It is well established law in Ohio that, generally, there are no tort damages for breach of contract. Some states across the country have shown trending away from this philosophy and towards tort-based recovery.
Recently, the Supreme Court of Canada created law that provides for aggravated damages arising out breach of contract. In the case Fidler v. Sun Life, the Court approved mental distress damages for a plaintiff whose disability insurance company wrongfully withheld benefits for five years. Previously, Canada’s law was similar to Ohio’s, but the Court acknowledged a shift.
The precedent in Canada was an 1854 case which stated that damages from a breach of contract must be fairly and reasonably arising naturally out of the breach. The Court expanded that definition by reasoning that damages should put the plaintiff in the same position as if the breach had never occured. In that light, damages for mental distress must be considered as the plaintiff would not have encountered that distress had the breach not occurred.
Further, bad faith is not a prerequisite.
How will this effect the law in Ohio? It represents a continuation of a trend that recognizes that a breach of contract encompasses many different types of damage. Parties to contracts (particularly businesses) may wish to keep this in the back of their minds as they conduct risk management.
