Hammond, A. v. United States Liability Insurance

Superior Court of Pennsylvania

Hammond, A. v. United States Liability Insurance

DecidedMay 7, 2020

Docket950 WDA 2019

StatusUnpublished

This text of Hammond, A. v. United States Liability Insurance (Hammond, A. v. United States Liability Insurance) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Hammond, A. v. United States Liability Insurance, (Pa. Ct. App. 2020).

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Opinion

J-A05020-20

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

ADAM J. HAMMOND & GERALD J. : IN THE SUPERIOR COURT OF IWANEJKO, JR. : PENNSYLVANIA : Appellants : : v. : : UNITED STATES LIABILITY : INSURANCE COMPANY & GROUP AND : MARSHALL DENNEHEY WARNER : COLEMAN & GOGGIN P.C. : No. 950 WDA 2019

Appeal from the Order Entered May 28, 2019 In the Court of Common Pleas of Lawrence County Civil Division at No(s): #2018-10233

BEFORE: BENDER, P.J.E., BOWES, J., and PELLEGRINI, J.*

MEMORANDUM BY BOWES, J.: FILED MAY 07, 2020

Adam J. Hammond and Gerald J. Iwanejko, Jr., Esquire (collectively

“Plaintiffs”), appeal from the order that sustained preliminary objections filed

by United States Liability Insurance Company & Group (“USLI”) and Marshall

Dennehey Warner Coleman & Goggin P.C. (“Marshall Dennehey”) (collectively

“Defendants”) and dismissed Plaintiffs’ amended complaint. We affirm.

In 2011, Hammond worked with Transportation Compliance Associates,

Inc. (“TCA”) to develop computer software for tracking compliance with

hazmat transportation regulations. Pursuant to his business agreement with

TCA, Hammond purchased a professional liability insurance policy through

USLI and began consulting with software firm LANtek. After TCA opted to

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* Retired Senior Judge assigned to the Superior Court. J-A05020-20

discontinue its relationship with Hammond, TCA and LANtek filed a declaratory

judgment action to determine ownership of the regulatory compliance

software, and also asserted tort and contract claims against Hammond.

Hammond contacted USLI about the claims, but USLI denied coverage.

Hammond filed counterclaims, which TCA and LANtek claimed were raised in

bad faith warranting an award of attorney fees and costs. Hammond returned

to USLI and renewed his request for a defense and coverage with respect to

these new allegations of misconduct, but USLI again declined. TCA, LANtek,

and Hammond ultimately resolved the dispute by stipulation, and Hammond

obtained discharge of his outstanding financial obligations through

bankruptcy.

Hammond sued USLI in federal court for breach of contract and bad faith

based upon its refusal to provide a defense and coverage. USLI, represented

by Marshall Dennehey, prevailed in the action upon the grant of judgment on

the pleadings. Specifically, the district court determined that USLI properly

declined to defend Hammond based upon an intellectual property exclusion

contained in the relevant policy. See Hammond v. U.S. Liab. Ins. Co.,

14CV0847, 2015 WL 401503, at *12 (W.D.Pa. January 28, 2015) (indicating

that Section II of the business owner’s coverage of the policy “excludes

coverage for any ‘loss, cost, or expense’ arising out of any ‘infringement of

copyright, patent, trademark, trade secret or other intellectual property

rights’”). Hammond appealed to the Court of Appeals for the Third Circuit,

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arguing, inter alia, that the district court erroneously relied upon language

that is not actually found in the policy exclusion, while USLI advocated for

affirmance based upon the exclusion. Ultimately, the Third Circuit affirmed

the dismissal and the United States Supreme Court denied Hammond’s

petition for a writ of certiorari. See Hammond v. U.S. Liab. Ins. Co. & Grp.,

643 Fed.Appx. 92, 96 (3d Cir. 2016) (holding, in the alternative, that the

policy “bars coverage for ‘personal and advertising injury’ ‘arising out of any

infringement of copyright, patent, trademark, trade secret or other intellectual

property rights’”), cert. denied, 137 S.Ct. 182 (2016).

Plaintiffs thereafter initiated the instant action. In their amended

complaint, Hammond stated a claim against both Defendants for abuse of

process based upon their reliance in the Third Circuit upon the “loss, cost or

expense” language that is not found within the exclusion.1 Attorney Iwanejko

averred a count of intentional interference with contractual relations,

contending that Defendants’ misrepresentation about the “loss, cost or

1 The record reflects that the intellectual property exclusion to the policy’s business liability coverage provides: “This insurance does not apply to . . . ‘Personal and advertising injury’ . . . arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights.” See Amended Complaint, 4/23/19, at Exhibit C, Section II, ¶ B.1.p.(13). On the page of the policy immediately preceding that exclusion, a different paragraph excludes coverage “With respect to any loss, cost or expense” arising out of a demand or suit concerning testing or removal of pollutants. See id. at Exhibit C, Section II, ¶ B.1.p.(11). However, whether the difference in language impacts the applicability of the exclusion is not relevant to the issue before us in this appeal.

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expense” language deprived him of his contingency fee in the underlying

litigation.

Defendants filed preliminary objections claiming that they are immune

from any tort liability that is premised upon the content of their pleadings in

the federal litigation because such statements in judicial proceedings are

absolutely privileged. The trial court agreed, and entered an order sustaining

Defendants’ preliminary objections and dismissing Plaintiffs’ amended

complaint with prejudice. Plaintiffs filed a timely notice of appeal, and both

Plaintiffs and the trial court complied with Pa.R.A.P. 1925.

Plaintiffs present the following question for our review:

Whether reversible error was committed in the decision to dismiss the claims set forth in the Amended Complaint on the basis of judicial privilege since it is contrary to applicable precedent . . . holding that judicial privilege does not operate to bar abuse of process and/or interference with contract claims under factual circumstances similar to those involved in this case.

Plaintiffs’ brief at 10 (cleaned up).

We begin with a review of the applicable law.

Preliminary objections in the nature of a demurrer test the legal sufficiency of the plaintiff’s complaint. The question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Thus, our scope of review is plenary and our standard of review mirrors that of the trial court. Accepting all material averments as true, we must determine whether the complaint adequately states a claim for relief under any theory of law.

Keller v. Bank of New York Mellon, 212 A.3d 52, 56 (Pa.Super. 2019)

(cleaned up).

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Upon a review of the certified record, the parties’ briefs and the relevant

law, we conclude that the opinion that the May 28, 2019 opinion authored by

the Honorable Dominick Motto thoroughly addresses and properly disposes of

Plaintiffs’ arguments. See Trial Court Opinion, 5/28/19, at 7, 9-12 (discussing

the applicable Pennsylvania precedent concerning judicial privilege and

correctly applying it to conclude that it bars Plaintiffs’ claims, which are based

solely upon a communication in a judicial proceeding); id. at 8-9

(distinguishing the non-binding federal court decisions upon which Plaintiffs

rely). Therefore, we adopt President Judge Motto’s May 28, 2019 opinion as

our own and affirm on the bases stated therein.

Order affirmed.

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