Anderson v. Continental Ins. Co
In Anderson v. Continental Ins. Co., 85 Wis. 2d 675, 694, 271 N.W.2d 368 (1978), the court addressed the recovery of damages for emotional distress for an insurer's bad faith refusal to honor a claim of an insured.
After recognizing a cause of action for this intentional tort, the court declined to decide whether damages for emotional distress were allowable under the particular pleadings before it, since that had not been the focus of the appeal. Id.
However, the court found it appropriate to set forth "some generalities in respect to damages for mental distress." Id.
The court first described the three existing categories of actions in which damages for emotional distress were compensable: negligent torts, where mental distress was, at that time, compensable only when there was an accompanying or resulting physical injury; intentional torts, where, the court said, "substantial other damages in addition to damages for emotional distress are required"; and the specific intentional tort of intentional infliction of emotional distress, where no other damages need be proved, but the elements of the tort impose additional limitations. Anderson, 85 Wis. 2d at 694-695.
The court in Anderson decided that the newly recognized tort of an insurer's bad faith fell within the second category, since the insurer's intent to cause emotional harm need not be shown; only knowledge of or reckless disregard of the lack of a reasonable basis for denying or refusing to honor or negotiate an insured's claim need be shown. 85 Wis. 2d at 695.
The court concluded that to recover for emotional distress in a cause of action for bad faith against an insurer (in the absence of pleading and proof that there was intentional infliction of emotional distress), "the plaintiff must plead and prove substantial other damages aside and apart from the emotional distress itself and the damages occasioned by the simple breach of the contract." 85 Wis. 2d at 695-696.
The court also imposed the requirement that the emotional distress be severe. 85 Wis. 2d at 696.