Can a person sue for emotional distress as the victim of fraud?

Question

Suppose I am the victim of fraud – e.g., I bought an item on eBay that the seller knew was counterfeit. Would the seller also be liable for damages of the emotional distress caused me by being scammed?

Answer 1

The ruling in Poirier v. Blue Seal at Taft Corner, a Vermont case, cites precedent to the effect that "[b]lack letter law indicates that emotional distress damages are not recoverable for fraud". Then turn the page and they note that courts are not unanimous: "Courts in other jurisdictions are all over the map on the question of whether, and when, emotional distress damages are available in fraud cases". They conclude that since there is nothing Vermont-specific to support emotional distress damages, then no, in Vermont. One of the cases cited is Spooner v. State Farm 709 So.2d 1157 Ala. (1998), which cites another Alabama case and says that "Emotional distress is compensable in a fraud action". It appears that you need to specify a state.

California falls into the "maybe, if you can prove it" category. There are a number of "no you can't" cases. Merenda v. Superior Court 3 Cal. App. 4th 1 held that

damages for emotional distress arising out of acts which invade an interest protected by established tort law are recoverable only if the claimed emotional distress naturally ensues from the acts complained of

so for example if you poison a neighbor's pet dog, emotional distress naturally ensues, but it is harder to see distress being a natural result of being defrauded. That case boiled down to negligence. Smith v. Superior Court, also negligence, repeats the general principle, saying that

the conclusory allegations of the amended complaint reflect no basis for concluding it was reasonably foreseeable their handling of the dissolution would result in emotional injury to plaintiff

Branch v. Homefed Bank No. D012751. Fourth Dist., Div. One. (negligent misrepresentation, adding a bit more wrong-doing) also denied distress damages, saying

damages for emotional distress are ordinarily not recoverable in an action for negligent misrepresentation when the injury other than the emotional distress is only economic

Schroeder v. Auto Driveaway, however, upheld distress damages in a case of fraud (there was evidence of actual coronary damage caused by the act); Murphy v. Allstate Ins. allows (is consistent with, but does not award – summary judgment was overruled) distress damages in a fraud case involving an insurance company fraudulently using workers who were not licensed and competent) – insurance cases seem to be particularly open to distress damages. In the situation you describe, distress damages would at least in principle be available.