Red Wing Aeroplane Company v. Fidelity Flight Simulation, Inc.
3:16-cv-00118
W.D. Wis.Jun 6, 2017Background
- Red Wing Aeroplane Co. contracted with Fidelity Flight Simulation to design and deliver a Level 6 flight simulator under an Equipment Purchase Agreement and a later Addendum setting firm completion and delivery deadlines.
- Red Wing alleges Fidelity missed the Addendum deadlines and delivered a defective simulator and that Fidelity made pre- and post-contract misrepresentations about schedule, timeliness, workmanship, and Fidelity’s experience/skill.
- Red Wing pleads breach of contract and a fraud claim seeking compensatory and punitive damages; Fidelity moved to dismiss the fraud claim under Rule 12(b)(6).
- The contract specifies Pennsylvania law governs; the court applies Pennsylvania law to the fraud claim under Wisconsin choice-of-law rules.
- Fidelity argues the fraud claim is barred by Pennsylvania’s "gist of the action" doctrine (and the related economic loss doctrine) because the alleged misrepresentations are intertwined with contractual duties.
- The court agrees: both pre-contract (inducement) and post-contract fraud allegations are effectively grounded in the parties’ contractual obligations and therefore the fraud claim is dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pennsylvania’s gist-of-the-action doctrine bars Red Wing’s fraud claim | Fraud claims based on misrepresentations before and after contracting are allowed, including fraudulent inducement | Gist doctrine bars tort claims that merely recast breaches where duties arise from the contract | Court: Gist doctrine bars the fraud claim; both pre-contract inducement and post-contract performance-based fraud are grounded in the contract and not actionable in tort |
| Whether the fraudulent-inducement exception saves pre-contract misrepresentations | Fraud in inducement can survive the gist doctrine when obligations arise outside the contract | Pre-contract statements became the basis for the contract and therefore are not independent tort duties | Court: Exception does not apply because alleged inducement statements became contractual basis and are inextricably linked to contract performance |
| Whether public policy or separate regulatory duties create an independent tort duty | Red Wing suggests fraud claims could be justified by larger policy or regulatory duties | Fidelity: no public-policy or statutory duty alleged that would create a separate tort duty | Court: No overarching public policy or independent regulatory obligation was alleged; fraud claim not saved |
| Remedy requested (punitive/compensatory) available despite contract | Red Wing seeks full tort remedies including punitive damages for fraud | Fidelity: tort remedies cannot be recovered where gist doctrine applies | Court: Dismissed fraud claim; contract remedies only remain available |
Key Cases Cited
- Jones v. ABN Amro Mortg. Grp., Inc., 606 F.3d 119 (3d Cir. 2010) (explaining gist-of-the-action bars recasting contract claims as torts)
- Pediatrix Screening, Inc. v. TeleChem Int’l, Inc., 602 F.3d 541 (3d Cir. 2010) (discussing elements for treating a claim as tort vs. contract and relation to ELD)
- eToll, Inc. v. Elias/Savion Advert., Inc., 811 A.2d 10 (Pa. Super. Ct. 2002) (holding gist doctrine bars fraud claims arising from contract performance)
- Bohler-Uddeholm Am., Inc. v. Ellwood Grp., Inc., 247 F.3d 79 (3d Cir. 2001) (limiting tort recovery where obligations are defined by contract terms)
- Mirizio v. Joseph, 4 A.3d 1073 (Pa. Super. Ct. 2010) (recognizing fraud-in-the-inducement may survive gist doctrine in some contexts)
- DeFabo v. Anderson Windows, Inc., 654 F. Supp. 2d 285 (E.D. Pa. 2009) (dismissing inducement fraud where alleged misrepresentations were indistinguishable from contract nonperformance)