Reginella Construction Co. v. Travelers Casualty & Surety Co. of America
949 F. Supp. 2d 599
W.D. Pa.2013Background
- Reginella Construction sues Travelers for breach of fiduciary duty, intentional interference with contractual relations, and tortious bad faith related to two multimillion-dollar construction bonds.
- The MASD (Moon Area School District) project and the OTC (Ohio Turnpike Commission) project are at issue; Travelers issued bonds for both projects as Reginella’s surety.
- Reginella alleges Travelers’ conduct cost it substantial future earnings and goodwill; Travelers moves to dismiss all six counts under Rule 12(b)(6).
- An Indemnity Agreement, entered June 2009, governs the surety-principal relationship and authorizes Travelers to take steps against Reginella upon default.
- The court considers the Indemnity Agreement incorporated by reference, as it bears on the fiduciary and contractual dynamics central to the pleadings.
- Pennsylvania choice-of-law analysis applies by most-significant relationship, with the court predicting Pennsylvania would not impose fiduciary duties on a surety and would bar tort bad-faith claims when contract governs the conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a fiduciary duty exists between Reginella and Travelers | Reginella asserts Travelers owes a fiduciary duty as its surety. | Travelers contends no fiduciary duty arises from suretyship under Pennsylvania law. | No fiduciary duty; not recognized as a matter of law. |
| Whether Counts Three–Six (intentional interference and bad faith) states tort claims barred by the gist of the action doctrine | Counts Three–Six allege torts arising from Travelers’ conduct in the contract/surety context. | Counts are legitimate tort claims not duplicative of contract or outside the contract’s setting. | Gist of the action bars these tort claims; dismissed with prejudice. |
Key Cases Cited
- Bash v. Bell Tel. Co., 601 A.2d 825 (Pa. Super. 1992) (twin duties of contract and tort; breach of contract cannot be treated as tort unless independent)
- eToll, Inc. v. Elias Savion Advertising, Inc., 811 A.2d 10 (Pa. Super. 2002) (gist of the action; tort claims must arise independent of contract)
- Glazer v. Chandler, 200 A.2d 416 (Pa. 1964) (contractual relations and tort claims; distinction between contract and tort)
- Grode v. Mutual Fire, Marine and Inland Ins. Co., 572 A.2d 798 (Pa. Cmwlth. 1990) (suretyship not insurance; fiduciary relation considerations in surety contexts)
- Weir by Gasper v. Ciao, 556 A.2d 825 (Pa. Super. 1989) (overmastering influence and fiduciary implication in relationships)