The opinion of the court was delivered by: CLIFFORD GREEN, Senior District Judge
Presently pending is Defendant's Motion to Dismiss Counts III and IV
and Numerous Paragraphs of Plaintiffs Amended Complaint pursuant to FRCP
12(b)(6) and 12(f) and Plaintiff's response thereto. For the following
reasons, Defendant's motion will be denied.
I. Factual and Procedural Background
On or about May 15, 2001, a fire occurred at the Continental Business
Center in Bridgeport, Pennsylvania, where plaintiff Little Souls, Inc.
("Little Souls") was a tenant and conducted business. Plaintiff submitted
a claim to defendant State Auto Mutual Insurance Co. ("State Mutual")
pursuant to a policy for alleged damage, including business income loss,
sustained as a result of the fire pursuant to a Pacemaker Businessowners
policy of insurance. A dispute arose as to the "period of restoration."
While both parties agree the "period of restoration" begins on the date
of the loss and ended when Plaintiffs moved to another location, the
parties disagreed as to the date of Plaintiff's move. To settle this
dispute, State Mutual filed a Declaratory Judgment action before this
court. Little Souls moved to dismiss and requested a remand to appraisal. On February 5, 2003, we denied the motion to
dismiss the declaratory judgement complaint, entered an order compelling
both parties to proceed to appraisal, and placed the litigation in the
civil suspense file. Thereafter, the parties were able to reach an
agreement as to the appropriate length of time for the "period of
restoration" in settlement discussions; however, the parties were not
successful in agreeing to the amount of business income loss. Those
negotiations are ongoing but have stalled.
On October 15, 2003, plaintiff Little Souls filed the instant complaint
against defendant State Mutual alleging breach of contract, bad faith,
fraud, intentional misrepresentation, negligent misrepresentation and
breach of duty of good faith and fair dealing. Defendant filed a Motion
to Dismiss the Complaint based on the fact that the counts were
duplicative and unnecessary under the "gist of the action" doctrine.
Thereafter, Plaintiff filed an Amended Complaint, alleging breach of
contract, bad faith, intentional misrepresentation, and fraud. Still
believing the causes of action duplicative, Defendant filed the current
Motion to Dismiss. Due to the filing of the Amended Complaint and the
Motion to Dismiss the Amended Complaint, the Motion to Dismiss the
original complaint will be dismissed as moot. The Motion to Dismiss
Counts III and IV and Numerous Paragraphs of Plaintiff's Amended
Complaint and the response thereto is addressed below.
A court should grant a motion to dismiss for failure to state a cause
of action only if it appears to a certainty that no relief could be
granted under any set of facts which could be proved. See Hishon v.
King & Spalding, 467 U.S. 69. 73 (1984). The "notice pleading" approach governs the standard of specificity regarding motions to
dismiss civil rights claims pursuant to 42 U.S.C. § 1983. In
Swierliewicz v. Sorema, 122 S.Ct. 992
(2002), a unanimous
Supreme Court stated,
[g]iven the Federal Rules' simplified standard for
pleading, a court may dismiss a complaint only if
it is clear that no relief could be granted under
any set of facts that could be proved consistent
with the allegations. If the pleading fails to
specify the allegations in a manner that provides
sufficient notice, a defendant can move for a more
definite statement under Rule 12(e) before
responding. Moreover, claims lacking merit may be
dealt with through summary judgment under Rule 56.
The liberal notice pleading of Rule 8(a) is the
starting point of a simplified pleading system,
which was adopted to focus on the merits of a
Id. at 998-99 (internal citations omitted).
A court must accept as true all well pleaded allegations of the
complaint in evaluating a motion to dismiss. See Jordan v. Fox.
Rothschild. O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir.
1994). Nevertheless, "a court need not credit a complaint's `bald
assertions' or `legal conclusions' when deciding a motion to dismiss."
Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.
1997) (citations omitted). Furthermore, because granting a motion to
dismiss results in a determination on the merits at an early stage of the
plaintiff's case, the district court must "construe the complaint in the
light most favorable to the plaintiff, and determine whether, under any
reasonable reading of the pleadings, the plaintiff may be entitled to
relief." Colburn v. Upper Darby Township, 838 F.2d 663, 665-66
(3d Cir. 1988), cert. denied, 489 U.S. 1065 (1989) (citations
omitted). III. Discussion
A. Gist of the Action Doctrine
Defendant State Mutual contends Plaintiff's complaint sounds in
contract, rather than tort, and the allegations of fraud and intentional
misrepresentation merely mirror the claims for breach of contract.
Defendant argues Plaintiff's intentional misrepresentation and fraud
claims should be dismissed under Pennsylvania's "gist of the action"
doctrine. (Def. Mem. at 7.) The doctrine states that "[w]hen a plaintiff
alleges that the defendant committed a tort in the course of carrying out
a contractual agreement, Pennsylvania courts examine the claim and
determine whether the `gist' or gravaman of it sounds in contract or
tort; a tort claim is maintainable only if the contract is `collateral'
to conduct that is primarily tortious." Sunquest Info. Sys., Inc. v.
Dean Witter Reynolds. Inc., 40 F. Supp.2d 644. 651 (W.D.Pa. 1999)
(citing cases). The opinion further iterates, "contract actions arise
from breach of duties mutually agreed to, while torts have their basis in
violations of duties imposed as a matter of social policy. Id.,
citing Phico Ins. Co. v. Presbyterian Medical Serv. Corp.,
663 A.2d 753, 757 (Pa. Super. 1995).*fn1 Plaintiff Little Souls argues
the tort claims are the gist of the action and are not dependent on the
resolution of the contract claims.
Plaintiff's intentional misrepresentation claim states that the
Defendants confirmed representations regarding making timely payments for
legitimate claims when the parties entered into the insurance policy.
(Compl. at ¶ 54.) Crediting the allegations of the complaint as true,
Plaintiff alleges the Defendant never had any intention of making timely
payments. In addition, the intentional misrepresentations alleged by Plaintiff were not
limited solely to the claim that State Mutual breached its contract.
Plaintiff also alleges State Mutual made false statements in the
declaratory judgment lawsuit, and sought relief on a claim that was not
in dispute. (Am. Comp. ¶ 58.) The Amended Complaint also alleges the
defendant's conduct in marketing itself as a trustworthy and reliable
company and its corporate policy are fraudulent. These representations
allegedly induced the Plaintiff into purchasing their insurance with
Defendant. (Am. Comp. at ¶ 60-62.)
At this point in the litigation, it is difficult to ascertain whether
the gist of the action doctrine would preclude plaintiff from asserting
these arguably similar causes of action. While based on a collateral
contract, the plaintiff Little Souls is alleging misrepresentations
occurred both before and after the formation of the contract that, if
sufficiently distinct, would not hinge on the outcome of the breach of
contract claim. As a sufficient factual basis is alleged, the tort claims
will not be prohibited by the "gist of the action" doctrine. Plaintiff
has stated a cause of action upon which relief can be granted; therefore,
defendant's motion to dismiss will be denied. As allegations in count III
differ from the allegations in the breach of contract claims they are not
redundant; therefore, the allegation will not be stricken from the
As to the sufficiency of the claims, State Auto Mutual Insurance has
moved to dismiss plaintiff's cause of action for fraud pursuant to
F.R.C.P 12(b)(6) for failure to plead with particularity, and in the
alternative, moved to strike Count IV as redundant, pursuant to F.R.C.P.
12(f). Rule 9(b) requires a plaintiff to plead "(1) a specific false
representation of material fact; (2) knowledge by the person who made it
of its falsity; (3) ignorance of its falsity by the person to whom it was made; (4) the intention that it should be acted
upon; and (5) that the plaintiff acted ...