Spring 2007-16 Compensation for mental suffering available in breach of contract suit

Number 67
Spring 2007

Compensation for mental suffering available in breach of contract suit

Puerto Rico law allows a plaintiff to seek compensation for mental anguish resulting from a breach of contract. Pion Cordero v. Disc Makers, 2007 U.S. Dist. LEXIS 22596.

Rafael Pion Cordero sued Disc Makers and Seko Worldwide for damages resulting from the late delivery of thousands of DVDs. The merchandise was supposed to have arrived in early December, 2004. Its late arrival made them unavailable for timely distribution. Disc Makers was the manufacturer of the DVDs. Seko was the freight transportation and logistics provider.

In his lawsuit Pion not only requested compensation for economic losses, but also for mental anguish, and for injuries resulting from loss of commercial contacts and professional prestige. Disc claimed that the causes of action other than for economic losses should be dismissed. In support of its position it pointed out that the same were not available under New Jersey law, which was to govern the case, and in the alternative, that Puerto Rico law did not provide the remedy either. The court did not agree.

In Green Giant Co. v. Superior Court, 104 D.P.R. 489 (1975), the Supreme Court of Puerto Rico adopted what is known as the “dominant or significant contacts” test for contract actions. According to the Restatement (Second) of Conflicts of Laws (1971), the contacts to be taken into account in making the determination include:

• place of contracting,
• place of negotiation of the contract,
• place of performance,
• location of the subject matter of the contract, and
• domicile, residence, nationality, place of incorporation and place of business of the parties.

Disc’s manufacturing plant and main office were located in New Jersey, and Pion’s in Puerto Rico. No evidence as to the other criteria was available. As a result the judge was unable to determine that New Jersey law was applicable.

The District Court also ruled that under Puerto Rico law damages in a contract action consist of those that are reasonably foreseeable at the time the parties signed the contract. These include moral damages. “[G]enerally under the substantive law of Puerto Rico consequential damages, including for mental suffering, are available in breach of contract situations if they were foreseeable at the time the contract was formed. The Court simply cannot say that damages for mental suffering may not be recovered as a matter of law, as Disc advances.”

© 2007 Goldman Antonetti & Cordóva, LLC