The opinion of the court was delivered by: Arthur Schwab, District Judge.
MEMORANDUM OPINION REGARDING DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT DISMISSING PLAINTIFFS' TORT CLAIMS (ON COUNTS XII AND XIII) (DOCUMENT NO. 247)*
Initially, the case began with a complaint filed December 14, 1999, alleging breach of contract claims against defendants Hilton Group, PLC, and Ladbrokes International Betting and Gaming, a division of Hilton Group, PLC (collectively "Ladbrokes"). This complaint sought injunctive relief and monetary damages, and was accompanied by an emergency motion for preliminary injunction to prevent Ladbrokes from alienating certain of its North American gaming assets which plaintiffs Stuart Williams and WSC Investments, LLC (collectively "Williams") believed they had a definitive purchase agreement to buy.
As this Court's previous opinion of August 8, 2000 (by Senior Judge Donald J. Lee, who was originally assigned to this case) summarized the action at that point, on the eve of an evidentiary hearing on plaintiffs' motion for a preliminary injunction:
The parties also have succinctly stated their
respective legal positions in their Pre-Trial
Stipulation. In essence, plaintiffs contend that the
Letter of Intent of July 28th  obligated
Ladbrokes to provide Williams with prompt access to
due diligence materials and a due diligence review
period of 60 days, to honor a period of exclusivity
which would run from July 28th through the due
diligence period and until a definitive purchase
agreement was executed, and to negotiate in good
faith the terms of a definitive purchase agreement
and otherwise proceed in good faith. Plaintiffs
further assert that Ladbrokes has materially breached
each of these obligations and seeks a preliminary
injunction to prevent Ladbrokes from selling or
otherwise alienating the assets it agreed to sell to
Williams until this matter has been fully adjudicated
after a full trial. Plaintiffs also claim that
Ladbrokes made binding obligations to sell their
gaming interests to plaintiffs on November 19th
 by defendants' offer and Williams' acceptance
of an oral agreement the terms of which were embodied
in a Term Sheet, and by defendants' offer and
Williams' acceptance of the terms of the draft
definitive acquisition agreement dated November 30th
Defendants counter that the parties intended and
understood that they would not be bound regarding the
purchase and sale of the Ladbrokes Assets unless and
until a mutually acceptable definitive acquisition
agreement was negotiated and executed. Because that
condition, and other conditions of the Letter of
Intent, never happened, neither the Letter of Intent,
the Term Sheet of November 19th, nor the draft
definitive acquisition agreement of November 30th
resulted in a binding obligation or enforceable
contract. Defendants also maintain that the terms of
the Letter of Intent did not obligate Ladbrokes to
provide Williams with exclusive negotiation rights
unless and until Ladbrokes decided to provide him
with due diligence materials in New York City, and
until that time, Ladbrokes was free to shop around
the deal to whomever it chose.
Mem. Op., August 8, 2000, at 11-12, quoting from Joint Pre-Trial Stipulation of Facts (Document No. 112).
A. Contract Claims Limited to Reliance Damages—No Expectation Damages
On March 7, 2002, Judge Lee entered an opinion and order resolving the parties' motions for partial summary judgment which, inter alia, granted partial summary judgment in plaintiffs' favor as to liability only on Counts VII and XI for breach of the exclusivity provision of the Letter of Intent and defendants' obligation to negotiate in good faith, and denied defendants' motion to limit plaintiffs' reliance damages.
More recently, on February 24, 2003, this Court entered an opinion and order which denied defendants' motion to reconsider the order of March 7, 2002 entering summary judgment in favor of plaintiffs, as to liability only, on their contract claims, and by separate order entered on March 12, 2003, this Court denied plaintiffs' motion to reconsider the December 14, 2000 memorandum and order to the extent it limited plaintiffs' right to recover or seek expectation damages.
On June 9, 2000, plaintiffs filed a Second Amended Complaint which added Counts XII and XIII against Ladbrokes for, respectively, fraudulent and negligent misrepresentation under Pennsylvania common law, based upon alleged misrep-resentations made before and during the period of exclusivity and the course of negotiations toward execution of a definitive purchase agreement. Plaintiffs' Third Amended Complaint of April 6, 2001 added defendant Alan Ross on the tort claims.
The Court's March 7, 2002 order also denied plaintiffs' motion for partial summary judgment on the tort counts, Counts XII and XIII, and denied defendants' motion for partial summary judgment on the issue of the availability of punitive damages for fraudulent misrepresentation.
On February 24, 2003, this Court granted defendants' motion for leave to file a motion for partial summary judgment as to the tort claims based upon the "gist of the action" doctrine, requesting the Court to reconsider its ruling of March 7, 2002. That ruling did not address the "gist of the action" doctrine which defendants now assert, but their current motion for ...