PNY Technologies Inc, et al v. Twin City Fire Insurance Co

Filing

NOT PRECEDENTIAL OPINION Coram: RENDELL, HARDIMAN and VANASKIE, Circuit Judges. Total Pages: 4. Judge: RENDELL Authoring.

Case: 14-3624

Document: 003111988320

Page: 1

Date Filed: 06/11/2015

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 14-3624
_____________

PNY TECHNOLOGIES INC;
PNY TECHNOLOGIES EUROPE,
Appellants
v.
TWIN CITY FIRE INSURANCE COMPANY

On Appeal from the United States District Court
for the District of New Jersey
(District Court No.: 2-11-cv-04647)
District Judge: Honorable Stanley R. Chesler

Submitted under Third Circuit LAR 34.1(a)
On June 1, 2015
(Opinion filed: June 11, 2015)

Before: RENDELL, HARDIMAN, and VANASKIE, Circuit Judges
O P I N I O N*

*

This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.

Case: 14-3624

Document: 003111988320

Page: 2

Date Filed: 06/11/2015

RENDELL, Circuit Judge:
Appellants PNY Technologies, Inc., and PNY Technologies Europe (collectively,
“PNY”) appeal from the District Court’s order granting summary judgment to Appellee
Twin City Fire Insurance Company (“Twin City”) in a coverage dispute regarding
insurance policies (the “Policies”) that Twin City issued to PNY. The District Court held
that Twin City was not obligated to cover PNY’s liabilities under certain contracts
because the Policies specifically excluded coverage for contract liability. We will affirm.
The Chief Financial Officer (“CFO”) of PNY Europe entered into contracts for
foreign exchange transactions with four banks. The contracts resulted in substantial
losses and the banks demanded payment from PNY pursuant to those contracts. PNY
notified Twin City of the banks’ demands and requested coverage, urging that its CFO
did not have authority to enter into such foreign exchange contracts, and, as a result, the
contractual liability exclusion in the Policies should not apply. That exclusion bars
coverage for any claim “based upon, arising from, or in any way related to any actual or
alleged . . . liability under any contract or agreement, provided that this exclusion shall
not apply to the extent that liability would have been incurred in the absence of such
contract or agreement.” (J.A. 69; J.A. 116.) Twin City denied coverage in reliance on,
inter alia, this exclusion.
PNY brought this action alleging breach of contract and seeking a declaratory
judgment that Twin City was obligated to provide coverage under the Policies. The

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Case: 14-3624

Document: 003111988320

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Date Filed: 06/11/2015

District Court granted summary judgment to Twin City because it held that the
contractual liability exclusion barred PNY’s claims.1
“We review a grant of summary judgment de novo,” Post v. St. Paul Travelers Ins.
Co., 691 F.3d 500, 514 (3d Cir. 2012), and “[w]e review the District Court’s
interpretation of the insurance policies de novo,” Alexander v. Nat’l Fire Ins. of Hartford,
454 F.3d 214, 219 n.4 (3d Cir. 2006). Under New Jersey law,2 “[i]nsurance
policies . . . ‘will be enforced as written when [their] terms are clear.’” Mem’l Props.,
LLC v. Zurich Am. Ins. Co., 46 A.3d 525, 532 (N.J. 2012) (quoting Flomerfelt v.
Cardiello, 997 A.2d 991, 996 (N.J. 2010)). “Exclusionary clauses are presumptively
valid and are enforced if they are ‘specific, plain, clear, prominent, and not contrary to
public policy.’” Flomerfelt, 997 A.2d at 996 (quoting Princeton Ins. Co. v. Chunmuang,
698 A.2d 9, 17 (N.J. 1997)).
PNY argues that the contractual liability exclusion does not apply because the
CFO was not authorized to execute the foreign exchange contracts and, as a result, the
contracts are invalid. This argument lacks merit because the exclusion applies to “any
actual or alleged . . . liability under any contract.” The exclusion thus encompasses any
alleged liability under any contract. PNY’s alleged liability stems from the contracts and,

The District Court also held that PNY’s claims did not qualify for coverage because
they were not “entity claims for wrongful acts” as defined by the Policies. We need not
reach the entity claim issue because the contractual liability exclusion provides sufficient
basis to affirm.
1

2

The parties agree that New Jersey law governs the Policies.
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Case: 14-3624

Document: 003111988320

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Date Filed: 06/11/2015

even if those contracts were deemed invalid, PNY’s liability would still have been
alleged under the contracts and the contractual liability exclusion would still apply.
PNY further urges that the exclusion does not apply because PNY’s liability is
based on the CFO’s malfeasance, not on the contracts. In support of this argument, PNY
relies upon Houbigant, Inc. v. Fed. Ins. Co., 374 F.3d 192 (3d Cir. 2004), in which we
held that a contractual liability exclusion did not apply to tort claims involving trademark
infringement. In that case, the insurer, Federal Insurance (“Federal”) had insured two
entities (the “Insureds”) whom Houbigant had licensed to manufacture and sell its
products and use its trademarks. Houbigant filed claims against the Insureds alleging that
they had breached the license agreements and infringed Houbigant’s trademarks. Federal
denied coverage to the Insureds, who then assigned their indemnification rights to
Houbigant. When Houbigant sued Federal, Federal argued that the insurance policy at
issue excluded coverage for injury “arising out of breach of contract.” Id. at 202.
Applying New Jersey law, we held that the exclusion did not apply to Houbigant’s tort
claims because “[a]lthough the relationship between Houbigant and the Insureds is
contractual, the actions of the Insureds were independently tortious.” Id. at 203 (footnote
omitted). PNY’s reliance on Houbigant is misplaced because there the liability arose out
of the tortious acts; here the liability relates solely to losses under the contracts. Thus, the
contractual liability exclusion squarely applies.
Accordingly, we will affirm.

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