470 F.2d 1 (7th Cir. 1972)





Plaintiff , a resident of Pennsylvania, filed this three count diversity complaint to recover damages for severe emotional injury suffered as a result of the deliberate refusal of Life of America Insurance Company (Insurer), of Chicago, to pay her the proceeds of insurer's policy covering the life of her husband. The district court dismissed the suit. Plaintiff has appealed. We reverse.


    Taking the allegations, properly pleaded in Counts 11 and III, as true, the following facts are stated: Defendant's life insurance policy covering plain

INSURANCE CO. tiff's husband issued September 22, 1967. Under the policy Insurer agreed to pay plaintiff $5,000 immediately upon due proof of death from "accidental

causes." On December 17, 1967, insured was an accidental victim of a homicide. Plaintiff met all conditions of the policy and repeatedly demanded payment, but Insurer refused to pay. Decedent left plaintiff with several

children, but no property of value. She had no money, none even for the funeral expenses. Denied payment by Insurer, she was required to borrow money to support her family, while her financial condition worsened. The family was required to live with, and accept charity from, relatives.


Further: . . . Insurer, knowing full well that plaintiff needed the proceeds of the policy to provide necessaries for her children, applied "economic

coercion" in refusing to make payment on the policy, and in “inviting" plaintiff to "compromise" her claim by implying it (Insurer) had a valid defense to the claim.


    The issue before us with respect to Counts 11 and III is whether plaintiff-- beneficiary of her husband's life insurance policy-may on the foregoing "facts"

recover damages for severe mental distress allegedly suffered as a result of Insurer's conduct. Illinois law controls our decision, and, in anticipation that the Illinois Supreme Court would hold as we do, we decide the issue in favor of plaintiff.


We have no doubt, in view of Knierim v. Izzo, 174 N.E.2d 157 (1961), that the Illinois Supreme Court would sustain plaintiffs complaint against Insurer's motion to dismiss.


In Knierim, plaintiff filed a wrongful death action alleging, inter alia, that defendant Izzo threatened her with the murder of her husband, carried out the threat, and thereby proximately caused her severe emotional distress. The trial court dismissed her complaint, but the Illinois Supreme Court reversed and held that plaintiff had stated a cause of action for an intentional causing of severe emotional distress by Izzo's "outrageous conduct."


The court recognized the "new tort" of intentional infliction of severe emotional distress, following similar recognition by an "increasing number of courts," and cited several state decisions. The court rejected reasons given by other courts not recognizing the "new tort." As to the reason that mental disturbance is incapable of financial measurement, the court pointed out that "pain and suffering" and "mental suffering" are elements of damage, respectively, in personal injury and malicious prosecution cases.


As to the reason that mental consequences are too evanescent for the law to deal with, the court noted that psychosomatic medicine had learned much' in the past "thirty years" about the bodily effects of man's emotions, and that symptoms produced by "stronger emotions" are now visible to the professional eye. As to the reason that recognizing the "new tort" would lead

To frivolous claims, the court observed that triers of fact from their own experiences would be able to draw a line between "slight hurts" and "Outrageous conduct. "


    In Knierim the court, inter alia, relied upon State Rubbish Collectors Association v. Siliznoff, 38 Cal.2d 330, 240 P.2d 282 (1952), and Restatement,

Torts S 46 (1948 Supp.). In Siliznoff the California Supreme Court, in an opinion by justice Roger Traynor, recognized the "new tort" for the first time and held that Siliznoff could recover from the cross-defendant Rubbish Collectors Association for mental distress caused by the Association's severe threats to-beat him up, destroy his truck and put him out of business unless Siliznoff offered to pay over certain proceeds to the Association. . . .


We think that the California court in Fletcher, set out correctly the elements of a prima facie case for the tort of intentional infliction of severe emotional distress":


(1) Outrageous conduct by the defendant;

(2) The defendant's intention of causing, or reckless disregard of the probability of causing emotional distress;

(3) The plaintiff's suffering severe or extreme emotional distress; and

(4) Actual and proximate causation of the emotional distress by the defendant's outrageous conduct.


    Here Insurer's alleged bad faith refusal to make payment on the policy, coupled with its deliberate use of "economic coercion" (i.e., by delaying and refusing payment it increased plaintiff's financial distress thereby coercing her to compromise and settle) to force a settlement, clearly rises to the level of "outrageous conduct" to a person of "ordinary sensibilities."


Furthermore, it is common knowledge that one of the most frequent considerations in procuring life insurance is to' ensure the continued economic and mental welfare of the beneficiaries upon the death of the insured. The very risks insured against presuppose that upon the death of the insured the beneficiary might be in difficult circumstances and thus particularly susceptible and vulnerable to high pressure tactics by an economically powerful entity. In the case before us Insurer's alleged high pressure methods (economic coercion) were aimed at the very thing insured against, and we think that the insurance company was on notice that plaintiff would be particularly vulnerable to mental distress by reason of her financial plight.