• Eliminating Duplicate Claims With the Gist of the Action Doctrine
  • December 7, 2016 | Author: Adam M. Sorce
  • Law Firm: Marshall Dennehey Warner Coleman & Goggin, P.C. - King Of Prussia Office
  • Key Points:
    • Claims of negligence and breach of contract against insureds in premises liability and property damages cases are increasing.
    • Where a contract exists and controls the work of the insured, the Gist of the Action Doctrine may eliminate the tort-based claims against the insured.
    Increasingly, insureds in premises liability cases and property damage/subrogation cases are faced with defending complaints and joinder complaints containing claims of negligence and breach of contract. The focus of this article will be applying the Gist of the Action Doctrine to eliminate tort-based claims-primarily those of negligence against insureds.

    Cases that involve some type of contractual agreement, whether it be for janitorial services, cleaning services, snow removal services or the like, may have claims sounding in both negligence and breach of contract. The party bringing the claims often cites alleged violations of the insured’s obligations under the contract and then seek to expand the insured’s alleged duties by making broad claims of negligence stemming from the obligations. This is a common practice in Pennsylvania given that the Pennsylvania Rules of Civil Procedure allow for the pleading of claims in the alternative. See, Pa. R.C.P. 1020(c) (providing that “[c]auses of action... may be pleaded in the alternative.”). The benefit of using the Gist of the Action Doctrine is that it can be pled in preliminary objections in state court or as a motion to dismiss/motion for judgment on the pleadings in federal court. Often, there is no need for a court to look beyond the allegations contained in the complaint to determine whether or not the tort-based claims are barred by the Gist of the Action Doctrine.

    The Gist of the Action Doctrine is designed to maintain the conceptual distinction between breach of contract claims and tort claims. eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d. 10, 14 (Pa.Super. 2002). In its practical application, the doctrine is used to preclude plaintiffs and joining defendants “[f]rom recasting ordinary breach of contract claims into tort claims.” The Pennsylvania Supreme Court expressly adopted the doctrine and described it in the following manner:

    The general governing principal which can be derived from our prior cases is that our Court has consistently regarded the nature of the duty alleged to have been breached, as established by the underlying averments supporting the claim in a Plaintiff’s Complaint, to be the critical determinative factor in determining whether the claim is truly one in tort, or for breach of contract. In this regard, the substance of the allegations comprising a claim in a Plaintiff’s Complaint are of paramount importance, and, thus, the mere labeling by the Plaintiff of a claim as being in tort, e.g., for negligence, is not controlling. If the facts of a particular claim established that the duty breached is one created by the parties by the terms of their contract-i.e., a specific promise to do something that a party would not ordinarily have been obligated to do but for the existence of the contract-then the claim is to be viewed as one for breach of contract. If, however, the facts establish that the claim involves the Defendant’s violation of a broader social duty owed to all individuals, which is imposed by the law of torts and, hence, exists regardless of the contract, then it must be regarded as a tort.

    Bruno v. Erie Ins. Co., 106 A.3d. 48, 68-69 (Pa. 2014) (internal citations omitted).

    In plain English, if your insured would not have been on a construction site or an apartment complex or a retail location but for the terms of the contract expressly agreed to by it, then the Gist of the Action Doctrine may be able to limit your insured’s potential liability under broader tort-based claims. To be sure, the Gist of the Action Doctrine can be used to successfully eliminate claims of negligence and other tort-based claims where the terms of a contract are clear and unequivocal. If a plaintiff or joining defendant argues that there are broader social duties that should have been followed by your insured, you can argue the Gist of the Action Doctrine and show the court that, but for the contract, your insured would not have been on site performing its job duties in the first place. Thus, the duplicative tort-based claim is unnecessary and improper.

    That said, the Gist of the Action Doctrine is not a catch-all for every tort-based claim. A notable exception is fraud in the inducement. See, Sullivan v. Chartwell Inv. Partners, 873 A.2d. 710, 719 (Pa.Super. 2005)(observing that the doctrine “would not necessarily bar a fraud claim stemming from the fraudulent inducement to enter into a contract.”).

    Courts will uphold the specific terms of a contractual agreement involving the insured and are more likely to strike tort-based claims where a written contract exists. There is well-established case law in the Commonwealth that when interpreting a contract, our courts are to give effect to the intent of the contracting parties. See, Hart v. Arnold, 884 A.2d. 316, 332 (Pa.Super. 2005). Moreover, the intent of the parties to a written agreement is to be regarded as being embodied in the writing itself. The whole instrument must be taken together in arriving at contractual intent. Courts do not assume that a contract’s language was chosen carelessly, nor do they assume that the parties were ignorant of the meaning of the language they employed. When writing is clear and unequivocal, its meaning must be determined by its contents alone. Murphy v. Duquesne University of the Holy Ghost, 777 A.2d. 418, 429 (Pa. 2001). This is why it is important to use the Gist of the Action Doctrine at the preliminary objection/motion to dismiss stage. Only where the terms of a contract are ambiguous would parole evidence be introduced. See, Synthes USA Sales, LLC v. Harrison, 83 A.3d. 242, 251 (Pa.Super. 2013).

    The Gist of the Action Doctrine may also be utilized for defendants who are not parties to the applicable contract. For instance, in Sparrow v. Pace/CM, Inc., 22 Pa. D. & C. 5th 515 (C.P. Lack. 2011), the Court of Common Pleas applied the doctrine to dismiss tort-based claims against the defendants who were not parties to the contract at issue.

    While the Gist of the Action Doctrine may not eliminate a complaint or joinder complaint in its entirety against your insured, it can be successfully utilized to eliminate tort-based claims against your insured. The use of the Gist of the Action Doctrine is successful in causing plaintiffs and joining defendants to focus their claims on the actual obligations of the defendants under the applicable contract or relevant agreement and decreases the number of arguments that can be made against your insureds.