Gonzales v. Personal Storage, Inc.

Opinion

In this case we consider the question of whether a self-storage facility which converted approximately $60,000 of a tenant’s personal property is liable for the severe emotional distress the tenant suffered when the tenant learned about the conversion. As we explain below, we find the self-storage facility is liable for the tenant’s emotional distress.

I

Factual Background

Plaintiff and respondent Lucy R. Gonzales is a native of the Philippines and was married for many years to an officer in the United States Navy. As a result of her husband’s travels during the course of his naval career, Gonzales had collected a number of rare and valuable pieces of furniture and personal belongings. Gonzales was also an active member of the local Filipino community and in 1968 she founded the Maria Clara de Pilipinas Sorority. Under her direction the sorority works with high school girls in the

Instead of giving Gonzales another preliminary lien notice and another notice of lien sale, Personal Storage placed an advertisement for an auction in the San Diego Daily Transcript. The advertisement provided Gonzales’s full name, her unit number and a detailed description of the items in her unit. Personal Storage sent Gonzales a copy of the advertisement and a note which stated that she would have to bring her rent current by February 10, 1992, in order to avoid the auction.

According to employees of Personal Storage, on February 4, 1992, a thin woman and an elderly man came to the storage facility and the woman falsely claimed to be Gonzales. The impostor tendered payment of the $336 in rent then due; without asking the woman to produce any identification, Personal Storage employees removed the company’s lock from Gonzales’s unit. The employees watched as the impostor and her companion then loaded Gonzales’s belongings into a U-Haul truck and left the scene.

On February 6, 1992, Personal Storage received a cashier’s check from Gonzales in the amount of $526. On February 7, 1992, Gonzales called Personal Storage to verify receipt of her payment. A Personal Storage employee told her there had been “a mix-up.” The employee then told Gonzales that someone had come to Personal Storage on February 4, paid the outstanding rent and emptied the storage unit.

Gonzales was emotionally devastated by the loss of her belongings. She did not leave her room for a week after hearing the news. She went to her office supply store on February 12 but hid in the back room crying. She left the business that day and never returned. She eventually filed for bankruptcy.

Gonzales stopped participating in community events, and the 1992 debutante ball for the Maria Clara de Pilipinas Sorority was canceled because Gonzales could not function. Gonzales was treated by a therapist from February 1992 to August 1992. The therapist diagnosed Gonzales as suffering from depression which was unresolved when Gonzales stopped treatment in August 1992.

The therapist saw Gonzales again in 1994 and again diagnosed her as suffering from depression. The therapist noted Gonzales continued to experience weight gain, withdrawal from friends, family and activities, sleep disruption, uncontrollable crying and difficulty leaving home.

Discussion

A. Emotional Distress Damages

“Damages for emotional distress have been permitted only where there is some means for assuring the validity of the claim. [Citation.] The case law reveals a diversity of circumstances in which recovery for emotional distress may be had. They are loosely linked in the sense that in each it could be said that a particular form of mental suffering naturally ensued from the acts constituting the invasion of another kind of protected interest. ‘The commonest example ... is probably where the plaintiff suffers personal injuries in addition to mental distress as a result of negligent or intentional misconduct by the defendant.’ [Citation.] Pain and suffering is the natural concomitant of a personal injury. [Citation.] ‘[I]n the case of many torts, such as assault, battery, false imprisonment, and defamation, mental suffering will frequently constitute the principal element of damages.’ [Citations.] Molien [v. Kaiser Foundation Hospitals (1980)] 27 Cal.3d 916 [ 167 Cal.Rptr. 831 , 616 P.2d 813 , 16 A.L.R.4th 518 ], found sufficient assurance of the validity of a claim of emotional distress in the nature of the cause of action for negligent misdiagnosis, predicated as it was upon a false imputation of syphilis, which by statute constitutes slander per se, an intentional tort. [Citation.] In torts involving extreme and outrageous intentional invasions of mental and emotional tranquillity, the outrageous conduct affords the necessary assurance of the validity of the claim. [Citation.] Recovery also has been sanctioned for emotional distress which could be said naturally to ensue from an act which invaded an interest protected by an established tort. (See, Sloane v. Southern Cal. Ry. Co. [(1896)] 111 Cal. 668 [ 44 P. 320 ] [humiliation from wrongful ejection from train]; State Rubbish etc. Assoc. v. Siliznoff [(1952)] 38 Cal.2d 330 [ 240 P.2d 282 ] [intentional infliction of emotional distress]; Crisci v. Security Ins. Co. [(1967)] 66 Cal.2d 425 [ 58 Cal.Rptr. 13 , 426 P.2d 173 ] [physical injuries and psychosis resulting from fall through opening]; see also Acadia, California, Ltd. v. Herbert (1960) 54 Cal.2d 328 , 337 [ 5 Cal.Rptr. 686 , 353 P.2d 294 ] [mental suffering occasioned by fear for safety of family caused by trespass]; Kornoff v. Kingsburg Cotton Oil Co. (1955) 45 Cal.2d 265 , 271 [ 288 P.2d 507 ] [discomfort and annoyance caused by nuisance]; Herzog v. Grosso (1953) 41 Cal.2d 219 , 225 [ 259 P.2d 429 ] [annoyance ensuing from trespass].)” (Merenda v. Superior Court (1992) 3 Cal.App.4th 1 , 8-9 [ 4 Cal.Rptr.2d 87 ].)

“Because in such cases the class of potential plaintiffs could be limitless, resulting in the imposition of liability out of all proportion to the culpability of the defendant, this court has circumscribed the class of bystanders to whom a defendant owes a duty to avoid negligently inflicting emotional distress. These limits are set forth in Thing as follows: ‘In the absence of physical injury or impact to the plaintiff himself, damages for emotional distress should be recoverable only if the plaintiff: (1) is closely related to the injury victim, (2) is present at the scene of the injury-producing event at the time it occurs and is then aware that it is causing injury to the victim and (3) as a result suffers emotional distress beyond that which would be anticipated in a disinterested witness.’ [Citation.]

“In contrast, the label ‘direct victim’ arose to distinguish cases in which damages for serious emotional distress are sought as a result of a breach of duty owed the plaintiff that is ‘assumed by the defendant or imposed on the defendant as a matter of law, or that arises out of a relationship between the two.’ [Citation.] In these cases, the limits set forth in Thing, supra, 48 Cal.3d 644 , have no direct application. [Citations.] Rather, well-settled principles of negligence are invoked to determine whether all elements of a cause of action, including duty, are present in a given case.” (Burgess v. Superior Court, supra, 2 Cal.4th at pp. 1072-1073, fn. omitted.)

As summarized by the court in Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965 , 985 [ 25 Cal.Rptr.2d 550 , 863 P.2d 795 ] (Potter), the

Importantly, emotional distress damages were also apparently permitted as part of a conversion claim in Schroeder v. Auto Driveway Co. (1974) 11 Cal.3d 908 , 921 [ 114 Cal.Rptr. 622 , 523 P.2d 662 ] (Schroeder). In Schroeder the plaintiffs were an elderly couple who had decided to move from Phoenix, Arizona, to Susanville, California. Over the course of seven or eight years, Mrs. Schroeder had accumulated approximately $20,000 in new and secondhand goods which she planned to sell in a store she hoped to open in Susanville. In August 1971 the Schroeders bought a van and loaded Mrs. Schroeder’s merchandise into it. Shortly thereafter the Schroeders contracted with a company which supplied a driver for the van.

On the trip to Susanville, the driver supplied by the defendant took a detour to see the Grand Canyon and in the course of doing so skidded off a mountain highway. The van was destroyed and many of its contents were damaged. The defendant towed the van to Flagstaff and left the contents covered by a polyethleyne sheet. When the contents of the van were eventually recovered by the Schroeders in February 1972, many of the items were missing and much of what they received was broken, wet and mildewed.

The Schroeders sued the company which supplied the driver for breach of contract, fraud and conversion. The jury returned a verdict in favor of Mrs.

On appeal the court found that Mrs. Schroeder had established liability for both fraud and conversion. With respect to her compensatory damages, the court stated: “To the sum of $19,000 for loss or damage to the goods we add the other damages suffered by plaintiff Madeleine Schroeder. Plaintiffs adduced evidence that they purchased the van, totally destroyed in the accident, for $800 and that they had invested approximately $400 in new tires, emergency equipment, and sundry repairs. Plaintiffs also presented expert evidence that Mrs. Schroeder’s circulatory problems were exacerbated by her distress over the accident and her frustration with Driveaway’s response to her inquiries. She was hospitalized twice for angina and high blood pressure, and incurred medical expenses of $1,214.85.

“The foregoing items of damages total $21,414.85. In addition to that figure, Mrs. Schroeder is entitled to compensation for pain, suffering, and emotional distress. Consequently the jury award of $25,000 for compensatory damages falls well within that permitted by the evidence.” (Schroeder, supra, 11 Cal.3d at p. 921, italics added.)

Although we have not been able to locate any California authority other than Schroeder which deals directly with a claim for emotional distress growing out of the conversion of personal property, we note the Restatement Second of Torts section 927, illustration m, page 542, states that where property has been converted: “If the deprivation is the legal cause of harm to the feelings, damages may be allowable for the harm, as when the defendant intentionally deprives the plaintiff of essential household furniture, which humiliates the plaintiff, a result that the defendant should have realized would follow.” (See also Fredeen v. Stride (1974) 269 Or. 369 [ 525 P.2d 166 , 168] [veterinarian’s conversion of plaintiff’s dog supports emotional distress damages].)

The Restatement position is consistent with Civil Code section 3336, which permits the victim of conversion to recover “an amount sufficient to indemnify the party injured for the loss which is the natural, reasonable and proximate result of the wrongful act complained of and which a proper degree of prudence on his part would not have averted.”

In this regard it is also important to recognize that negligent damage to personal property, for which the law generally will not permit recovery of emotional distress damages (see Cooper, supra, 153 Cal.App.3d at pp. 1012-1013), is distinct from the conversion of personal property. “ ‘The foundation for the action of conversion rests neither in the knowledge nor the intent of the defendant. It rests upon the unwarranted interference by defendant with the dominion over the property of the plaintiff from which the injury to the latter results. Therefore, neither good nor bad faith, neither

The act of dominion over the property of another which is necessary for conversion is important to consider here because it will invariably provide the converter with very direct knowledge of the likely consequences of such interference. For instance, where a converter takes possession and disposes of household goods or family heirlooms on the basis of a reasonable but erroneous belief as to title, the converter may legitimately contend that he acted without knowledge as to rightful ownership. However, the converter cannot claim he was unaware of the potential emotional harm his interference would cause. In contrast, the negligent destroyer of personal property—the defendant who fails to properly secure the bulldozer or the warehouseman who leaves paint rags next to a gas burner—has considerably less direct knowledge of the emotional consequences of his conduct. (See Thing v. La Chusa (1989) 48 Cal.3d 644 , 647 [ 257 Cal.Rptr. 865 , 771 P.2d 814 ]; Cooper, supra, 153 Cal.App.3d at p. 1012.) Thus, in the context of a conversion claim there is far less likelihood that allowing recovery for emotional distress damages will create liability which is out of proportion to the nature of the defendant’s act. It follows that when a defendant is guilty of conversion, there is considerably less justification for imposing the limits on emotional distress damages which exist in negligence cases, such as Cooper.

In sum then, we conclude that notwithstanding further developments in the law of negligence, damages for emotional distress growing out of a defendant’s conversion of personal property are recoverable.

B. Trial Court’s Instruction

The only difficulty we have in affirming the jury’s award of emotional distress damages is that no instruction was given which permitted

However, in the particular context of this case, the trial court’s error in including emotional distress damages as an element of the negligence case and failing to allow them on the conversion claim was not prejudicial. (See Soule v. General Motors Corp. (1994) 8 Cal.4th 548 , 574 [ 34 Cal.Rptr.2d 607 , 882 P.2d 298 ].) “Instructional error in a civil case is prejudicial ‘where it seems probable’ that the error ‘prejudicially affected the verdict.’ [Citations.] Of course, that determination depends heavily on the particular nature of the error, including its natural and probable effect on a party’s ability to place his full case before the jury. [<JQ But the analysis cannot stop there. Actual prejudice must be assessed in the context of the individual trial record. . . . Thus, when deciding whether an error of instructional omission was prejudicial, the court must also evaluate (1) the state of the evidence, (2) the effect of other instructions, (3) the effect of counsel’s arguments, and (4) any indications by the jury itself that it was misled.” (Id. at pp. 580-581, fn. omitted.)

Here, the evidence was undisputed that Gonzales’s severe emotional distress was caused by the loss of her treasured personal belongings. Importantly, the trial court found as a matter of law that Personal Storage had converted those belongings and Personal Storage does not dispute that ruling on appeal. The jury in turn found that the conversion, as opposed to the negligence, caused the total loss of the belongings plus additional damages. Given this record we cannot conclude that had the jury been instructed that emotional distress damages were permitted as an element of conversion, rather than negligence, it would have made a smaller emotional distress award. Thus the emotional distress portion of the judgment cannot be disturbed.

C. Attorney Fees

The contract Gonzales signed at the time she rented the storage space contained an attorney fees provision which in part stated: “In the event of any legal action or proceeding between the parties hereto, reasonable attorney’s fees and expenses of the prevailing party in any such action or proceeding may be added to the judgment therein.”

Gonzales concedes that under the particular terms of Personal Storage’s lease, an award of attorney fees is a matter within the sound discretion of the trial court and absent abuse of discretion the determination of the trial court cannot be disturbed. (See Erich v. Granoff (1980) 109 Cal.App.3d 920 , 931 [ 167 Cal.Rptr. 538 ]; Bussey v. Affleck (1990) 225 Cal.App.3d 1162 , 1165 [ 275 Cal.Rptr. 646 ].) A trial court’s exercise of discretion is abused only when its ruling “‘exceeds the bounds of reason, all of the circumstances before it being considered.’ ” (Denham v. Superior Court (1970) 2 Cal.3d 557 , 566 [ 86 Cal.Rptr. 65 , 468 P.2d 193 ].) Nonetheless “ ‘ “[t]he discretion of a trial judge is not a whimsical, uncontrolled power, but a legal discretion, which is subject to the limitations of legal principles governing the subject of its action, and to reversal on appeal where no reasonable basis for the action is shown. [Citation.]” ’ [Citations.] The scope of discretion always resides in the particular law being applied, i.e., in the ‘legal principles governing the subject of [the] action.’” (City of Sacramento v. Drew (1989) 207 Cal.App.3d 1287 , 1297 [ 255 Cal.Rptr. 704 ].)

Here the trial court erred in relying, at least in part, on the fact that under her contingent fee agreement with her counsel Gonzales would not have been liable for any attorney fees if her claim had been unsuccessful. In Wiener v. Van Winkle (1969) 273 Cal.App.2d 774 [ 78 Cal.Rptr. 761 ], a trial court adopted similar reasoning in denying attorney fees to successful plaintiffs who had retained counsel on a contingent fee basis. The plaintiffs had sought the fees on a promissory note which permitted the prevailing party to recover “ ‘such sum as the Court may fix as attorneys’ fees.’ ” (Id. at p. 787.) In reversing the trial court, the Court of Appeal stated: “The trial court found that the Wieners did not incur attorney’s fees and concluded that the Van Winkles therefore had no obligation to pay such fees. This finding is incorrect. The purpose of upholding an attorney’s fees provision in a promissory note is to allow a plaintiff to recover the full amount due him

The reasoning employed by the court in Wiener v. Van Winkle is fully applicable here. Personal Storage’s lease agreement permits recovery of reasonable attorney fees in an action between the parties; the lease does not require that the fees be incurred by the prevailing party. Indeed, an interpretation which bars recovery to parties who have contingent fee agreements would create a great deal of inequity because although a party with a contingent fee agreement would be exposed to the risk of paying fees incurred by an opponent, he would have no opportunity to recover any portion of the fees he would in fact be required to pay if he were successful. Such disparity of treatment is to be avoided in interpreting and applying attorney fees provisions. (See International Industries, Inc. v. Olen (1978) 21 Cal.3d 218 , 224 [ 145 Cal.Rptr. 691 , 577 P.2d 1031 ].)

We note that in denying Gonzales’s request for attorney fees, the trial court appeared to also rely on the fact that in addition to her out-of-pocket losses Gonzales was awarded a substantial sum in tort damages for her emotional suffering. However, unlike attorney fees available under Civil Code section 1717, the attorney fees provision in Personal Storage’s lease agreement is not restricted to contract actions. By its terms it applies to “any legal action.” Agreements which contain such broad language permit the recovery of attorney fees in tort as well as contract actions. (See Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338 , 1340 [ 5 Cal.Rptr.2d 154 ]; Honey Baked Hams, Inc. v. Dickens (1995) 37 Cal.App.4th 421 , 425 [ 43 Cal.Rptr.2d 595 ]; Palmer v. Shawback (1993) 17 Cal.App.4th 296 , 299 [ 21 Cal.Rptr.2d 575 ]; Lerner v. Ward (1993) 13 Cal.App.4th 155 , 160-161 [ 16 Cal.Rptr.2d 486 ].) Because the attorney fee clause in the lease expressly permitted recovery to either party in the event of a tort action, Gonzales cannot be denied recovery of attorney fees solely because she was successful in the tort portions of her lawsuit.

Thus, the order denying Gonzales’s motion for attorney fees is reversed, and the trial court is directed to make an award of reasonable attorney fees to Gonzales, including fees incurred on appeal. In all other respects the judgment is affirmed.

Huffman, J., and Nares, J., concurred.

A petition for a rehearing was denied August 7,1997, and the opinion was modified to read as printed above. The petition of appellant Personal Storage, Inc. for review by the Supreme Court was denied November 12, 1997. Kennard, J., and Chin, J., were of the opinion that the petition should be granted.