Gist of the Action Doctrine
In civil contract actions and disputes, Plaintiff litigants often try to change simple contract claims into other causes of action such as fraud, conversion, or unjust enrichment. Pennsylvania law frowns on this type of gaming of the system to avoid provisions of a contract which may be in dispute. Unlike other areas of law, contract claims are unique and frequently complex – requiring hours of assessment for even the simplest of contracts. While it is important to have a contract that covers your business in the event of an issue, it is equally important to have a litigation attorney willing to challenge contract litigation claims that are frivolous or just rehashing what is already covered by a breach of contract action.
The gist of the action doctrine in Pennsylvania is designed to maintain the conceptual distinction between breach of contract claims and tort claims. It generally prevents plaintiffs from re-casting or re-molding ordinary breach of contract claims into tort claims. More specifically, the idea and doctrine prevents tort claims that: (1) arise solely from a contract between the parties; (2) where the duties allegedly breached were created and grounded in the contract itself; (3) where the liability stems from a contract; and (4) where the tort claim essentially duplicates a breach of contract claim or the success of which is wholly dependent on the terms of the contract. Strausser v. PRAMCO, III, 2008 PA Super 28; Hart v. Arnold, 2005 PA Super 328; Driscoll/Intech II v. Scarborough, 2008 Phila. Ct. Com. Pl. LEXIS 33.
The critical conceptual distinction between a breach of contract claim and a tort claim is that the breach of contract claim arises out of breaches of duties imposed by mutual consensus agreements (or, the contract itself) between particular individuals/business, while the tort claim arises out of breaches of duties imposed by law as a matter of social policy. Hart v. Arnold, 2005 PA Super 328, Reardon v. Allegheny College, 2007 PA Super 160. For instance, a claim should be limited to a contract claim when the parties' obligations are defined by the terms of the contract itself, and not by the larger social policies embodied by the law of torts. Hart v. Arnold, 2005 PA Super 328.
However, the gist of the action doctrine does not necessarily bar all tort claims. For example, fraud claims stemming from the fraudulent inducement to enter into a contract are not barred by the doctrine if the fraud does not concern the performance of contractual duties. In such cases, the gist of the action would be the fraud, rather than any contractual relationship between the parties Sullivan v. Chartwell Inv. Partners, LP, 2005 PA Super 124, Mirizio v. Joseph, 2010 PA Super 70. This distinction is crucial in determining whether a particular tort claim is barred by the gist of the action doctrine. Mirizio v. Joseph, 2010 PA Super 70. So the “heart” or the “gist” of the action can bar claims outside of the heart of the claim.
In practice, the doctrine is frequently applied in the context of litigation cases where the plaintiff alleges, along with a breach of contract, actions such as “fraud” or “conversion” (theft), or “unjust enrichment.” A good litigation defense attorney, protecting the interests of the defendant business, will make sure to object to these claims as just breach of contract actions in a new coat of paint.
