Peoplekeys, Inc. v. Westfield Insurance ( 2016 )

J-A32014-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
PEOPLEKEYS, INC., INSTITUTE FOR IN THE SUPERIOR COURT OF
MOTIVATIONAL LIVING, INC., AND PENNSYLVANIA
SANFORD G. KULKIN,
Appellants
v.
WESTFIELD INSURANCE COMPANY,
Appellee No. 100 WDA 2015
Appeal from the Order December 16, 2014
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD 14-000527
BEFORE: SHOGAN, STABILE, and STRASSBURGER,* JJ.
MEMORANDUM BY SHOGAN, J.: FILED FEBRUARY 25, 2016
This is an appeal from the December 16, 2014 order granting
Westfield Insurance Company’s (“Westfield”) motion for judgment on the
pleadings and dismissing PeopleKeys, Inc., Institute for Motivational Living,
Inc. (“IML”) and Sanford Kulkin’s, (collectively, “PeopleKeys” or
“Appellants”), 1 complaint with prejudice. After careful review, we affirm.
PeopleKeys develops, markets, and utilizes behavioral assessments to
match job applicants with prospective employers. Sanford Kulkin was
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*
Retired Senior Judge assigned to the Superior Court.
1
PeopleKeys and IML are affiliated business entities with principal places of
business in Ohio. Both are owned by Sanford Kulkin. Complaint, 1/14/14,
at ¶¶ 1–3.
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PeopleKeys’ Chief Executive Officer. On July 1, 2013, Appellants filed a
complaint in the United States District Court for the Northern District of Ohio
against PeopleKeys’ former CEO, Brad Myers, another former employee, and
E-Pysence, the company formed by these two employees, asserting claims
for injunctive relief, copyright infringement, and related allegations. Myers
filed a counterclaim/third-party complaint (the “counterclaim”) asserting a
single count of unfair competition against Appellants. This pleading alleged
that Appellants instituted “sham litigation” against Myers “with the
subjective intent of injuring Myers’ ability to be competitive . . . and to
interfere with his business relationships.” Westfield’s Answer, New Matter,
and Counterclaim for Declaratory Judgment, 3/14/14, Exhibit A at ¶¶ 25–26.
Specifically, the counterclaim in the federal lawsuit alleged:
19. Kulkin, PeopleKeys, and IML are fully aware that Myers does
not have any of their alleged trade secrets or proprietary
information, including knowledge of the algorithm for matching
employers to job seekers and the underlying source code as
described in the Complaint, particularly since Myers was not
even aware of any such algorithm having been developed by
PeopleKeys or IML during his employment with IML.
20. Nonetheless, because Myers was developing a competitive, if
not superior, product in the behavioral assessment market,
PeopleKeys and IML filed, and Kulkin caused to be filed, on July
1, 2013, the instant lawsuit against Myers to harm his
competitive position in the marketplace and scare off start-up
investors and customers by entangling Myers and E-Psyence in a
federal lawsuit involving misappropriation of trade secrets and
trademark infringement claims.
***
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23. On July 1, 2013, PeopleKeys and IML filed, and Kulkin caused
to be filed, the instant lawsuit against Myers, claiming that Myers
misappropriated their trade secrets and intellectual property, i.e.,
an algorithm for matching employers with job seekers, for
purposes of starting a competitor company called E-Psyence.
24. The instant lawsuit is objectively baseless for numerous
reasons, including but not limited to: (1) Myers was not privy to
(and was not even aware of) PeopleKeys, IML, or Kulkin having
developed such an algorithm during his employment with IML;
and (2) the products and services that Myers is marketing
through the platform E-Psyence are not based upon the DISC
Theory utilized by PeopleKeys and IML to develop their products
and services, but rather, Myers’ products and services are
developed utilizing Dr. Llobet’s copyrighted content library.
25. PeopleKeys, IML, and Kulkin were aware of the above and
filed the instant lawsuit with the subjective intent of injuring
Myers’ ability to be competitive through the E-Psyence platform
and to interfere with his business relationships.
26. Said conduct constitutes sham litigation that serves no
purpose other than to harm a business competitor.
Id. at ¶¶ 19–20, 23–26. Upon receipt of the counterclaim, PeopleKeys
contacted their insurance company, Westfield, requesting coverage for
defense of the counterclaim and indemnification under the policy issued by
Westfield.
On August 23, 2013, Westfield sent a letter preliminarily informing
PeopleKeys that coverage was unavailable because of certain exclusionary
language of the policy. Westfield further advised that it had requested a
formal coverage opinion and, upon receipt of that opinion, it would advise
the insured if there was a determination that a defense was owed on the
claim. Westfield’s Answer, New Matter, and Counterclaim for Declaratory
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Judgment, 3/14/14, at Exhibit C. Six days later, Westfield informed
PeopleKeys that it was denying coverage because the counterclaim did not
allege a claim for “personal and advertising injury” covered by the policy and
because the factual averments of the unfair competition count fell within the
policy’s exclusion from coverage for “Knowing Violation of the Rights of
Another” and “Material Published with Knowledge of Falsity.” Id. at Exhibit
D.
On January 14, 2014, PeopleKeys commenced the instant action in
Pennsylvania against Westfield for breach of insurance contract and bad
faith, contending that Westfield wrongfully refused to defend them against
the counterclaim of unfair competition filed in Ohio federal court. In
response, Westfield filed, inter alia, a counterclaim for declaratory judgment
that it did not have a duty to defend. On July 24, 2014, Westfield filed a
motion for judgment on the pleadings.
The trial court granted Westfield’s motion for judgment on the
pleadings and dismissed Peoplekeys’ complaint with prejudice on December
16, 2014. PeopleKeys simultaneously filed an appeal to this Court and a
motion for reconsideration before the trial court on January 14, 2015. The
trial court denied reconsideration of this decision on January 27, 2015.2
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2
When the trial court entered the order granting Westfield’s motion for
judgment on the pleadings, it did not rule specifically on Westfield’s
(Footnote Continued Next Page)
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PeopleKeys raises three issues on appeal:
1. Whether the trial court erred in failing to consider evidence
that Appellee Westfield understood the claim at issue to be
potentially covered under its Policy?
2. Whether the trial court erred in reading Ohio tort law
elements of defamation and malicious prosecution into the Policy
and reaching beyond a plain English reading of the Policy
language in order to favor Westfield?
3. Whether the trial court erred in refusing to examine the
totality of the pleadings to find coverage?
Appellants’ Brief at 4–5.
Our standard of review of judgment on the pleadings is
well-settled. A motion for judgment on the pleadings is similar
to that of a demurrer in that it may be entered only when there
are no disputed issues of fact, and the moving party is entitled
to judgment as a matter of law. Rourke v. Pennsylvania
National Mutual Casualty Insurance Co., 116 A.3d 87, 91
(Pa. Super. 2015). Appellate review of an order granting a
motion for judgment on the pleadings is plenary, and we apply
the same standard employed by the trial court. Id. We will
affirm the grant of the motion “only when the moving party’s
right to succeed is certain and the case is so free from doubt
that the trial would clearly be a fruitless exercise.” Id. at 91
(citing Southwestern Energy Production Co. v. Forest
Resources, LLC, 83 A.3d 177, 185 (Pa. Super. 2013) (citation
omitted)).
_______________________
(Footnote Continued)
counterclaim for declaratory judgment. Thus, the counterclaim remained
pending at the time the appeal was filed. On direction from this Court,
Appellants were ordered to show cause why the appeal should not be
quashed. Both Appellants and Westfield responded by letter asserting that
the order appealed from effectively ended the litigation and disposed of all
claims of all parties. We accept the parties’ characterization of the
procedural posture; accordingly, we have jurisdiction to decide this appeal.
See Pa.R.A.P. 341(b) (1) (“A final order is any order that . . . disposes of all
claims of all parties.”).
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Gongloff Contracting, L.L.C. v. L. Robert Kimball & Associates,
Architects & Engineers, Inc., 119 A.3d 1070, 1075–1076 (Pa. Super.
2015).
We can readily dispose of PeopleKeys’ first claim that the trial court
should have considered certain of Westfield’s work product notes3 that were
produced in discovery relative to PeopleKeys’ insurance claim. The subject
notes were presented to the trial court during the argument of the motion
for judgment on the pleadings and were attached to PeopleKeys’ motion for
reconsideration of the court’s order granting Westfield’s motion for judgment
on the pleadings, both of which occurred subsequent to the close of the
pleadings in this matter. In adjudicating judgment on the pleadings
motions, a trial court “must confine its consideration to the pleadings and
relevant documents. The court must accept as true all well pleaded
statements of fact, admissions, and any documents properly attached to the
pleadings . . . .” Coleman v. Duane Morris, LLP, 58 A.3d 833, 836 (Pa.
Super. 2012). Accordingly, Westfield’s work product notes, produced during
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3
Westfield’s work product notes reference a reservation of rights letter that
was apparently drafted on August 23, 2013, and approved for mailing on
August 26, 2013. PeopleKeys’ Motion for Reconsideration, 1/14/15, at
Exhibit B (Work Product Notes). However, such letter is not in the record.
The only letters included in the record dated around that time are the letter
from Westfield preliminarily informing PeopleKeys that coverage was
unavailable because of certain exclusionary language and notifying them
that it was seeking a formal coverage opinion, see Westfield’s Answer, New
Matter, and Counterclaim for Declaratory Judgment, 3/14/14, at Exhibit C,
and the letter denying coverage. Id. at Exhibit D.
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discovery and attached to a pleading filed subsequent to adjudication of the
motion, could not be considered by the trial court in rendering its decision on
the motion for judgment on the pleadings.
The parties next join issue over the breadth of Westfield’s duty to
provide PeopleKeys coverage for defense of Myers’ counterclaim alleging
unfair competition. Westfield claims that personal and advertising injury
liability coverage was not triggered for defense of this claim because the
underlying counterclaim did not facially state a cause of action for an offense
covered by the policy. PeopleKeys, on the other hand, contends that the
assertions in the counterclaim arguably fall within the definition of covered
personal and advertising injury, i.e., a cause of action in malicious
prosecution and/or an oral or written publication that slandered Myers or
disparaged Myers’ goods, products, or services—injuries that are covered by
the policy.
The interpretation of an insurance contract is a question of law and our
standard of review is de novo. Donegal Mutual Insurance Co. v.
Baumhammers, 938 A.2d 286, 290 (Pa. 2007) (quoting Kvaerner Metals
Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d
888, 893 (Pa. 2006)). It is agreed that Ohio law governs this dispute. Trial
Court Opinion, 3/30/15, at 2; Appellants’ Brief at 11; Appellee’s Brief at 16.
The duty of an insurer to defend an insured is broader than the duty to
indemnify and is absolute when the complaint contains any allegation that
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could arguably be covered by the insurance policy. City of Sharonville v.
American Employers Insurance Co., 846 N.E.2d 833, 837 (Ohio 2006).
An exception to the absolute duty exists when all of the claims are each
clearly and indisputably outside of the coverage. Id. (citation omitted).
“Another way of stating the exception is that the insurer need not provide a
defense if there is no set of facts alleged in the complaint which, if proven
true, would invoke coverage for any claim.” Granger, et al. v. Auto-
Owners Insurance, et al., 40 N.E.3d 1110, 1115 (Ohio 2015).
Whether an insurer has a duty to defend is determined
from the allegations in the complaint. Where the allegations of
the complaint unequivocally bring the action within the policy
coverage, the duty to defend may arise from the complaint
alone. Motorists Mut. Ins. Co. v. Trainor (1973), 33 Ohio
St.2d 41, 294 N.E.2d 874. However, where the insurer’s duty to
defend is not clear from the pleadings, or the pleadings do not
provide sufficient factual information to determine whether an
insurer had a duty to defend but the allegations state a claim
which is potentially or arguably within policy coverage, or
where there is some doubt whether a theory of recovery within
the policy coverage has been pleaded, the insurer must accept
the defense of the claim. Willoughby Hills v. Cincinnati Ins.
Co. (1984), 9 Ohio St.3d 177, 180, 9 OBR 463, 465, 459 N.E.2d
555, 558.
Great American Insurance Company v. Hartford Insurance, 621
N.E.2d 796, 798 (Ohio Ct. App. 1993) (emphasis in original).
Westfield’s duty to defend is governed by the following provisions in
the insurance policy:
COVERAGE B PERSONAL AND ADVERTISING INJURY
LIABILITY
1. Insuring Agreement
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a. We will pay those sums that the insured becomes
legally obligated to pay as damages because of
“personal and advertising injury” to which this
insurance applies. We will have the right and duty to
defend the insured against any “suit” seeking those
damages. However, we will have no duty to defend
the insured against any “suit” seeking damages for
“personal and advertising injury” to which this
insurance does not apply. We may at our discretion
investigate any offense and settle any claim or “suit”
that may result. . . .
Westfield’s Answer, New Matter, and Counterclaim for Declaratory
Judgment, 3/14/14, at Exhibit B ¶1(a). The policy defines “Personal and
advertising injury” to mean injury arising out of the following offenses:
b. Malicious prosecution;
* * *
d. Oral or written publication, in any manner, of material that
slanders or libels a person or organization or disparages a
person’s or organization’s goods, products, or services;
Id. at Section V—Definitions ¶14 (b) and (d).
However, Coverage B also describes certain claims that will be
excluded from coverage:
2. Exclusions
This insurance does not apply to:
a. Knowing Violation Of Rights of Another
“Personal and advertising injury” caused by or at the
direction of the insured with the knowledge that the
act would violate the rights of another and would
inflict “personal and advertising injury.”
b. Material Published With Knowledge Of Falsity
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“Personal and advertising injury” arising out of oral
or written publication of material, if done by or at the
direction of the insured with knowledge of its falsity.
Westfield’s Answer, New Matter, and Counterclaim for Declaratory
Judgment, 3/14/14, at Exhibit B ¶2 (a) and (b).
The trial court determined that Westfield did not have a duty to defend
because the unfair competition counterclaim was excluded from coverage.
The trial court reasoned that:
The employee’s counterclaim alleged unfair competition, a
matter not within the policy of insurance that had been issued in
Ohio. Unfair competition is a cause of action that exists in Ohio,
and differs from causes of action such as slander, libel,
defamation, disparagement or malicious prosecution, which are
covered by the insurance policy issued here.
“The duty to defend (in Ohio) is determined by the scope
of the allegations in the Complaint.” Ward v. United Foundries,
129 Ohio St.3d 292, 951 N.E.2d 770, 773 (2011). Where “. . .
the allegations are clearly and indisputably outside the
contracted coverage, the insurer need not defend the insured.”
Ward, 951 N.E.2d at 773.
The former employee’s counterclaim was for unfair
competition. In order to establish this claim, “. . . A party must
show that the legal action is objectively baseless and that the
opposing party had the subjective intent to injure the party’s
ability to be competitive.” American Chemical Society v.
Leadscope, Inc., 133 Ohio St.3d 366, 978, N.E.2d 832, 843
(2012). In Navigators Specialty Ins. Co. v. Beltman, No. 11-
CV-00715-RPM, 2012 WL 5378750 (D. Colo. Nov. 1, 2012), the
United States District Court For the District of Colorado
determined that “Personal and advertising injury” coverage did
not require coverage for assertions that the insured engaged in
sham litigation to harm a business competitor. See also Holloway
Sportswear Inc. v. Transportation Ins. Co., 58 Fed. Appx. 172(6th Cir. 2003); Westfield Insurance Co. v. Trent, 2010 Ohio
5897 (Dec. 3, 2010).
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It is evident that the former employee’s counterclaim
against Plaintiffs falls within an exclusion for coverage.
Accordingly, Defendant had no duty to defend, and the counts
for breach of contract and bad faith, necessarily, must fail.
Trial Court Opinion, 3/30/15, at 2–3.
PeopleKeys avers that the trial court erred when it: 1) construed the
ambiguous policy definitions in Westfield’s favor; 2) impliedly defined
“malicious prosecution” and “oral or written declaration” according to Ohio
tort law, rather than ascribing those terms their plain and ordinary meaning
which would mandate a coverage conclusion;4 3) determined that because
unfair competition is a distinct cause of action under Ohio tort law, it was
excluded from the policy definition of “Personal and advertising injury”; and
4) did not consider the entirety of the pleadings in rendering its coverage
decision. PeopleKeys also contends that the trial court’s failure to address a
number of their arguments deprived them of their day in court.
Westfield counters that Myers’ unfair competition counterclaim was
based upon PeopleKeys filing sham litigation which does not fall within the
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4
Under Ohio law, a cause of action for “malicious prosecution” requires,
inter alia, the termination of a prior proceeding in the plaintiff’s favor, see
Robb v. Chagrin Lagoons Yacht Club, Inc., 662 N.E.2d 9 (Ohio 1996),
and absence of privilege is a required element for a cognizable cause of
action for defamation in Ohio. McPeek v. Leetonia Italian-American
Club, 882 N.E.2d 450, 453 (Ohio Ct. App. 2007). Significantly, statements
made in a written pleading are absolutely privileged if they are reasonably
related to the judicial proceeding in which they appear. Morrison v. Gugle,
755 N.E.2d 404, 416 (Ohio Ct. App. 2001) (citation omitted).
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policy’s definition of personal and advertising injury.5 It argues that the
Ohio Supreme Court has specifically recognized this particular cause of
action under Ohio law and has held, “that to successfully establish a claim
for unfair competition based upon a legal action, a party must show that the
legal action is objectively baseless and that the opposing party had the
subjective intent to injure the party’s ability to be competitive.” American
Chemical Society v. Leadscope, Inc., 978 N.E.2d 832, 839 (Ohio 2012).
Westfield asserts that the counterclaim alleges that PeopleKeys filed the
federal lawsuit with the subjective intent of injuring Myers’ ability to be
competitive and to interfere with his business relationships. Westfield also
alleges that PeopleKeys was fully aware that its claim was baseless but
nevertheless instituted sham litigation against Myers. Thus, argues
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5
Westfield cites a number of cases for its position that Ohio courts have
repeatedly held that unfair competition claims do not constitute “personal
and advertising” injury within the meaning of a liability insurance policy.
See Motorists Mutual Insurance Co. v. National Dairy Herd
Improvement, 750 N.E.2d 1169 (Ohio Ct. App. 2001), Holloway
Sportswear, Inc. v. Transportation Insurance Co., 58 Fed. Appx. 172(6th Cir. 2003) (applying Ohio law), and Westfield Insurance Co. v. Trent,
No. E-09-050, 2010 WL 4925817 (Ohio Ct. App. 2010). This
characterization of the holdings of these cases is an overstatement. For
example, the underlying claim at issue in Motorists Mutual was an
antitrust complaint; in Holloway, the claim was tortious interference with
economic advantage; and in Trent, the insured claimed that the lawsuit
against it did not include allegations of defamatory or disparaging
statements. While these causes of action imply some elements of a claim of
unfair competition, none of the cases hold outright that such a cause of
action is not covered under “personal and advertising” injury within the
meaning of a liability insurance policy.
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Westfield, even if a claim for unfair competition did fall within the definition
of “Personal and Advertising Injury,” the exclusions for the “Knowing
Violation of the Rights of Another” and “Material Published with Knowledge of
Falsity” would nonetheless preclude coverage.
We agree with Westfield that the exclusions language in the policy
nullifies its duty to defend. For this reason, we need not further discuss the
respective arguments of the parties concerning whether the counterclaim
alleges a personal or advertising injury covered under the policy.6
In their main brief, PeopleKeys conflates their discussion concerning
the applicability of the policy’s exclusions with their argument that the
counterclaim for unfair competition is potentially or arguably covered as a
personal and advertising injury. In their reply brief, PeopleKeys now
suggests that under Westfield’s interpretation of the exclusion provisions,
“claims of slander, libel, defamation, disparagement or malicious prosecution
could never be covered under its policy, since knowing and intentional
conduct are elements that must be pled to create a viable cause of action.”
Appellants’ Reply Brief at 2.
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6
We note that, although the trial court determined that the “counterclaim
alleged unfair competition, a matter not within the policy of
insurance . . . [,]” it ultimately concluded that “the counterclaim . . . falls
within an exclusion for coverage.” Trial Court Opinion, 3/30/15, at 2–3. We
may affirm the trial court on any basis.” Southwestern Energy
Production Co. v. Forest Resources, LLC, 83 A.3d 177, 184–185 (Pa.
Super. 2013) (quoting Richmond v. McHale, 35 A.3d 779, 786 n.2 (Pa.
Super. 2012)).
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While PeopleKeys correctly states that inconsistencies in an insurance
contract must be construed favorably to the insured, PeopleKeys overlooks
Ohio case law that contradicts their position that coverage is due. In
Westfield Companies v. O.K.L. Can Line, 804 N.E.2d 45, 53, (Ohio Ct.
App. 2003), the Ohio Court of Appeals held that a “knowing violation of the
rights of another” exclusion applied to “advertising injuries based upon libel,
slander, disparagement, and invasion of privacy” because “the language of
the exclusion mimicked the language of the libel, slander, disparagement,
and invasion-of-privacy coverage provisions.” Id.; see also Westfield
Insurance Company v. Factfinder Marketing Research, Inc., 860
N.E.2d 145, 154 (Ohio Ct. App. 2006) (observing that a “knowledge-of-
falsity” exclusion bars coverage for advertising injury arising out of oral or
written publication of material by or at the direction of the insured with
knowledge of its falsity”) (citation omitted); see also Burlington
Insurance Co. v. Eden Cryogenics LLC, ___ F.Supp.3d ___, 2015 WL
5145554, at *8 (S.D. Ohio filed September 1, 2015) (applying Ohio law and
concluding that a “Knowing Violation” provision prohibits coverage when jury
determined that actor violated the rights of another knowing his or her
conduct was likely to result in injury).
As noted, Westfield asserts that the policy exclusions relieve it from its
duty to defend against alleged personal and advertising injury. The first
exclusion relied upon by Westfield precludes coverage for “injury caused by
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or at the direction of the insured with the knowledge that the act would
violate the rights of another and would inflict “personal and advertising
injury.” Westfield’s Answer, New Matter, and Counterclaim for Declaratory
Judgment, 3/14/14, Exhibit B, at ¶ 2(a). The other exclusion invoked bars
coverage for any injury “arising out of oral or written publication of material,
if done by or at the direction of the insured with knowledge of its falsity.”
Id. at ¶ 2(b).
In considering whether the exclusions apply, we review the allegations
of the counterclaim. Before we undertake this assessment, however, we
must address PeopleKeys’ third issue that the trial court erred when it
confined its analysis to the paragraphs of the counterclaim and refused to
look to the totality of the pleadings in the underlying litigation in rendering
its coverage determination. We conclude, however, that no error occurred in
this regard because under Ohio law, “the duty to defend is determined by
the scope of the allegations of the complaint.” Ward v. United Foundries,
Inc., 951 N.E.2d 770, 773 (Ohio 2001). “If the allegations state a claim
that potentially or arguably falls within the liability insurance coverage, then
the insurer must defend the insured in the action.” Id. However, if “the
claims are clearly and indisputably outside the contracted coverage, the
insurer need not defend the insured.” Id.Here, the allegations of the counterclaim, i.e., that PeopleKeys
knowingly filed a sham lawsuit with the intent of harming a business
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competitor, fall squarely within the plain language of the “Material Published
with Knowledge of Falsity” exclusion. While not binding upon this Court, we
observe that a decision from the United States District Court for the District
of Colorado, in a markedly similar case applying Colorado law, came to the
same conclusion. In Navigators Specialty Insurance Co. v. Beltman,
No. 11-cv-00715, 2012 WL 5378750 (D.Col. filed Nov. 1, 2012), an insured
corporation, Stratus Consulting, sought coverage for defense of a claim
that it commenced sham litigation against another corporation, Chevron,
causing damage to Chevron’s reputation. Id. at *1. As in the matter sub
judice, the insurance policy under scrutiny provided “personal and
advertising injury” coverage for malicious prosecution and oral or written
publication that slanders or libels . . . [or] disparages a person or
organization’s goods, products, or services. . . . Id. at *8 (quotation
omitted). The policy also contained exclusions limiting coverage for
“Knowing Violation of Rights of Another” and “Material Published with
Knowledge of Falsity,” the language of which is virtually identical to that
included in the Westfield policy at issue here. Id. In response to the
insured’s claim that the suit filed against it could be understood as alleging
malicious prosecution and/or an accusation of slander, libel, or
disparagement, the federal court decided that it was “not necessary to
pursue that legal analysis because coverage is barred by the exclusions” of
the policy. Id. at *10. The Navigators Court concluded that the “Knowing
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Violation of Rights of Another” exclusion barred coverage because the
Chevron action alleged that the insured “intended to deceive,” made
“deliberate misrepresentations,” and perpetuated “deliberate falsehoods”
about Chevron and did so “knowingly and intentionally.” Id. It likewise
concluded that the “knowledge of falsity” language precluded coverage
because the Chevron action “is replete with allegations of intentional
misrepresentations.” Id.
A similar result is warranted herein. The counterclaim averred that
PeopleKeys knew that its claims against Myers were baseless, but they
nevertheless instituted sham litigation against him with the subjective intent
of injuring Myers’ ability to be competitive and to interfere with his business
relationships. Westfield’s Answer, New Matter, and Counterclaim for
Declaratory Judgment, 3/14/14, at Exhibit A ¶¶ 19–20, 23–26. These
allegations explicitly plead that PeopleKeys knowingly published material
with knowledge of its falsity and Westfield properly relied upon this exclusion
provision in denying coverage to PeopleKeys.
For the foregoing reasons, we affirm the order granting judgment on
the pleadings in favor of Westfield.
Order affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/25/2016
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