Opinion ID: 2584011
Heading Depth: 1
Heading Rank: 8

Heading: Issue 3: Are the Tort Claims Subsumed Within the Contract Claims?

Text: Before addressing the specifics of the defendants' arguments as to each tort count, we must address Unison's contention that because plaintiffs' tort claims (Counts II, III, and IV) are premised on the same conduct as their breach of contract claim (Count I) the tort claims are subsumed into the contract claim. In support, Unison cites Ford Motor Cred. Co. v. Suburban Ford, 237 Kan. 195, 699 P.2d 992 (1985). In Suburban Ford, a secured party brought an action against a vehicle dealership pursuant to its financing agreement seeking an accounting for proceeds of vehicle sales and a deficiency judgment. The dealership and defendant guarantors counterclaimed on a number of tort theories alleging that the secured party's tortious acts caused the collapse of the dealership. In ruling that the trial court erred in allowing the jury to consider any of the tort-based claims, this court emphasized that all of the parties were in a contractual relationship and all of their difficulties arose directly from that contractual relationship. 237 Kan. at 203-05. The court quoted extensively from Isler v. Texas Oil & Gas Corp., 749 F.2d 22 (10th Cir. 1984), an opinion pointing out the impropriety of confusing contract and tort law. 237 Kan. at 203. Unison's reading of this case is more expansive than the facts and holdings of the case justify. See Rossi, Lender Liability in Kansas: A Paradigm of Competing Tort and Contract Theories, 29 Washburn L.J. 495, 518 (1990). The contract at issue in Suburban Ford contained language specifically negating the duty allegedly violated by defendants. The plaintiffs were pleading a tort to avoid certain consequences of the contract. Quoting Isler, 749 F.2d at 23, the court stated: `No reason appears to support such a radical shift from bargained-for duties and liabilities to the imposition of duties and liabilities that were expressly negated by the parties themselves when they decided to abandon their status as legal strangers and define their relationship by contract.' 237 Kan. at 203. Furthermore, Unison's argument is contrary to several opinions of this court. See, e.g., Bittel v. Farm Credit Svcs. of Central Kansas, P.C.A., 265 Kan. 651, 962 P.2d 491 (1998); Equitable Life Leasing Corp. v. Abbick, 243 Kan. 513, 757 P.2d 304 (1988); V-W Enterprises, Inc. v. Federal Savings & Loan Ins. Corp., 234 Kan. 354, 673 P.2d 1112 (1983). In Bittel this court explained when conduct could satisfy the elements of both a breach of contract or of an independent tort, unless the conduct is permitted by the express provisions of a contract, a plaintiff may pursue both remedies. 265 Kan. at 660. The determination of what constitutes an independent tort is difficult to assess. Application of the test has lead to considerable criticism and commentary. See, e.g., Linzer, Uncontracts: Context, Contort and the Relational Approach, 1988 Ann. Surv. Am. L. 139; Robinson, Contorts for Busted Business Deals, 72 J.K.B.A. 24 (March 2003); Dorff, Attaching Tort Claims to Contract Actions: An Economic Analysis of Contort, 28 Seton Hall L. Rev. 390 (1997); Rossi, 29 Washburn L.J. 495; Linzer, Rough Justice: A Theory of Restitution and Reliance, Contracts and Torts, 2001 Wis. L. Rev. 695. However, in this case, as more fully discussed below, the duties and liabilities plaintiffs attempt to impose were not those bargained for in the Stockholders' Agreement. Nor were duties, such as a fiduciary duty, negated by the contract. In fact, as we have noted, the plaintiffs' action in this case is more appropriately based upon an independent tort and as a matter of law is not based upon breach of a contract under the theory pled by the plaintiffs. In Bittel, we reversed the trial court's determination that a plaintiff may only pursue one remedy. 265 Kan. at 660. Thus, plaintiffs were not precluded from pleading both a breach of contract and independent torts even if based upon the same facts. If plaintiffs can satisfy the elements of an independent tort, the plaintiffs may pursue that remedy.