Reginella Constr. Co. v. Travelers Cas. & Sur. Co. of Am.
Decision Date | 05 September 2013 |
Docket Number | Civil Action No. 12–1047. |
Citation | 971 F.Supp.2d 470 |
Parties | REGINELLA CONSTRUCTION COMPANY, LTD., Plaintiff, v. TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, Defendant. |
Court | U.S. District Court — Western District of Pennsylvania |
OPINION TEXT STARTS HERE
James S. Malloy, Joseph L. Luciana, III, Kari M. Ashcroft, Dingess, Foster, Luciana, Davidson, & Chleboski, LLP, Pittsburgh, PA, for Plaintiff.
W. Alan Torrance, Jr., Dickie, McCamey & Chilcote, Pittsburgh, PA, for Defendant.
This is an action for damages initiated by a construction company against its former surety. On May 31, 2013, this Court dismissed plaintiff Reginella Construction Company Limited's (“Reginella”) Complaint for failure to state a claim upon which relief could be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). See Reginella Constr. Co., Ltd. v. Travelers Cas. and Sur. Co. of America, 949 F.Supp.2d 599, 2013 WL 2404140 (W.D.Pa.2013) ( “Opinion”). Specifically, the Court found that Reginella's fiduciary duty, intentional interference, and tort bad faith claims failed as a matter of law. Finding the claims to be legally rather than factually deficient, the Court determined that curative amendment was futile and dismissed the Complaint with prejudice.1 In response to the dismissal of the Complaint, Reginella timely filed a Motion to Alter or Amend Judgment or, in the Alternative, for Leave to File an Amended Complaint (ECF No. 23) pursuant to Federal Rules of Civil Procedure 59(e) and 15(a) on the basis that the Opinion was predicated on several errors of law. Defendant Travelers Casualty and Surety Company of America (“Travelers”) contends that Reginella's arguments lack merit. (ECF No. 30.)
The Court held a hearing on Reginella's motion on August 21, 2013. For the reasons that follow, the Motion will be denied in its entirety.
Reginella argues that the Court committed legal error in dismissing its fiduciary duty claims with prejudice, applying Pennsylvania's gist of the action doctrine to bar its interference and tort bad faith claims, and by construing the facts in the Complaint against Reginella rather than in its favor. In light of these alleged errors and emergence of certain “new facts,” Reginella contends that the Court should grant it leave to file an Amended Complaint. The Court concludes that because no error of law occurred and because amendment would be futile and would reward undue delay, the Motion will be denied.
In accordance with Federal Rule of Civil Procedure 59(e), a party may move to re-open a judgment no later than 28 days after its entry if at least one of the following grounds exists: “(1) an intervening change in controlling law; (2) the availability of new evidence; or (3) the need to correct clear error of law or prevent a manifest injustice.” Burtch v. Milberg Factors, Inc., 662 F.3d 212, 230 (3d Cir.2011). The determination of whether a judgment should be re-opened is left to the discretion of the district court. Cureton v. Nat. Collegiate Athletic Ass'n, 252 F.3d 267, 272 (3d Cir.2001).
First, Reginella contends that because the Court held that the Complaint failed to plead the existence of a legally-recognized fiduciary-in-fact relationship, it was legal error for the Court to have dismissed the claims without granting leave to re-plead with new facts. However, the Court was not required to grant leave to re-plead because it determined that there was no set of facts under which Reginella, a corporation with 25 years of experience in the multi-million dollar public construction industry, with access to legal and financial advice, as well as the knowledge that Travelers was contractually permitted to take steps against its interests if certain contingencies arose as set forth in the various agreements it intelligently and willingly signed, could plead the existence of a fiduciary-in-fact relationship between itself and Travelers. Reginella urges the Court to reconsider this conclusion in light of the newly-asserted fact that “Travelers was a public company with publicly reported assets of $14 billion while [Reginella] was a small regional contractor with assets that were only a small fraction of Travelers' assets.” (ECF No. 24 at p. 19.) The Court is not aware of any Pennsylvaniacase that has found a fiduciary-in-fact relationship between two incorporated entities based on the comparative size of their balance sheets, the parties cite to no such case, and this Court will not start down that road now.
Futility of amendment is a long-accepted basis for dismissing a Complaint with prejudice. Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434–35 (3d Cir.1997). Thus, the ruling that Reginella's fiduciary-in-fact claims are legally deficient will stand.
Next, Reginella argues that the Court committed legal error in sua sponte applying the gist of the action doctrine to bar its tortious interference and tort bad faith claims because: 1) the Court should have given Reginella an opportunity to brief the issue; 2) the applicability of the doctrine depends upon evidence adduced during discovery; and 3) in applying the doctrine, the Court did not construe the Complaint's facts in the light most favorable to Reginella as it was required to do on Rule 12(b)(6) review. These arguments misstate the law.
The purpose of the gist of the action doctrine is to maintain the conceptual separation between contract claims and tort claims, and in any case is a matter of law for the Court to decide. ( SeeOpinion, 949 F.Supp.2d at 614–15, citing cases.) “The doctrine deals less with specific enumerated ‘duties' than with the parties' conduct as it relates to the contract and the tort alleged,” such that where the tort claims are inextricably intertwined with the contract, and the source of the duties allegedly breached is the contract rather than the general duty of care imposed by law as a matter of social policy, the “gist of the action” is in contract. Pediatrix Screening, Inc. v. TeleChem Intern., Inc., 602 F.3d 541, 550 (3d Cir.2010) (discussing eToll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10, 21 (Pa.Super.2002)). Simply put, the doctrine asks, “What's this case really about?” Pediatrix, 602 F.3d at 550. To be clear, the doctrine only precludes the plaintiff from proceeding on a tort theory of liability. It does not, by its own operation, extinguish the alternative contract claim, and it is not an affirmative defense that the defendant bears the burden of proving.
The agreements in force between Travelers and Reginella make clear that source of the duties allegedly breached was in contract. See, e.g., Indemnity Agreement, ECF No. 7–1, at 1 ( ); ¶ 1 ( ); ¶ 6 ); see also MASD Performance Bond, ECF No. 7–2, at § 4 ( ); MASD Payment Bond, ECF No. 7–3 at § 16 ( ); OTC Contract Bond, ECF No. 7–4 at 2 ( ). These provisions were outlined and discussed at length in the Opinion.
Because it was facially apparent from the Complaint that Reginella's tortious interference 2 and tort bad faith 3 claims were re-casted breach of contract claims, the Court was obligated to apply the doctrine at the pleading stage to further Pennsylvania's interest in maintaining the separation between these well-settled forms of actions. Ray v. Kertes, 285 F.3d 287, 297 (3d Cir.2002) ( ); see McPherson v. U.S., 392 Fed.Appx. 938, 942–43 (3d Cir.2010) ( );see also Rudder v. Williams, 666 F.3d 790, 796 (D.C.Cir.2012) (same).
Although whether the gist of the action doctrine applies can, at times, require “a fact-intensive analysis as to the nature of the claim,” Pediatrix, 602 F.3d at 551, which can be the case with fraud-based claims like misrepresentation and fraudulent inducement, there is no bright-line rule to this effect and...
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