Brief Fact Summary. Freeman & Mills (Plaintiff) is awarded a tort remedy under its breach of contract claim.
Synopsis of Rule of Law. Tort and breach of contract remedies should not be awarded under the same claim unless the claim contains independent issues that support a claim for each type of remedy.
Issue. Whether a party to a contract may recover in tort for another party’s bad faith denial of the contract’s existence?
Held. (Justice Lucas). No. A party to a contract may not recover in tort for another party’s bad faith denial of the contract’s existence. The holding in Seaman’s Direct Buying Service, Inc. v. Standard Oil Co. is overruled. Seaman’s Direct Buying Service has left many courts confused as to the scope and application of its holding. If there is no independent duty arising from principles of tort law, then tort recovery should not be considered an added remedy under breach of contract cases. If bad faith denials of liability within the scope of Seaman were included in breach of contract cases, then potentially every contract breach could also include a tort remedy. The judgment of the court of appeals is affirmed.
Discussion. Even though the court decides not to include tort remedies with breach of contract remedies, it does reserve tort remedies in implied covenant in insurance cases and civil remedies created by legislation.