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Can a Corporation or LLC Suffer Emotional Distress under Georgia Law?

| Apr 30, 2018 | Uncategorized |

The answer, perhaps unsurprisingly, is “no.” What is surprising is that the law in Georgia was unsettled until October 2017. In Osprey Cove Real Estate, LLC v. Towerview Construction, LLC, 2017 WL 4856319, *3, ___ S.E.2d ___ (Ga. Ct. App., October 27, 2017), as a matter of first impression, the Georgia Court of Appeals adopted what appears to be the majority view that “business entities […] cannot recover on claims of intentional or negligent infliction of emotional distress as a matter of law because [they] lack the cognizant ability to experience emotions.”

In Osprey Cove, the trial court had denied the defendant’s motion to dismiss the plaintiff’s claim for intentional infliction of emotional distress. Although the opinion from the Court of Appeals does not discuss the trial court’s reasoning, if any, that is presumably because “neither party ha[d] identified any Georgia authority on point, and [its own] research [had] yielded none […].” Id. Thus, on appeal, the Court considered and was persuaded by authority from the Ninth, Tenth, and Eleventh Circuits, as well as one state court opinion out of Iowa. Ultimately, the Court agreed with the Iowa Supreme Court that to permit such a claim would “stretch the bounds of the legal fiction of corporate personhood too far.” Id. (quoting Barreca v. Nickolas, 683 N.W.2d 111 (Iowa 2004)).

The Court’s holding in Osprey Cove is notable for two reasons. First, because it ostensibly settles a previously unsettled question of Georgia law. And second, because it appears to define the outer limits of how far the Court is willing to descend down the slippery slope that is the nature and extent of corporate “personhood.”

Specifically, in deciding Osprey Cove, the Court compared, without explanation, the authority it ultimately favored from other courts to its own opinion in Oglethorpe Power Co. v. Estate of Forrister, 332 Ga. App. 693, 774 S.E.2d 755 (2015). In Oglethopre Power Co., the Court had recently held that, in nuisance cases, “a limited liability company may have a cause of action for ‘discomfort and annoyance’ affecting the use of its property for the purposes intended by its members and those they permit to join them.” Id. at 712. In that case, the Court indulged in an extensive analysis in which it relied heavily upon a United States Supreme Court case that reasoned, at least in part, that the discomfort of the members of a church’s congregation was, in fact, the discomfort of the incorporated church – thereby giving substance to that entity’s claim. See Baltimore & P.R. Co. v. Fifth Baptist Church, 108 U.S. 317, 329-330, 2 S.Ct. 719, 27 L.Ed. 739 (1883). In Osprey Cove, however, the Court undertook no such analysis. Instead, it merely concluded that “‘discomfort and annoyance’ damages are therefore separate from emotional distress.” Id. at *3. In fact, the Court in Osprey Cove specifically declined to decide whether such emotional distress claims “might accrue to individual members of a limited liability company,” thereby avoiding the murky waters of Oglethorpe Power Co. and Baltimore & P.R. altogether. Id. at n.3.

While the law in Georgia may now be settled, litigation of this issue is likely far from over. Given a compelling set of facts, Georgia courts may someday be forced – perhaps with considerable difficulty – to reconcile the disparate treatment under the law of an LLC’s member’s emotional distress and his “discomfort and annoyance.” Until then, however, claims for the former will remain available only to those living, breathing plaintiffs, and not to their corporate-person counterparts.