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Liberty Insurance Corp. v. Tinplate Purchasing Corp.

October 6, 2010


The opinion of the court was delivered by: Walls, Senior District Judge



Defendants Tinplate Purchasing Corporation, Trakloc North America, LLC, and David Jablow ("defendants") move for partial summary judgment against plaintiff Liberty Insurance Corporation ("plaintiff") on the issue of plaintiff‟s duty to defend. Plaintiff opposes defendants‟ motion, cross-moves for summary judgment, and moves to strike portions of David Jablow‟s certification. Pursuant to Rule 78 of the Federal Rules of Civil Procedure, the motions are decided without oral argument. Defendants‟ motion for summary judgment is denied, plaintiff‟s motion for summary judgment is granted and plaintiff‟s motion to strike is denied.


Plaintiff Liberty Insurance Corporation is an Illinois insurance company with its principal place of business in Massachusetts. (Compl. ¶ 2.) Defendant Tinplate is a New Jersey corporation, defendant Trakloc is a Delaware limited liability company, and both have their principal places of business in New Jersey. (Compl. ¶¶ 3-4, Answer ¶ 4.) Defendant David Jablow resides in New Jersey and is an officer and manager of Trakloc North America, LLC, and Tinplate Purchasing Corporation. (Jablow Cert. ¶ 1.)

Plaintiff issued to Tinplate a series of General Liability Policies, each providing $1 million in coverage. (Compl. ¶ 10, Jablow Cert. ¶ 3.) These policies were issued for three consecutive one-year terms and provided continuous coverage from May 24, 2006 to May 24, 2009. (Id.) Trakloc was an additional insured under the two most recent policies. (Joint Stipulation filed on February 16, 2010, ¶ 1.) Jablow is covered for his conduct in his capacity as the manager of Trakloc and an officer of Tinplate.

On or about September 27, 2007, Trakloc and Jablow were named as defendants in litigation commenced by Pacific Rollforming, LLC ("Pacific") in the United States District Court for the Southern District of California. (Jablow Cert. ¶ 5, Ex. D.) The defendants did not notify plaintiff of the litigation at that time, opting instead to "engage in a series of lengthy negotiations regarding various business solutions in an attempt to resolve their differences." (Jablow Cert. ¶ 6.) Pacific filed a First Amended Complaint on October 12, 2007, and a Second Amended Complaint on September 25, 2008. (Compl. ¶ 16.) When negotiations failed, Jablow hired California litigation counsel, Ms. Irena Leigh Norton, to represent Tinplate, Trakloc and Jablow in the California case. On January 26, 2009, Ms. Norton tendered a notice of claim requesting defense and indemnification from Liberty. (Compl. ¶ 22.) She attached a copy of the Second Amended Complaint, along with correspondence explaining that the pleading asserted claims for breach of contract, fraud, breach of the implied covenant of good faith and fair dealing, defamation, interference with contract/prospective economic advantage, RICO, and injunctive and declaratory relief. Ms. Norton asserted that the claims for defamation and tortious interference brought the defense of all of the claims within the ambit of the policy. (Jablow Cert. ¶ 7, Ex. E.) Pacific filed a Third Amended Complaint on September 8, 2009, naming Tinplate as a defendant for the first time.*fn1 (Answer to Am. Compl., ¶ 15, Love Decl. Ex. D.)

Pacific states in its complaint that it entered into Master Area License Agreements ("License Agreements") with entities to whom Trakloc and Tinplate were successors-in-interest. (Third Am. Compl. ¶¶ 9-10, 14.) These License Agreements granted to Pacific the exclusive right to manufacture and market, in certain territories, a proprietary drywall and stud framing system known as Trakloc. (Id. at ¶ 9-10.) Pacific alleges that the License Agreements required Trakloc and Tinplate to: 1) deliver to Pacific all tangible forms of technical information about the Trakloc system; 2) advise Pacific of any national or regional marketing programs and allow Pacific to participate in them; 3) provide Pacific with a complete set of standardized marketing information; 4) promptly forward to Pacific any and all leads, inquiries or contacts related to the sale of the products and its territories; 5) arrange for machines to manufacture the product to be made available to Pacific on an exclusive basis in its territory and obtain various approvals of the product; 6) provide Pacific with written information about all improvements and enhancements to the system; and 7) protect the exclusive territory of Pacific. (Id. at ¶ 14.)

The Complaint alleges that Trakloc and Tinplate breached many of these contractual obligations. The fourth cause of action for defamation, made against Trakloc and Jablow, alleges that the previous allegations of breach of contract also constitute libel and slander. As example, Pacific claims that Trakloc and Jablow made statements to others that Pacific was not licensed for the Trakloc product, that it lacked certification to sell the product, that it was unable to meet its delivery commitments, that it had no right to attend marketing presentations for the product, and that Trakloc was taking over Pacific‟s markets for the product. (Third Am. Compl. ¶ 34.) Pacific says that all of these statements were made as part of a "conspiracy to destroy [Pacific] and put [Pacific] out of business by defaming [Pacific]." (Id.)

The fifth cause of action for "interference with contract/prospective business advantage" includes all three defendants. Pacific claims that all of the breaches of the License Agreements it complained of in the previous causes of action were committed with the express purpose of putting Pacific out of business by disrupting its relationship with its distributors, customers, potential customers and potential investors. (Third Am. Compl. ¶ 39.) It further alleges that Trakloc and Jablow "conspired . . . to ship product into [Pacific‟s] territory in violation of the License Agreements." (Id. at ¶ 41.) Finally, the twelfth cause of action is also titled "interference with prospective business advantage," and asserts that Jablow and another individual interfered with Pacific‟s attempts to enter into a partnership with its largest creditor. (Id. at ¶ 85). This claim was dismissed by the Court‟s Order of June 17, 2010. (Pl. Br. 9.)

Liberty acknowledged receipt of the claim on February 25, 2009. (Jablow Cert. ¶ 8, Ex. F.) It filed a Complaint for Declaratory Judgment in this Court on October 13, 2009 (Dkt. No. 1), and sent a letter denying defendants‟ request for defense and indemnification on October 16, 2009, citing four exclusions to the personal and advertising injury provisions. (Rowell Decl. ¶ 6, Ex. E.) On July 7, 2010, the parties filed cross-motions for summary judgment. (Dkt. No. 27, 28.) On July 28, 2010, the plaintiff filed a motion to strike portions of David Jablow‟s certification (Dkt. No. 31.)


Summary judgment is appropriate where the moving party establishes that "there is no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c)(2). A factual dispute between the parties will not defeat a motion for summary judgment unless it is both genuine and material. See Scott v. Harris, 550 U.S. 372, 380 (2007); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A factual dispute is genuine if a reasonable jury could return a verdict for the non-movant and it is material if, under the substantive law, it would affect the outcome of the suit. See Anderson, 477 U.S. at 248. The moving party must show that the non-moving party has failed to "set forth," by affidavits or otherwise, "specific facts showing that there is a genuine issue for trial." See Beard v. Banks, 548 U.S. 521, 529 (2006) (citing Fed. R. Civ. P. 56(e)).

Once the moving party has carried its burden under Rule 56, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts" in question. Scott, 550 U.S. at 380 (citing Matsushita Elec. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)). To survive a motion for summary judgment, a non-movant must present more than a mere "scintilla of evidence" in his favor. Woloszyn v. Cnty. of Lawrence, 396 F.3d 314, 319 (3d Cir. 2005). The opposing party must set forth specific facts showing a genuine issue for trial. Shields v. Zuccarini, 254 F.3d 476, 481 (3d Cir. 2001). At the summary judgment stage, the court‟s function is ...

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