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Golkow v. Esquire Deposition Services

July 15, 2010

LINDA L. GOLKOW, PLAINTIFF,
v.
ESQUIRE DEPOSITION SERVICES, LLC, DEFENDANT.



The opinion of the court was delivered by: Timothy R. Rice U.S. Magistrate Judge

MEMORANDUM OPINION

I. Background

This case involves a breach of contract claim, in which plaintiff Linda Golkow alleges defendant Esquire Deposition Services, LLC ("Esquire") breached its contract to pay her a 25 percent commission for business she generated on behalf of Esquire. See Complaint at 2-5, Golkow v. Esquire Deposition Svc., LLC, No. 07-cv-03355 (E.D. Pa. Aug. 14, 2007) [hereinafter Original Complaint]. Golkow seeks leave to amend her Complaint to include a claim for conversion and a request for punitive damages based on evidence already gathered during discovery. See Plaintiff's Motion for Leave to Amend Complaint at 2-3, Exh. 2, Golkow v. Esquire Deposition Svc., LLC, No. 07-cv-03355 (E.D. Pa. May 13, 2010) [hereinafter Plaintiff's Motion].

Golkow's proposed amended complaint is futile because her conversion claim is barred by the gist of the action doctrine. See Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000) (futility is the failure to state a claim upon which relief could be granted). Additionally, allowing Golkow to amend her complaint would cause undue prejudice to Esquire.

II. Discussion

"[C]courts have shown a strong liberality... in allowing amendments under Rule 15(a)."

Heyl & Patterson Int'l, Inc. v. F.D. Rich Hous. of the V.I., Inc., 663 F.2d 419, 425 (3d Cir. 1981) (citations omitted); see Fed. R. Civ. P. 15(a)(2) (the court should freely give leave to amend). However, "undue delay, bad faith, or dilatory motive on part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or the] futility of amendment" justify denial of leave to amend. Foman v. Davis, 371 U.S. 178, 182 (1962); Shane, 213 F.3d at 115.

A. Gist of the Action Doctrine

The gist of the action doctrine "is designed to maintain the conceptual distinction between breach of contract claims and tort claims," and therefore precludes plaintiff from recasting ordinary breach of contract claims into tort claims. Krajewski v. Am. Honda Finance Corp., 557 F. Supp. 2d 596, 607 (E.D. Pa. 2008) (Yohn, J.) (citing eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 14 (Pa. Super. Ct. 2002).*fn1

Contract actions involve the breach of duties imposed by mutual consensus, whereas tort actions involve the breach of duties imposed by social policy. Bohler-Uddeholm Am., Inc. v. Ellwood Group, Inc., 247 F.3d 79, 103 (3d Cir. 2001); eToll, 811 A.2d at 14. Therefore, if the parties' obligations stem from social policy, the claim may be construed as a tort action. If, however, the parties' obligations flow from an agreement between the parties, the claim is limited to a contract claim. Knit With, 2009 WL 3427054, at *6; eToll, 811 A.2d at 14.

Conversion is "the deprivation of another's right of property in, or use of possession of, a chattel, or other interference therewith, without the owner's consent and without lawful justification." Markert v. Becker Technical Staffing, Inc., 2010 WL 1856057, at *8 (E.D. Pa. May 7, 2010) (Joyner, J.) (quoting Underhill Coal Mining Co. v. Hixon, 652 A.2d 343, 345 (Pa. Super. Ct. 1994)). The gist of the action doctrine precludes an action for conversion if the conversion claim depends on the obligations of the contract. Krajewski, 557 F. Supp. 2d at 607; U.S. Claims, Inc. v. Saffren & Weinberg, LLP, 2007 WL 4225536, at *9 (E.D. Pa. Nov. 29, 2007) (Buckwalter, S.J.); see, e.g., Quandry Sol'ns, Inc. v. Verifone Inc., 2007 WL 655606, at *4 (E.D. Pa. Mar. 1, 2007) (DuBois, J.) (conversion claim based upon a duty to pay that arose from the parties' contract).

For example, in Mid-Continent Ins. Co. v. Packel, 2001 WL 34371697 (E.D. Pa. Oct. 25, 2001) (Surrick, J.), the plaintiff's conversion claim alleged defendant deliberately and knowingly withheld premiums from plaintiff, and sought damages of $639,420.53. Plaintiff's breach of contract claim alleged defendant breached the contract by withholding $639,420.53 in premiums from plaintiff. The conversion claim was barred by the gist of the action doctrine because the two claims were essentially the same. See 2001 WL 34371697, at *4; see also Saffren, 2007 WL 4225536, at *9 (doctrine bars conversion claim where the pleadings are merely a damage claim for breach of contract).

Similarly, Golkow's conversion and contract claims are essentially the same. Golkow's breach of contract claim alleges: "Esquire has failed and refused to pay Golkow the 25% commission rate due and owing to her under the contract.... Esquire's failure and refusal to pay Golkow the 25% commission rate due and owing to her constitutes a material breach of the contract, and caused Golkow to suffer damages in excess of $141,200.40...." See Original Complaint at ¶¶ 29-30. Golkow's proposed conversion claim alleges: "Golkow was entitled to a 25% commission of all business generated at Esquire by and on behalf of Golkow.... Esquire has seized and refused to return at least $141,200.40 belonging to Golkow." See Plaintiff's Motion at Exh. 2 ¶¶ 33-34. Golkow's conversion claim is based ...


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