PA Court Interprets Gist Of The Action Doctrine
A Pennsylvania court has held that an insured’s fraud claim against its insurer based on the same facts as its breach of contract claim was barred by the gist of the action doctrine. In Havice v. Erie Ins. Co., the plaintiff initially filed a complaint following her insurer’s refusal to pay for damages to her roof after a hail storm. The plaintiff’s complaint alleged a breach of contract claim as well as claims based on fraud and deceit after her insurer determined that there was no damage to her roof despite numerous contractor estimates. In response to the plaintiff’s complaint, the insurer filed preliminary objections arguing that the plaintiff’s fraud claim was barred by the gist of the action doctrine. In its analysis, the court noted that the gist of the action doctrine was established to maintain the difference between breach of contract and tort claims. Further, the court noted that the doctrine foreclosed tort claims that arose solely from a contractual relationship between the parties, any duties alleged to have been breached arising from a contract, liability that stemmed from a contract, and any claims that were dependent on the success of a breach of contract claim. Based on the foregoing, the court determined that the plaintiff’s fraud claim was barred by the gist of the action doctrine because any alleged misrepresentations committed by the insurer were committed in an attempt to avoid its obligations under the insurance policy and that the significance of those misrepresentations was dependent on a showing of a breach of the insurance policy by the insurer. Nevertheless, the court noted, that the plaintiff was entitled to punitive damages if she could establish the insurer’s misrepresentations were made in bad faith. Thanks to Colleen Hayes for her contributions to this post. For more information, please contact Nicole Y. Brown at nbrown@wcmlaw.com.
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