US District Court Holds “Gist of the Action” Doctrine Bars Parallel Negligence Claim for Property Damage Where the Essence of Plaintiff’s Claim Was for Breach of Contract

Federal Insurance Co. v. Philotimo, Inc.
2009 U.S. Dist. Lexis 108105 (W.D.P.A. Nov. 19, 2009)

Homeowner hired defendant to inspect and clean its fireplace and chimney after observing chunks of mortar falling into the fireplace. Homeowner showed defendant’s technicians the fallen mortar. The technicians cleaned and visually inspected the chimney and reported to homeowner that it “looked good.” Thereafter, an extensive fire swept through the house causing over $400,000 in damage.

Following the fire, homeowner’s insurer commissioned an inspection which revealed numerous signs of damage and disrepair to the chimney that suggested defendant’s technicians should have instructed homeowner not to use fireplace and chimney until repairs were made.

The insurer initiated a subrogation action in which it alleged that defendant had failed to perform its contractual obligations in a safe and professional manner and was liable for both breach of contract and negligence. Defendant moved for summary judgment on breach of contract claim. The court denied the motion for summary judgment, but independently raised the issue of whether the negligence claim was barred by the “gist of the action” doctrine. Under this theory, a plaintiff is barred from bringing a tort claim that is merely repetitive of the underlying contract claim when the cause of action stems from contract. Stated differently, if the “gist” of the action sounds in contract, a party cannot bring its claim in tort.

In holding that the “gist of the action” doctrine barred the negligence claim, the Court found that the matter before it arose from the contractual relationship between the parties. The alleged breach of contractual duties was the essence of action. Accordingly, Plaintiff could not maintain its overlapping negligence claim, which was dismissed.

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