The opinion of the court was delivered by: HERBERT HUTTON, District Judge
Currently before the Court are Defendants's Motion for Partial
Judgment on the Pleadings (Docket No. 13) and Plaintiff's Answer
thereto (Docket Nos. 14 & 15).
On February 22, 2001, Plaintiff Longview Development LP
("Longview") and Defendant The Great Atlantic and Pacific Tea
Company, Inc. ("A&P") entered into a contract in which A&P agreed
to sell to Longview property located at Baltimore Pike and Union
Avenue in Upper Darby, Pennsylvania. A&P operated a supermarket
there and Longview planned to either sell or lease the property
to another supermarket operator.
Before the contract was signed, Longview alleges that A&P
represented that the sale of the property would not conflict with
any other agreement to which A&P was a party. A&P's
representation was memorialized in the contract.*fn1
Nonetheless, on July 13, 2001, Longview learned that the United Food and Commercial Workers
Union ("Union") had a right of first refusal to purchase the
property under a collective bargaining agreement with A&P. On
July 18, 2001, the Union filed a grievance regarding the sale of
the property as a result of A&P's failure to honor the Union's
right of first refusal. Longview and A&P thereafter amended their
agreement to extend the due diligence period to allow A&P to
resolve the Union's grievance. A&P never conveyed the property to
Longview alleges that A&P's pre-contractual representation that
A&P's right to sell the property was unencumbered constitutes
fraud. Longview further alleges that at the time A&P made the
representation, A&P knew that the Union had a right of first
refusal. Longview believes that A&P intentionally concealed the
existence of the Union's collective bargaining agreement to
induce Longview to enter into the contract.
Longview filed the Complaint on September 6, 2002, in the
Delaware County Court of Common Pleas alleging fraud and breach
of contract and seeking specific performance. The case was
removed to this Court on September 23, 2002. After 11 months in
civil suspension, the case was returned to the active docket on
October 7, 2003. In the instant motion, A&P asserts that Longview's fraud
claim must be dismissed because Pennsylvania's "gist of the
action" doctrine bars tort claims when a cause of action is based
on a breach of contract. Longview opposes.
Federal Rule of Civil Procedure 12(c) allows any party to move
for judgment on the pleadings "after the pleadings are closed but
within such time as not to delay the trial. . . ." Fed.R. Civ.
P. 12(c). When only the pleadings have been presented to the
Court for consideration, a Rule 12(c) motion receives the same
standard as a motion to dismiss under Rule 12(b)(6). See Inst.
for Scientific Info., Inc. v. Gordon & Breach, Sci. Publ'ers,
Inc., 931 F.2d 1002, 1005 (3d Cir. 1991); Bowman v. Am. Med.
Sys., No. 96-7871, 1998 U.S. Dist. LEXIS 16082, at *4 (E.D. Pa.
Oct. 9, 1998). Thus, the Court's role is to evaluate the legal
sufficiency of the complaint. See Holder v. City of
Allentown, 987 F.2d 188, 194 (3d Cir. 1993); Harvey v.
Pilgrim's Pride Corp., No. 03-3500, 2003 U.S. Dist. LEXIS 23274,
at *3 (E.D. Pa. Dec. 1, 2003). The Court must accept as true all
facts alleged in the complaint and any reasonable inferences that
can be drawn from them. See, e.g., H.J. Inc. v. Nw. Bell Tel.
Co., 492 U.S. 229, 249-50 (1989); Doe v. Delie, 257 F.3d 309,
313 (3d Cir. 2001); Fairfax v. Sch. Dist. of Phila., No.
03-4777, 2004 U.S. Dist. LEXIS 7750, at *5-6 (E.D. Pa. Apr. 26,
When pleading a claim for fraud or mistake, Rule 9(b) requires that "the circumstances constituting fraud or mistake shall be
stated with particularity." Fed.R.Civ.P. 9(b). Rule 9(b) is
satisfied when a plaintiff pleads the "date, place, or time" of
the fraud, but the plaintiffs may also satisfy the rule "by
injecting precision and some measure of substantiation into their
allegations of fraud." Seville Indus. Mach. Corp. v. Southmost
Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984).
In applying Rule 9(b) the United States Court of Appeals for
the Third Circuit has cautioned that district courts must take
into account the "general simplicity and flexibility contemplated
by the rules" and "be sensitive to the fact that [the Rule] . . .
may permit sophisticated defrauders to successfully conceal the
details of their fraud. Christidis v. First Penn. Mortgage
Trust, 717 F.2d 96, 99-100 (3d Cir. 1983). Thus, application of
Rule 9(b) is relaxed when the factual information regarding the
fraud is peculiarly within the defendant's control. Weiner v.
Quaker Oats Co., 129 F.3d 310, 319 (3d Cir. 1997). Even in
situations where a relaxed application applies, a plaintiff must
at least outline "the nature and scope of [the] effort to obtain
. . . the information needed to plead with particularity. . . ."
Shapiro v. UJB Fin. Corp., 964 F.2d 272, 285 (3d Cir. 1992).
A&P argues that Longview's fraud claim, Count I of the
Complaint, must be dismissed under Pennsylvania's "gist of the action" doctrine. The gist of the action doctrine bars an
aggrieved party to a contract from bringing a tort claim against
the other party where the essential nature of the claim, the
"gist" of the claim, is contractual. See Owen J. Roberts Sch.
Dist. v. HTE, Inc., No. 02-7830, 2003 U.S. Dist. LEXIS 2997, at
*2 (E.D. Pa. Feb. 28, 2003). In eToll, Inc. v. Elias/Savion
Adver., Inc., the Pennsylvania Superior Court explained the
distinction between tort claims and contract claims: "Tort
actions lie for breaches of duties imposed by law as a matter of
social policy, while contract actions lie only for breaches of
duties imposed by mutual consensus agreements between particular
individuals." 811 A.2d 10, 14 (Pa. Super. 2002) (citing Bash v.
Bell Tel. Co., 601 A.2d 825, 829 (Pa. Super. 1992)). The legal
distinction is important because "[t]o permit a promisee to sue
his promisor in tort for breaches of contract inter se would
erode the usual rules of contractual recovery and inject
confusion into our well-settled forms of actions." Id.
The doctrine does not provide for an absolute prohibition of
tort claims when a breach of contract is alleged. "[A]lthough
mere non-performance of a contract does not constitute fraud[,]
it is possible that a breach of contract also gives rise to an
actionable tort[.] To be construed as in tort, however, the wrong
ascribed to defendant must be the gist of the action, the
contract being collateral." Id. In other words, a party to a
contract should be limited to a contract claim only when "`the parties' obligations
are defined by the terms of the contracts, and not by the larger
social policies embodied by the law of torts.'" Id. (quoting
Bohler-Uddeholm Am., Inc. v. Ellwood Group, Inc., 247 F.3d 79,
104 (3d Cir. 2001)). This distinction is illustrated in
Bohler-Uddeholm. There, the minority shareholder of a
corporation brought suit against the majority shareholder
alleging a contract claim for breach of the shareholder
agreement, a tort claim for breach of the majority shareholder's
fiduciary duty, and a tort claim for misappropriation of trade
secrets. See Bohler-Uddeholm, 247 F.3d at 87. The Third
Circuit held that when a majority shareholder breaches his
fiduciary duty to minority shareholders, the gist of the action
doctrine does not apply, even if the duty was expressly part of a
shareholder agreement, because the fiduciary duty has grown out
of social policy defining the relationships among shareholders.