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- Freedom to Contract Jeopardized When Fact Finder’s ‘Sense of Fairness’ Becomes Determinative
- Failure to Understand Terms of Personal Guarantee Agreements Will Likely Cost You
- Collateral Estoppel may Apply to Vacated Judgments Post-settlement
- “But he hit me First” Might Work With Mom, but not Necessarily for Defending Breach of Contract Claims
- E-Commerce Sales Tax Enforcement Finally Enters 21st Century
- Exceptions Complicate Res Judicata Doctrine’s Ability to Bar Additional Claims
- Promises to pay Another’s Debts Might fall Within Statute of Frauds; Then Again, Maybe not
- I can amend my pleadings, can’t I?
- Proceed With Caution When Considering CMBS Loans
When is a Tort Claim Instead an Actionable Contract Claim?
Steer clear of inconsistent contract, tort and equitable theories in litigation to position your case for a successful and cost-effective outcome.
This one seems so obvious, but I continue to see it all the time – tort claims being styled as contract claims and vice versa.
Let’s start with the basic premise that contract claims and tort claims are different animals. To establish a breach of contract the plaintiff typically must show (1) there was a contract, (2) the other side breached and (3) the breach resulted in damages to the plaintiff.
A tort claim, say one for negligence, is different. Actionable negligence is based upon a legal relationship between parties that results in a duty of care and a breach of that duty causing damage.
A legal duty may arise from a variety of sources, including a contract. However, to show a breach of duty necessary to give rise to actionable negligence the underlying duty cannot be contract-based. Rather, the duty underlying a negligence claim must be distinct from any contractual duty. Put another way, “[i]f a relationship exists that would give rise to a legal duty without enforcing [a] contractual promise,” you may have an actionable tort. Without that distinct duty yours is contractual remedy, if at all.
Lawyers tend to be careful people by their nature. We like to cover our bases and then some. As such, I commonly see complaints filed based on the breach of a contract and yet sandwiched in with various tort claims like negligence and fraud. Now there is nothing wrong with pleading in the alternative when all the predicate facts are unknown. Under those circumstances, alternative pleading may not only be prudent, it may be necessary. Often, however, alternative pleading is not based in prudence.
In recent memory, I have defended many clients sued through complaints alleging counts numbering into the high teens, including an unhealthy mix of tort, contract and equitable claims. In many of those instances, the complaints began with a count alleging breach of a contract, and the parties’ written agreement was actually attached. The rest of the complaints tended to be convoluted attempts to spin or morph the original contract claim into a plausible tort or equitable theories. Those efforts all failed; sometimes the attempts resulted in sanctions.
The lesson to be learned is that alternative tort claims may be factually necessary, but they should not simply be used to cover the bases, or worse, to needlessly complicate the action. This type of pleading by obfuscation only begs for costly and time consuming motion practice and rarely serves to push the ball down the field toward a just resolution.
I know many lawyers will attempt to justify this type of shotgun pleading approach, but those justifications ring hollow when the rules are as clear as the facts of the case. In litigation, confusing the judge or jury with conflicting, or at best factually ambiguous theories, is asking for trouble. Even when the pleadings are cleaned up through motions to dismiss or for summary judgment the wasted time and expense is just that, a waste.
At trial, your task is to persuade the fact-finder that your claim has merit. Trying to do that while pursuing inconsistent contract, tort and equitable theories, can be self-defeating. In litigation, sometimes less is more.Tags: Business Risk Management, Business Torts, Commercial Liability, Contracts