead bodies, or the delivery of messages concerning death. An employment contract is a commercial agreement and does not fall into this narrow category of contracts with inherently personal and emotional stakes. The court reasoned that the focus is on the nature of the contract itself, not the malicious nature of the breach. To allow emotional distress damages here would improperly blur the line between contract and tort law, effectively creating a tort of 'tortious breach of contract,' which Indiana has expressly rejected. This approach maintains the distinction that contract damages are limited to the expectations of the parties, while tort damages are broader.
Analysis:
This decision reinforces the traditional common law boundary between contract and tort remedies, particularly in the employment context. It establishes that in Indiana, a claim for breach of an employment contract will be limited to economic damages, regardless of the employer's motive or the emotional harm caused to the employee. The ruling forces plaintiffs seeking compensation for emotional harm to prove an independent tort, such as Intentional Infliction of Emotional Distress, which has a much higher burden of proof than a contract claim. This precedent limits the potential liability for employers in wrongful termination cases and channels such disputes toward predictable, contract-based remedies rather than more volatile tort-based damages.
