Sunday, March 30, 2008

contracts/torts - gist-of-the-action doctrine

Rahemtulla v. Hassam - MD Pa. - March 24, 2008

Courts are extremely cautious about permitting tort recovery based on contractual breaches.

"'While it is true that the mere existence of a contract between parties does not foreclose the possibility of a tort action arising between them, it does not follow that a plaintiff should be allowed to sue in tort for damages arising out of a breach of contract. To hold otherwise would be to blur one reasonably bright line between contract and tort, and hence introduce needless confusion into the judicial process, a step that Pennsylvania’s state and federal courts alike have refused to take.

"[T]he 'gist of the action' doctrine precludes plaintiffs from recasting ordinary breach of contract claims into tort claims, where such tort claims '(1) aris[e] solely from a contract between the parties; (2) when the duties allegedly breached were created and grounded in the contract itself; (3) where the liability stems from a contract; or (4) when the tort claim essentially duplicates a breach of contract claim or the success of which is wholly dependent on the terms of a contract.'"

The conceptual distinction between a breach of contract claim and a tort claim is that the former arises out of “breaches of duties imposed by mutual consensus agreements between particular individuals,” while the latter aries out of “breaches of duties imposed by law as a matter of social policy.”....“In other words...,a claim should be limited to a contract claim when the parties’ obligations are defined by the terms of the contracts, and not by the larger social policies embodied by the law of torts.”