In these economic times, it is not unusual to find that the party with whom you have contracted no longer exists when it comes time to sue for breach-of-contract damages. A plaintiff may legitimately feel wronged by this circumstance and may search for ways to avoid the financial pain of having entered into a contract with a party who cannot pay the damages caused by its breach. The question becomes: What can the plaintiff do to get relief? Does having an insolvent business partner justify a plaintiff’s reaching out to sue others, who were not party to the contract, under tort theories?
Indeed, an insolvent contracting party on one end of an agreement often is not the target or not the only target of a plaintiff’s suit. Creative plaintiffs often go after noncontracting but related parties even where those parties should technically be shielded by the law from liability. Plaintiffs looking for a solvent party to sue for the breach of a contract will sometimes go after anyone they can identify as even tangentially related to the contract by asserting claims for negligence or prima facie tort. In addition to possibly finding a deeper pocket in a noncontracting defendant, a plaintiff may find that alleging a negligence claim invokes an otherwise innocent defendant’s insurance coverage and provides the plaintiff with a settlement opportunity it would not otherwise have.
