Superior Court Rules, For First Time, that Gist of the Action Doctrine Does Not Apply To Support Dismissal of a Breach of Contract Claim

In the case of Swatt v. Nottingham Village, 2025 Pa. Super. 138 (Pa. Super. July 2, 2025) (en banc) (Op. by Kunselman, J.), a Pennsylvania Superior Court en banc panel addressed the issue of whether the gist of the action doctrine applies to contract actions.

This case arose out of a nursing home malpractice claim. The Plaintiff filed claims for both malpractice and breach of contract.

A central issue in the case was to be decided by the court is whether the gist of the action doctrine applied to breach of contract action.

Typically, under the gist of the action doctrine, courts have held that negligence claims cannot be pursued based on facts that confirm that the gist of the action actually involves a breach of contract claim.

In this case, the Superior Court was addressing the opposite situation, that is, whether the gist of the action doctrine prevents a Plaintiff from proceeding on a breach of contract claim that is actually based upon facts that give rise to a negligence claim.

Despite a number of prior cases confirming that the gist of the action doctrine does apply in breach of contract cases, this en banc panel of the Superior Court, after completing an exhaustive review of the gist of the action doctrine concluded that the doctrine does not apply to breach of contact actions.

Rather, the court noted that, under any set of facts, Plaintiff could make claims for both negligence and breach of contact where warranted.

Anyone wishing to review a copy of the Majority decision may click this LINK.

The Concurring Opinion by President Judge Lazarus may be viewed HERE.

The Concurring Opinion by Judge Stabile may be viewed HERE.

The Concurring Opinion by Judge King may be viewed HERE.

Source of image: Photo by Andrea Piacquadio on www.pexels.com.

Nursing Home's Effort to Have Lawsuit Dismissed By Virtue of an Arbitration Clause Denied

In the case of Perry v. Saber Healthcare Holdings, LLC, No. 2024-CV6608 (C.P. Lacka. Co. June 6, 2025 Nealon, J.), Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas addressed various Preliminary Objections filed in a nursing home malpractice case.

According to the Opinion, the Plaintiff sustained injuries as a result of a fall.  Thereafter, the Plaintiff, through his daughter pursuant to her Power of Attorney, asserted claims of negligence, breach of contract, and other claims against the facility.

Among other issues, the Defendant facility raised Preliminary Objections asserting that the cause of action filed was required to instead be submitted to binding arbitration pursuant to an arbitration agreement executed by the daughter at the time the father was admitted to the facility.

The court ruled that, since the Power of Attorney that the father provided to his daughter expressly stated that the daughter was not authorized to enter into any arbitration agreement on his behalf with any skilled nursing facility or personal care home, the daughter could not bind her father to any arbitration agreement.

Judge Terrence R. Nealon
Lackawanna County 

Accordingly, Judge Nealon found that there was no enforceable arbitration agreement in place. As such, the Preliminary Objection seeking to have this case transferred to arbitration was overruled.

The court otherwise ruled that certain negligence allegations submitted on behalf of the Plaintiff were not barred by the gist of the action doctrine even though some of the claims presented in this case were based in contract. The court found that the claim for negligent hiring, supervision and retention were collateral to the contract and not contingent on the breach of any terms of the admission agreement.

The court otherwise sustained the demurrer filed against the Plaintiff's claim for intentional infliction of emotional distress given that the Complaint did not allege conduct that was so outrageous in character and extreme in degree as to exceed all possible bounds of decency and be regarded as atrocious and utterly intolerable in a civilized community.

Anyone wishing to review a copy of this decision may click this LINK.

Gist of the Action Doctrine Applied to Sustain Preliminary Objections

In the case of Spiritrust Lutheran v. Wagman Constr., Inc., No. 572 MDA 2022 (Pa. Super. April 23, 2024 Stabile, J., Dubow, J. and McCaffery, J.) (Op. by Stabile, J.), the Pennsylvania Superior Court addressed issues surrounding Preliminary Objections raising, in part, the gist of the action doctrine.

With regards the validity of Amended Complaints, the Superior Court reaffirmed that, once an Amended Complaint is filed, the original Complaint becomes a nullity and is considered null and void.

The court also reaffirmed the rule that matters not raised in Preliminary Objections may not be considered by the trial court sua sponte.

With respect to the gist of the action doctrine, the Pennsylvania Superior Court reaffirmed that this doctrine precludes Plaintiff from recasting ordinary breach of contract claims as tort claims. More specifically, the Plaintiff is not permitted to pursue a claim of negligence where the alleged duty breached by the Defendant arises from the parties’ contract.

Here, the court ruled that, since the Plaintiff’s negligence claim repeated as the basis for negligence the same averments alleging a breach of contract, the negligence claims were properly barred by the gist of the action doctrine.

The court also noted that the services allegedly negligently performed by the Defendant were those provided in the parties’ contract.

Anyone wishing to review a copy of this decision may click this LINK.


I send thanks to a Attorney James M. Beck of the Reed Smith office in Philadelphia for bringing this case to my attention.

Bad Faith Action in Fire Loss Insurance Coverage Case Dismissed

In the case of Mohanan v. Liberty Mut. Pers. Ins. Co., No. 2:22-CV-02956-RBS (E.D. Pa. Nov. 20, 2023 Surrick, J.), the court granted a Defendant insurance company’s Motion to Dismiss the Plaintiffs’ claims of violations of the Pennsylvania Unfair Trade Practices & Consumers Protection Law, negligence, and bad faith relative to coverage questions related to the alleged smoke damage to a property.

The court found that the Plaintiff’s had failed to establish any deceptive conduct on the part of the carrier in terms of the carrier’s investigation and handling of the claim. The court also found that the Plaintiff had failed to produce any evidence of any act or omission by the carrier in terms of any alleged misrepresentations of the coverage available.

The court in this case otherwise ruled that the Plaintiff’s negligence claim was barred by the gist of the action doctrine in this breach of contract case.

The court otherwise found that the Plaintiff had not pled any facts to explain why the carrier’s investigation was unreasonable.

The court additionally rejected the Plaintiff’s claim that the carrier had a special relationship with the Plaintiffs simply by virtue of the fact that the Plaintiffs had purchased an insurance policy. As such, the Plaintiff’s claim of a heightened duty of care owed to the Plaintiff was rejected.

The court additionally noted that the parties had agreed that various references to treble damages, the request for attorneys’ fees, and the request for punitive damages and consequential damages should be stricken from Complaint as improper.

Anyone wishing to review a copy of this decision may click this LINK.  The Court's companion Order can be viewed HERE.


Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (Dec. 14, 2023).

Trial Court Addresses Issues Regarding Denial of Coverage Under Homeowner's Policy

In the case of Watkins v. State Farm Fire and Casualty Co., No. 10363 of 2020-CA (C.P. Lawr. Co. April 19, 2022 Motto, P.J.), the court granted a Defendant carrier’s Preliminary Objections to a Plaintiff’s claim for negligence and breach of fiduciary duty relative to the sale of a homeowner’s insurance policy that ended up not providing the Plaintiff with coverage for a fire loss.

In its decision, the court found that the Plaintiff’s claim for negligence against his insurance company was barred by the gist of the action doctrine.

The court additionally found that the Plaintiff’s Complaint did not allege sufficient facts to allow the Plaintiff to move forward on a breach of fiduciary duty claim against the carrier in connection with the sale of the insurance policy. The court noted that, by asserting the right to handle all claims against the insured, the insurance company assumed a fiduciary duty and was obligated to act in good faith and with due care towards its insured. However, the court noted that the courts in Pennsylvania did not impose a fiduciary duty upon an insurance company merely for selling a policy of insurance to an insured.

The court found that the Plaintiff’s Complaint did not allege any facts to show that the Defendant insurance company or its agents applied any undue influence over the Plaintiff. As such, the court found no basis to support an allegation of an existence of a fiduciary duty under the facts alleged. As such, the Defendant’s Preliminary Objections were sustained in these respects and the Defendant was ordered to file an answer to the remainder of the Plaintiff’s Complaint.

Anyone wishing to review a copy of this decision may click this LINK.


Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (May 31, 2022).

Pennsylvania Superior Court Affirms Application of the Gist of the Action Doctrine

In the case of Patel v. Kandola Real Estate, LP, 2021 Pa. Super. 219 (Nov. 8, 2021 Stevens, P.J.E., Bender, P.J.E., Murray, J.) (Op. by Stevens, P.J.E.), the court affirmed the trial court’s entry of summary judgment after finding that the gist of the action doctrine barred the Plaintiff’s tort claims.

The court reiterated that, under the gist of the action doctrine, tort allegations against a party to the contract are barred when the tort claim is based on a breach of the contract. 

Given that, without the contract in this case, there would have been no obligation for the Defendant to have taken any action, the negligence claims were barred under the gist of the action doctrine.

Anyone wishing to review a copy of this decision may click this LINK.


I send thanks to Attorney James M. Beck of the Philadelphia office of the Reed Smith law firm for bringing this case to my attention.

Defendant's Reliance Upon Gist of the Action Doctrine Rejected

In the case of Weigold v. Ford Motor Company, No. 20-2141 (E.D. Pa. Sept. 1, 2020 Savage, J.), the court rejected an effort on the part of the Defendant to have part of a Plaintiff’s tort claims dismissed under the gist of the action doctrine.

The court ruled that the tort claims used against a vehicle seller for negligence and strict liability surrounding claims of improper installation, inspection, and servicing of the vehicles was electrical system, along with allegations of the sale of a defective vehicle, were found to be claims that rested upon socially based duties imposed upon manufacturers not to sell dangerous or defective products.

As such, the court found that these types of claims were not duplicative of any possible contract claims. Accordingly, the defense's reliance upon the gist of the action doctrine was dismissed.

Anyone wishing to review a copy of this decision may click this LINK.  The Court's Order can be viewed HERE


I send thanks to Attorney James M. Beck of the Philadelphia office of the Reed Smith law firm for bringing this case to my attention.

Judge Williamson of Monroe County Addresses Gist of the Action Doctrine

In the case of Artisan and Truckers Cas. Co. v. Travelcenters of America, Inc., No. 9778-CV-2019 (C.P. Monroe Co. Feb. 26, 2020 Williamson, J.), the court overruled a Defendant’s Preliminary Objections based, in part, on the gist the action doctrine.

According to the Opinion, the Plaintiff insurance company had issued a policy to a trucking company who owned a tractor trailer. The tractor trailer had been taken for repairs at a station owned by the Defendant. Later on the same day that the repairs were completed, the truck caught fire.

An allegation was made that the repair facility made improper repairs that caused the fire. In this insurance subrogation action, the Plaintiff insurance company asserted that it was required to pay its insured $200,000.00 under the policy. The carrier filed a Complaint against the Defendant repair facility asserting claims of negligence, breach of contract, breach of express and/or implied warranties, and other claims.

The Defendant filed Preliminary Objections asserting that the negligence count violated the gist of the action doctrine.

Judge Williamson noted that the gist of the action doctrine prevents a Plaintiff from bringing an action for a negligence when the allegations state that the breached duty arose from a contractual relationship. The doctrine prevents Plaintiffs from filing a separate negligence claim arising solely from the contract between the parties, where the duties allegedly breached were created in the contract itself, where liability stems from a contract, or where the tort claim essentially duplicates the breach of contract claim.

After reviewing the record before him, Judge Williamson overruled the Defendant’s Preliminary Objections after finding that the alleged breach of duty went beyond the strict requirements of the gist of the action doctrine. The court noted that, despite there being numerous decisions analyzing the doctrine, “there is no clear cut standard for determining when an action falls” within the doctrine.

Anyone wishing to review a copy of this decision may click this LINK.

I send thanks to Attorney Dale G. Larrimore from the Philadelphia law firm of Larrimore & Farnish, LLP, for bringing this case to my attention.

Link to Judge Williamson's Gist of the Action Decision

Here is the missing LINK to yesterday's post on Judge David J. Williamson's Monroe County decision on the Gist of the Action Doctrine in the Weiss v. Nazareth Mut. Ins. Co. case.

I apologize for forgetting to add the Link to the original post.

Thanks for reading Tort Talk.

Gist of the Action Doctrine Held to Bar Negligence Claim

In the case of Weiss v. Nazareth Mutual Insurance Company, No. 6293-Civil-2017 (C.P. Monroe Co. July 5, 2018 Williamson, J.), Judge David J. Williamson of the Monroe County Court of Common Pleas granted Preliminary Objections under the gist of the action doctrine in a case arising out of an insurance claim following a fire loss.  

According to the Opinion, the Plaintiff claimed that, following the fire, the Plaintiff’s property was burglarized.   As such, the Plaintiff submitted a claim to the insurance carrier with respect to the personal property that was allegedly stolen.   In his Complaint, the Plaintiff asserted that the carrier had not acted upon his claim for some of the lost personal property.  

The Complaint additionally contained claims against a remediation company who worked on the premises following the fire.   The Plaintiff alleged that the remediation company removed some of the Plaintiff’s property during the remediation project and never returned it to the Plaintiff.   That remediation company filed various Preliminary Objections to the Complaint.  

Judge David J. Williamson
Monroe County

In part, the remediation company asserted that the Plaintiff’s claims of negligence were barred by the gist of the action doctrine.   Judge Williamson agreed, finding that this case was primarily a contract action and that the allegations of the negligence claim were nearly identical to those pled in the contract claim.  As such, the negligence claim was stricken from the Complaint on the basis of the gist of the action doctrine.  

In another notable decision in this Opinion, the court dismissed the Plaintiff’s claim for negligent infliction of emotional distress after finding that the Plaintiff had failed to assert any physical harm as required by the elements of that cause of action. 

Anyone wishing to review a copy of this decision may click this LINK .

Source:  “Digest of Recent Cases.”  Pennsylvania Law Weekly (July 24, 2018).  

Eastern District Federal Court Remands UIM Claim Back to State Court

As also already reported in The Legal Intelligencer in a July 9, 2015 article by Gina Passarella, in a recent July 8, 2015 detailed Order, the Eastern Federal District Court of Pennsylvania remanded a removed Post-Koken case back to Delaware County in the matter of Kennedy v. Allstate, No. 2:15-CV-02221-TON (E.D.Pa. July 8, 2015 O'Neill, J.).

The Plaintiff originally filed in Delaware County in this UIM claim and asserted UTPCPL claims and negligence claims against Allstate as a company as well as several Pennsylvania resident claims adjusters for Allstate.

Allstate removed the matter to federal court, asserting a fraudulent joinder and the lack of any colorable claims under Pennsylvania law.

There was no dispute that Allstate was an Illinois resident and that the three adjuster Defendants and the Plaintiff were Pennsylvania residents.  There was also no dispute that the amount in controversy element was satisfied.

After reviewing the applicable law on the issues raised, and after finding that the Plaintiff had stated colorable claims against the non-diverse claims adjuster defendants, the court remanded the case back to state court in Delaware County.

The court so ruled despite noting a lack of concrete Pennsylvania state law recognizing the validity of a negligence claim against a claims adjuster by an insured relative to the handling of the insured's claims (i.e., is there a duty of care owed by an adjuster to an insured?). 

The court in Kennedy believed that, since there was a "possibility" that the Pennsylvania Supreme Court could someday rule that a claims adjuster owes a duty to an insured and therefore could be the subject of a negligence cause of action, the defendants in this matter had failed to meet their heavy burden under the law of attempting to show that there was no colorable claim and/or a fraudulent joinder of claims in an effort to defeat the diversity of citizenship necessary for federal court jurisdiction.

The court in Kennedy went to great lengths to clearly state that it was not recognizing such a negligence cause of action against claims representatives.  Rather, the court was more simply noting that, since Pennsylvania law in this regard was unsettled, it could not rule that the Plaintiff had failed to state a colorable claim under the motion to remand standard of review.

The court also addressed gist of the action and statute of limitations issues relative to the negligence claim in a manner that favored the Plaintiff's position.

The Plaintiff's UTPCPL claims were also found by the court to be colorable claims that equally served to support the granting of the motion to remand.


Anyone wishing to review a copy of this Kennedy v. Allstate decision may contact me at dancummins@comcast.net.


I send thanks to the prevailing Plaintiff's Attorney Ryan Curran of the Curran Firm in Media, PA for bringing this case to my attention.

Judge Conaboy Circumscribes Proper Bad Faith Claims in UM Context

In his recent decision in the case of Cicon v. State Farm Mutual Automobile Insurance Company, No. 3:14-cv-2187 (M.D. Pa. March 4, 2015 Conaboy, J.), Federal Middle Court Judge Richard P. Conaboy, considered Defendant State Farm’s Motion to Dismiss four counts of a Post-Koken Complaint filed by the Plaintiff, including Bad Faith claims.  

More specifically, State Farm sought a dismissal of a Count of Breach of the Duty of Good Faith and Fair Dealing, a Count for Breach of Contract, a Count of Negligence, and a Count of Vicarious Liability, all asserted against the Uninsured Motorist (UM) Benefits carrier. 

According to the Opinion, this matter arose out of personal injuries allegedly sustained as a result of a motor vehicle accident involving an uninsured vehicle.   Following the accident, the Plaintiff submitted a claim for uninsured motorist benefits.  

Prior to retaining any attorney, the Plaintiff attended an independent medical examination at the request of the carrier and, thereafter, attempted to settle the claim for a period of seven (7) months.  When the settlement discussions failed to be successful, the Plaintiff retained counsel.  

Plaintiffs’ retained counsel made a demand of the $100,000.00 UM limits, and supplied State Farm with additional documentation in support of the claims presented.  Defendant, State Farm responded with a $30,000.00 offer.  

The Plaintiff proceeded to file suit alleging that the offer presented by State Farm was unreasonable and inconsistent with the documentation provided by the Plaintiff in terms of medical treatment and wage loss information.  

With respect to the Defendant’s motion for the dismissal of the Plaintiff’s allegations of a violation of a contractual duty to observe the covenant of good faith and fair dealing, the court noted that the Pennsylvania Supreme Court has held that “there is no cause of action for a breach of the implied duty of good faith and fair dealing in a case for first party insurance benefits, like this one, where an insured is suing his insurer."    See Cicon at p. 5-6 citing D’Ambrosio v. Pennsylvania National Mutual Casualty Insurance Company, 494 Pa. 501, 507-10 (1981).   As such, this claim was dismissed by the court. 

Judge Richard P. Conaboy
Federal Middle District
of Pennsylvania

Judge Conaboy allowed the Plaintiff’s Count for Breach of Contract to stand and rejected the defense argument that that Count should be dismissed as being redundant of the claims alleged Counts 1 and 2 in the Complaint for UM benefits and loss of consortium claims, respectively.   Although the court noted that it was inclined to agree that the damages recoverable under all of these claims were seemingly identical and “necessarily limited by the terms of the policy,” the court noted that the claims presented in these three counts were technically separate such that the Breach of Contract claim would be allowed to proceed.  

Judge Conaboy went on to dismiss Count 6 of the Complaint which sounded in Negligence and was based upon an allegation that the Defendant, State Farm, owed a duty of care to the Plaintiff, failed to discharge that duty, and was allegedly therefore liable in tort.  

In this regard, the court accepted the defense argument that the “gist of the action” doctrine operated to preclude the Plaintiffs’ negligence count as an improper attempt to characterize an ordinary breach of contract claim as a tort action.   The court ruled in this fashion despite recognizing the Plaintiffs’ argument that the Supreme Court of Pennsylvania have never adopted the gist of the action doctrine in an insurance coverage dispute context. 

However, Judge Conaboy felt that, after his review of the Superior Court case law, that the Pennsylvania Supreme Court would rule that the Plaintiff’s negligence count should be barred by the gist of the actions doctrine under the circumstances presented if that Court was ever faced with the issue. 

Judge Conaboy also agreed that the Plaintiffs’ allegations of vicarious liability on the part of the Defendant State Farm, based upon the alleged negligent and intentional misconduct of its adjusters, supervisors, and defense counsel, should be dismissed.  

In so ruling, the court noted that the only party in this case was the Defendant and that, as such, the party Defendant could not be vicariously liable for its own conduct.   Judge Conaboy additionally noted that vicarious liability is a creature of tort law, which caused him to reiterate his finding that the gist of the action doctrine required that this case be determined under contract law concepts and not tort law principles.

Overall, the court granted the Defendant’s Motion to Dismiss in part and denied it in part.

Judge Conaboy’s Opinion can be read as supporting an argument by a Defendant carrier that the sole cause of action in a first party case for an alleged breach of good faith is pursuant to 42 Pa. C.S. §8371.  This decision also arguably stands for the proposition that there is no common law cause of action for a breach of the duty of good faith and fair dealing, with its attendant consequential damages, in a first party case.  

 

I send thanks to the prevailing defense counsel, Attorney Lee Ullman of the Reading, Pennsylvania office of Forry Ullman, for providing me with a copy of this Opinion.

 

Anyone desiring a copy of this Opinion may contact me at dancummins@comcast.net.

The Pennsylvania Supreme Court Analyzes the Gist of the Action Doctrine and The Certificate of Merit Rules

In a wordy December 15, 2014 decision in the homeowner's insurance contract dispute case of Bruno v. Erie Insurance, No. 25 WAP 2013 (Pa. Dec. 15, 2014)(Op. by Todd, J.) (Concurring Op. by Eakin, J.), the Pennsylvania Supreme Court offered its latest detailed analysis of the "gist of the action" Doctrine, as well as the scope of the Certificate of Merit rules in professional negligence claims.

This matter involved a contractual dispute between insureds and their homeowner's carrier over the alleged existence of mold in the insured's home and how to remedy the same. The insureds attempted to include in their suit a negligence claim against the engineer retained by the carrier to evaluate the alleged mold condition.

The homeowner's insurance carrier Defendant filed preliminary objections asserting that the gist of the action doctrine barred the Plaintiff's pursuit of a negligence claim arising out of the same allegations as involved in the breach of contract action.

The engineering expert filed preliminary objections asserting that the claim against him was barred due to the Plaintiff's failure to secure a Certificate of Merit to support the negligence claim against that professional defendant.

After extensively reviewing essentially the entire history of the doctrine, the Supreme Court ruled that the negligence action asserted in this matter against the homeowner's carrier based upon the alleged misdeeds and/or omissions of the carrier's adjuster or its retained engineering expert was not barred by the "gist of the action" doctrine.  The court found that that the allegations of negligence on the part of a person or persons performing the duties under, or in furtherance of, the contract are, as a matter of law, not to be viewed as a cause of action based upon the underlying contract since such claims are not founded upon the breach of any of the specific promises that make up the contract, but rather the negligent acts or omissions of an agent of the homeowner's carrier.  See Maj. Op. at p. 35, 36-37.

In other words, while the homeowner's carrier had contractual duties to properly investigate whether mold existed, and to pay for property damage caused by the mold, the focus of the allegations by the insured was not that the carrier failed in meeting these contractual obligations, but rather, that, in the course of attempting to fulfill these obligations, representatives of the carrier (the adjuster and the expert retained by the carrier) acted negligently in their dealings with the insureds.  As such, the Plaintiff's were alleging a breach of a social duty in this regard as opposed to any breach of the contract terms.

Accordingly, the court found that the Plaintiff's negligence claims against the carrier were not barred by the "gist of the action" doctrine.

The Court also addressed the issue of whether the insureds were required to secure a Certificate of Merit under Pa.R.C.P. 1042.1 and 1042.3 in order to be able to proceed on their negligence claim against the engineer retained by the carrier to inspect the mold conditions. 

After studying the wording of the Rules, the Pennsylvania Supreme Court ruled that the insureds were not required to obtain a Certificate of Merit in order to proceed with their negligence suit against the engineer, since they were not patients or clients of the engineering company which employed that expert.  Stated otherwise, as the Plaintiffs were not the party who retained the expert, they were not required by the applicable Rules to secure a Certificate of Merit relative to their pursuit of a negligence claim against the engineer.

Overall, the Supreme Court reversed the Superior Court and remanded for further proceedings.

Anyone wishing to review the Pennsylvania Supreme Court's majority Opinion decision in the Bruno v. Erie Insurance case may click this LINK.

The Concurring Opinion by Justice Eakin, joined in by Chief Justice Castille, can be viewed HERE.  Justice Eakin and Chief Justice Castille agreed with the majority Opinion but cautioned that the "broad pronouncement" in the majority Opinion suggesting that finding negligent actions by a contracting party do not arise out of the contract does not fully comport with the gist of the action Doctrine and may represent a painting of the issue with too broad a brush.

 

I send thanks to Attorney Andrew L. Braunfeld of the Conshohocken law firm of Masterson Braunfeld LLP for bringing this case to my attention.

Detailed Decision by PA Superior Court in Duty to Defend Coverage Case Appealed to PA Supreme Court

In its December of 2013 decision in the case of Indalex v. National Union Fire Ins. Co. of Pittsb., 83 A.2d 413 (Pa.Super. 2013)(Donohue, Shogan, and Wecht, J.J.; Opinion by Shogan, J.), the Pennsylvania Superior Court offered one of its latest and most detailed recitations of the law of insurance contract interpretation and the duty to defend in the context of a products liability case and faulty workmanship claims.

The Superior Court ultimately ruled, after a comparison of the underlying Complaints at issue to the policy language in question, that the carrier did indeed have a duty to defend its insured.  In so ruling the court rejected an argument by the carrier the "gist of the action" doctrine (contract actions can not be recast into tort actions by artful pleading) did not serve to preclude coverage.

The Superior Court noted "that the gist of the action doctrine has not been adopted by our Supreme Court in an insurance coverage context."  The Superior Court in Indalex found persuasive the analysis of the United States District Court for the Western District Court of Pennsylvania on the relationship between the gist of the action doctrine and the duty to defend. 

In that regard, the Federal Western District Court of Pennsylvania ruled that "[i]f the underlying complaint contains more than one cause of action, and one of them would constitute a claim within the scope of the policy's coverage, the insurer must defend the complaint until it can confine the claim to a recovery excluded from the scope of the policy." Citing National Fire Ins. Co. of Hartford v. Robinson Fans Holdings, Inc., Not Reported in F.Supp.2d, 2011 WL 1327435 (W.D.Pa.2011), citing American States v. Maryland Cas., 427 Pa.Super. 170, 628 A.2d 880, 887 (Pa.Super.Ct.1993).

The Indalex court found that, since tort claims were pled in the Complaints in the underlying suits, such tort claims must be considered in the ordinary duty to defend insurance contract analysis (i.e., do the allegations of the Complaint fall within the coverage provisions of the policy?).

The court in Indalex went on to state that "[w]hether the laws under which the complaints are brought will bar those tort claims because of the application of the gist of the action or a similar doctrine will be decided by the courts presiding over those lawsuits. Ultimately, because the gist of the action doctrine has never been adopted by our Supreme Court in an insurance coverage context, we are convinced that, at this juncture of a duty to defend claim, applying the gist of the action doctrine is inappropriate. Citing with "See" signal Berg Chilling Sys., 70 Fed.Appx. [620] at 624 [(3rd Cir. 2003)](stating that a court undertaking a duty to defend analysis should not rely entirely upon whether the plaintiff characterizes its claim as one arising in tort or contract).

The Superior Court in Indalex ultimately held that "[b]ecause the underlying complaints alleged defective products resulting in property loss, to property other than Appellants' products, and personal injury, we conclude there was an “occurrence” and reverse the order granting summary judgment."


It is reiterated that, in addition to addressing the novel issue of the application of the gist of the action doctrine in the context of a duty to defend argument, the Indalex Opinion offers an excellent overview of the appropriate standard of review in a declaratory judgment action on the issue of the duty to defend under a liability insurance policy.

The Pennsylvania Superior Court's decision can be viewed HERE.


UPDATE:

Reargument in this case was denied by the PA Superior Court on February 10, 2014.

A Petition for Allowance of Appeal to the PA Supreme Court was filed on March 12, 2014.
 

 

 

I send thanks to Don Bankus, Legal Affairs Manager for Insurance Agents & Brokers of PA, MD & DE (www.IABforME.com) for bringing this to my attention.

 

Gist of the Action Doctrine Accepted for Review by Pennsylvania Supreme Court

In the case of Bruno v. Erie Insurance Company, No. 347 WAL 2012 (Pa. Sept. 11, 2013), the Pennsylvania Supreme Court has included the “gist of the action” doctrine in one of its questions accepted.  According to Attorney James Beck of the Philadelphia Office of Reed Smith and writer for the excellent Drug and Device Law Blog, the Pennsylvania Supreme Court has never accepted or rejected this defense.

As described by Attorney Max Kennerly of the Beasley Firm in Philadelphia in his excellent Litigation & Trial blog, "the 'gist of the action' doctrine precludes negligence claims where, under the facts alleged, the defendant has no duty to the plaintiff except for those created by contract. The “gist” is contractual — there are no duties between the parties except for those created by the contract."

Attorney Kennerly cited the following:  "Under Pennsylvania law, the gist of the action doctrine “precludes plaintiffs from re-casting ordinary breach of contract claims into tort claims.” eToll, Inc. v. Elias/Savion Adver., 811 A.2d 10, 14 (Pa. Super. Ct. 2002) citing Bash v. Bell Tel. Co., 601 A.2d 825, 829 (Pa. Super. Ct. 1992). The difference between a cause of action for tort and breach of contract is that “tort actions lie for breaches of duties imposed by law as a matter of social policy, while contract actions lie only for breaches of duties imposed by mutual consensus agreements between particular individuals.” Bash, 601 A.2d at 829. A breach of contract may give rise to a tort claim only when defendant’s wrongful conduct is the gist of the action, and the contract is collateral. Pittsburgh Constr. Co. v. Griffith, 834 A.2d 572, 582 (Pa. Super. Ct. 2003) citing Bash, 601 A.2d at 829)."

Anyone wishing to review the Pennsylvania Supreme Court's Order in Bruno may click this LINK.

I send a "thanks" to Attorney James Beck of the Philadelphia office of Reed Smith for the heads-up on this Order.

Link to Healey v. Wells Fargo Case Corrected

I have corrected the link to Judge Nealon's gist of the action doctrine decision in the case of Healey v. Wells Fargo.  Sorry for the mix-up caused by my continuing learning how to use Google Docs correctly.

Here is the link again: 

https://docs.google.com/file/d/0B83Pxa3TYcXMN0ZONG5kQThTRkM3Y3UxaG9CQmtndw/edit

Judge Terrence R. Nealon of Lackawanna County Addresses Gist of the Action Doctrine

In his recent March 20, 2012 decision in the case of Healey v. Wells Fargo, No. 2011-Civil-3340 (C.P. Lacka. Co. March 20, 2012 Nealon, J.), Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas addressed a Defendant’s Preliminary Objections raised in a case involving a lender and breach of contract and tort claims.

Of note in this decision is Judge Nealon’s analysis of the gist of the action doctrine and its impact on the Plaintiff’s claim for negligent infliction of emotional distress and other tort claims pled in this matter.
While the facts involved in this case are convoluted, the opinion is a worthwhile read if you are faced with a gist of the action doctrine issue. This doctrine basically maintains the distinction between breach of contract claims and tort claims and precludes Plaintiffs from recasting ordinary breach of contract claims as tort claims.  Stated otherwise, under Pennsylvania law, a cause of action framed as a tort but reliant upon contractual obligations will be analyzed to determine whether the cause of action properly lies in tort or contract.

Judge Nealon reviewed in this decision the law of the gist of the action doctrine which serves to bar tort claims that arise solely from a contractual relationship between the parties, when the alleged duties breached are grounded in the contract itself, where any liability stems from the contract, when the tort claim essentially duplicates the breach of contract claims, and/or where the success of the tort claim is dependent on the success of the breach of contract claim.

Ultimately, the court in this case of Healey v. Wells Fargo found that the gist of the action doctrine served to bar certain tort claims presented by the Plaintiff.

Anyone desiring a copy of Judge Nealon’s 49 page opinion may click here.