Loading...
HomeMy WebLinkAbout95-6238 CivilLIFETIME PERIODICALS, INC., Plaintiff Ve FRY COMMUNICATIONS, INC., Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 95-6238 CIVIL TERM IN RE: DEFENDANT'S PRELIMINARY OBJECTION BEFORE OLER, J. ORDER OF COURT AND NOW, this ~ day of April, 1996, after careful consideration of Defendant's preliminary objection in the nature of a demurrer, and for the reasons stated in the accompanying opinion, the preliminary objection is SUSTAINED and count I (negligence) of Plaintiff's complaint is DISMISSED. PLAINTIFF is GRANTED 20 days within which to file an amended complaint if it cares to do so to supplement its contractual claim. Defendant shall have 20 days from service of any such amended complaint, or 20 days from the expiration of the time for filing an amended complaint if none is filed, to file a responsive pleading. Jennifer A. Kline, Esq. Paul W. Minnich, Esq. BARLEY, SNYDER, SENFT & COHEN 100 East Market Street P.O. Box 15012 York, PA 17405-7012 Attorneys for Plaintiff BY THE COURT, Theodore A. Adler, Esq. REAGER & ADLER, P.C. 2331 Market Street Camp Hill, PA 17011 and Robert A. Swift, Esq. Denis F. Sheils, Esq. KOHN, SWIFT & GRAF, P.C. 2400 One Reading Center 1101 Market Street Philadelphia, PA 19107-2924 Attorneys for Defendant : rc LIFETIME PERIODICALS, INC., Plaintiff Vo FRY COMMUNICATIONS, INC., Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 95-6238 CIVIL TERM IN RE: DEFENDANT'S PRELIMINARY OBJECTION BEFORE OLER, J. OPINION and ORDER OF COURT Oler, J. This action arises out of an agreement between a publisher of periodicals (Plaintiff) and a printer (Defendant), whereby Defendant was to print certain quarterly periodicals for Plaintiff. Allegedly, Defendant forgot to include bar codes provided by Plaintiff on the covers of the periodicals, and a financial loss resulted to Plaintiff. Plaintiff's complaint contains a count for negligence and a count for breach of implied warranties. For disposition at this time is Defendant's preliminary objection in the nature of a demurrer to the negligence count. Based upon the general rule that a breach of contract is not properly the subject of a claim for negligence, the preliminary objection will be sustained. STATEMENT OF FACTS The allegations of Plaintiff's complaint may be summarized as follows: Plaintiff is Lifetime Periodicals, Inc., a Florida corporation having a business address of 2131 Hollywood Boulevard, Hollywood, Florida. Defendant is Fry Communications, Inc., a Pennsylvania corporation having a business address of 800 West NO. 95-6238 CIVIL TERM Church Road, Mechanicsburg, Pennsylvania. Plaintiff is the publisher of two quarterly periodicals known as "Money Lines" and "Fell's U.S. Coins." In August of 1993, Plaintiff entered into an agreement with Defendant, a printing company "hold[ing] itself out as having special expertise, knowledge and skill to print magazines for newsstand distribution,''~ pursuant to which Defendant was to print the periodicals for newsstand distribution over a three-year period. In order to print the covers for these magazines, [Defendant] was provided with two pieces of film per magazine. One of the films contained the graphics for the cover and the other film contained the UPC code which was to be placed on the cover.2 Defendant inadvertently failed to print the bar codes on the periodical covers; without such codes, the magazines could not be sold at newsstands. After discovering the error, Defendant failed to delay distribution of the periodicals to facilitate correction of the problem. Plaintiff suffered financial losses in the form of reduced sales as well as expenses associated with printing and affixing to the periodicals substitute bar code stickers. Count I of Plaintiff's complaint alleges that Defendant knew or should have known that the periodicals could not be sold without bar codes, and Plaintiff's Complaint, paragraph 4. Id., paragraph 8. 2 NO. 95-6238 CIVIL TERM that Defendant's "negligence and carelessness-3 in failing to print bar codes on the magazines and failing to act upon discovery of the error resulted in damages to Plaintiff in excess of $20,000.00. Count II alleges that Plaintiff was known to be relying upon Defendant's skill, knowledge and experience in printing the magazines. It avers that in failing to print the bar codes Defendant breached an implied warranty of merchantability and an implied warranty of fitness for a particular purpose, resulting in damages to Plaintiff in excess of $20,000.00. Defendant's preliminary objection in the nature of a demurrer contends that "Pennsylvania does not recognize a cause of action sounding in negligent breach of contract."4 It contends further that "pure economic injury is not compensable under a negligence theory.,,5 Statement of law. DISCUSSION The standard for review of a demurrer to a complaint has been expressed as follows: Preliminary objections in the nature of a demurrer will only be sustained in cases which are clear and free from doubt, that is, where it appears with certainty that the law will not permit recovery. In making this determination, a court will consider all well- 3 Id., paragraph 17. 4 Preliminary Objections of Defendant Fry Communications, Inc., paragraph 4. ~ Id., paragraph 5. NO. 95-6238 CIVIL TERM pleaded facts as inferences which are therefrom. true, including any reasonably deducible Koren v. Board of Directors, Pa. Commw. n.4, 661 A.2d 449, 451 n.4 (1995) (citations omitted). "The test ... is not whether the applicable law is clear and free from doubt .... " Firing v. Kephart, 466 Pa. 560, 563, 353 A.2d 833, 835 (1976). The role of the court in ruling on preliminary objections in the nature of a demurrer is to determine whether or not the facts pleaded are legally sufficient to permit the action to continue. This is so whether the legal determination to be made is relatively simple or relatively difficult. Id. at 563-64, 353 A.2d at 835; see 5 Standard Pennsylvania Practice S25:70, at 181 (1993). The distinction between tort and contract causes of action is both logical and of practical importance. First, the actions have traditionally served different purposes: Although they derive from a common origin, distinct differences between civil actions for tort and contract breach have developed at common law. 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 consensual agreements between particular individuals. Iron Mountain Sec. Storage Corp. v. American Specialty Foods, Inc., 457 F. Supp. 1158, 1165 (E.D. Pa. 1978). Second, different measures of damages have usually been 4 NO. 95-6238 CIVIL TERM associated with contract and tort claims. See Grode v. Mutual Fire, Marine and Inland Ins. Co., 154 Pa. Commw. 366, 623 A.2d 933 (1993). Relegation of a type of action to tort or contract often reflects a determination as to where, in a certain type of relationship, the risk of a certain type of loss should fall. See, e.g., REM Coal Co., Inc. v. Clark Equipment Co., 386 Pa. Super. 401, 563 A.2d 128 (1989) (purely economic loss in products liability case arising out of physical damage to product only held to give rise to contract action only).6 ~ An example of this kind of analysis is contained in REM: First, tort law's concern for the protection of the public is greatly reduced in such circumstances. Since consumers of the product can insure against the loss of the product and its use, there is no need to provide them with the special protection of tort remedies. Second, damage to the product is "most naturally understood as a warranty claim." Warranties aim at maintaining product value and quality, which is all a consumer loses when the product is defective in a manner that results only in economic losses. Finally, warranty law is suited to economic loss cases because in such cases, the parties have the opportunity to have set the terms of their agreement regarding product value and quality in advance. The manufacturer may provide limited warranties and reduce the price, or give full warranties at a higher cost. The customer has the ability to negotiate over the terms of the bargain. If the product does not perform according to the agreement, the consumer is made whole by contract damages as limited by the terms of the agreement. This limitation of liability is an entirely appropriate brake on the manufacturer's liability in a case involving only the loss of the bargained for product. REM Coal Co., Inc. v. Clark Equipment Co., 386 Pa. Super. 401, 410- 11, 563 A.2d 128, 132-33 (1989) (citations omitted). NO. 95-6238 CIVIL TERM Third, different collateral consequences have developed as a result of, and are dependent upon, the judicial distinction between tort and contract liability - e.g., contractual liability exclusions in commercial insurance policies. See generally Hertz Corp. v. Smith, 441 Pa. Super. 575, 657 A.2d 1316 (1995). The Pennsylvania Supreme Court has cautioned against authorizing tort recovery for contractual breaches: To 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. Most courts have been cautious about permitting tort recovery for contractual breaches and we are in full accord with this policy. The methods of proof and the damages recoverable in actions for breach of contract are well established and need not be embellished by new procedures or new concepts which might tend to confuse both the bar and litigants. Glazer v. Chandler, 414 Pa. 304, 308-09, 200 A.2d 416, 418 (1964) (citation omitted); see Health Benefits Management, Inc. v. Pilot Air Freight, Inc., No. 94-7084 Civil Term (Cumberland Co. July 14, 1995) (Hoffer, J.). Notwithstanding this admonition, it must be recognized that the reluctance of courts to permit tort recovery for contractual breaches "is not ironclad." Grode v. Mutual Fire, Marine and Inland Ins. Co., 154 Pa. Commw. 366, 370 n.3, 623 A.2d 933, 935 n.3 (1993). It can not be said, for instance, "that tort claims can never arise from contractual service relationships." Id. at 371, 6 NO. 95-6238 CIVIL TERM 623 A.2d at 936 (emphasis added).7 A good general rule on this subject appears to the court to have been provided by the Superior Court in Bash v. Bell Telephone Co., 411 Pa. Super. 347, 601 A.2d 825 (1992): [I]t 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. A claim ex contractu cannot be converted to one in tort simply by alleging that the conduct in question was wantonly done. Id. at 355-56, 601 A.2d at 829 (citation omitted) (emphasis omitted). In Bash, the Superior Court upheld a lower court's dismissal of a negligence count against a company which omitted plaintiff's advertisement from a phone book. "The obligations of the parties in the instant dispute are a matter of private contract law," the Court stated. Id. at 356, 601 A.2d at 829. The court discerned no need to implicate "the larger social policies embodied in the law of torts." Id. at 357, 601 A.2d at 830. In the case sub judice, several factors support Defendant's position that Plaintiff's action should not proceed on a negligence basis. First, the wrong ascribed to Defendant - failure to print 7 For instance, "special non-contractual duties of professionals such as doctors, lawyers and architects enforced by tort law were created in part to make up for the lack of sophistication and bargaining power of those seeking these professional services." PPG Industries, Inc. v. Sundstrand Corp., 681 F. Supp. 287, 290 (W.D. Pa. 1988). 7 NO. 95-6238 CIVIL TERM a bar code supplied by a publisher on periodical covers and failure to facilitate correction of the problem when it was discovered - is a matter involving the parties express or implicit understandings; the contract between them can not be characterized as merely "collateral" to the alleged wrong. Second, the duty allegedly breached by Defendant was not one imposed by law as a matter of social policy. Finally, the measure of damages applicable to contract actions seems more appropriate than that applicable to tort actions in a case such as this arising out of an agreement between a publisher and printer, involving no physical harm, property damage or injury other than economic loss. For these reasons, the following order will be entered: ORDER OF COURT AND NOW, this 3/~ day of April, 1996, after careful consideration of Defendant's preliminary objection in the nature of a demurrer, and for the reasons stated in the accompanying opinion, the preliminary objection is SUSTAINED and count I (negligence) of Plaintiff's complaint is DISMISSED. PLAINTIFF is GRANTED 20 days within which to file an amended complaint if it cares to do so to supplement its contractual claim. Defendant shall have 20 days from service of any such amended complaint, or 20 days from the expiration of the time for filing an amended complaint if none is filed, to file a responsive pleading. BY THE COURT, J. Wesley Oler, ~r., J. NO. 95-6238 CIVIL TERM Jennifer A. Kline, Esq. Paul W. Minnich, Esq. BARLEY, SNYDER, SENFT & COHEN 100 East Market Street P.O. Box 15012 York, PA 17405-7012 Attorneys for Plaintiff Theodore A. Adler, Esq. REAGER & ADLER, P.C. 2331 Market Street Camp Hill, PA 17011 and Robert A. Swift, Esq. Denis F. Sheils, Esq. KOHN, SWIFT & GRAF, P.C. 2400 One Reading Center 1101 Market Street Philadelphia, PA 19107-2924 Attorneys for Defendant : rc 9