DAN RYAN BUILDERS, INC. v. CRYSTAL RIDGE DEV., INC., NO. 13-2234
Decided: April 20, 2015
The Fourth Circuit affirmed the ruling of the district court to dismiss plaintiff’s tort claim seeking additional damages because plaintiff rested his claim solely on a breach of contract without alleging that defendant had an independent legal duty.
In 2005, Dan Ryan and Lang Brothers, Inc. (Defendant) entered into a Lot Purchase Agreement (LPA). The LPA stated that Defendant was to build a fill slope that would provide grading on certain lots to accommodate construction. Defendant completed the work and was paid in full by Ryan. In 2007, cracks appeared in the basement slab and foundation walls of a partially constructed home. The parties amended the LPA with Ryan agreeing to purchase the remaining lots and reapportioned the parties’ responsibilities. Later that year, the slope behind one of the lots began sliding downhill toward a nearby highway. Furthermore, Ryan began experiencing difficulties with Defendant’s stormwater management system, development permits, and entrance drive.
The court reasoned that Ryan’s tort claim failed under the “gist of the action” doctrine, which bars recovery in tort when the duty that forms the basis of the asserted tort claim arises solely from a contractual relationship. The Fourth Circuit acknowledged the “principle of party presentation”, but “[a] party’s failure to identify the applicable legal rule certainly does not diminish a court’s responsibility to apply that rule.” Thus, even though Defendant didn’t raise the “gist of the action” doctrine as a defense, the court can apply the defense because it is an “antecedent” and “dispositive” issue, since it is goes to the duty element of any tort claim. Moreover, the Fourth Circuit found that Defendant had no separate legal duty besides the one owed in the contract. Tort recovery is barred “where liability arises solely from the contractual relationship between the parties.” Accordingly, the Fourth Circuit affirmed the dismissal of plaintiff’s tort claim seeking additional damages.