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Freeman vs. Belcher Oil

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Freeman Mills v Belcher Oil ; 11 Cal 4th 85

Facts of the case: Belcher Oil company retained a law firm, acknowledging that the company was to pay for all bills relating to the company including those fees for the accountants. The accountants billed the company for their services. The company did not pay, and the accountants brought the case to court claiming that it was a breach of contract, bad faith denial of contract , and quantum meruit. Belcher Oil Company failed to pay accounting fees to Plaintiff, even though there was essentially a pact between both groups. The jury decided upon giving the Plaintiff monetary and punitive damages. The Punitive damages were given as a result of the defendant’s denial of the contract’s existence as well as manipulative behavior.

Question before the court: Is a party’s contract enough to cover for another group’s bad faith denial of the contract’s settlement?

Holding: A part to a contract is not able to recover in tort for someone else’s bad faith denial of the contract’s being. The holding presented in the Seaman’s Direct Buying Service, Inc. v. Standard Oil Co. is overruled. Unless there are duties that are efficiently independent of tort law, then tort recovery should not be considered to be another remedy present under breach of contract cases.

Reasoning: The former rule that a group that is tied to a contract may incur tort remedies when it seeks to hide itself from liability by lying, and without necessary probable cause, is not viable. The trial court entered the case and recognized the points that the company had breached the contract with bad faith intentions.

Concurrences: There was a concurring opinion by Kennard, J., with Arabian J, concurring.

Dissents: There was a separate concurring and dissenting opinion by Mosk, J.

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