Harleysville Ins. Co. of N.J. v. M & R Mechanical Contractors, Inc., No. A-4812-07T2, 2009 WL 1675712 (N.J. Super. Ct. App. Div. Jan. 26, 2009)
Following remand for discovery respecting publications that might have precluded coverage under the first publication exclusion, the malicious prosecution coverage otherwise implicated by the fact assertions triggered a defense.
In New Jersey malicious prosecution is described as malicious use of process in a civil context. Only the third action filed in this series of underlying cases is alleged to
have been maliciously prosecuted, described as the Design III arbitration.
Under New Jersey law, the elements of an action for malicious use of process are: (1) that defendant's complaint was “filed maliciously and without probable cause,” (2) that the complaint was “terminated favorably” to the plaintiff claiming malicious use of process; and (3) that the plaintiff “suffered a special grievance.” Grodjesk v. Faghani, 104 N.J. 89, 102 (1986) (citing Penwag Property Co. v. Landau, 76 N.J. 595, 598 (1978)). In essence, the wrongful conduct of malicious use of process involves commencing a legal action without justification.
Id. at *5 (footnote omitted).
In Harleysville, the insurer conceded that the asserted action for bringing the Design III arbitration constituted either malicious prosecution or abuse of process under its pertinent policy language covering personal injury. Harleysville argued, rather, that the Design III action which occurred in January 2005 after the coverage term began in November 2004, arose out of earlier publications by M&R that predated the policy. The court applied the first publication exclusion to the malicious prosecution offense because
[A]lthough “publication” is not commonly thought to be a defined element of a malicious prosecution claim, the filing of the offensive action, whether it be civil or criminal, can reasonably be considered a form of “communication” injurious to another party. The filing of a written demand for arbitration is, in this sense, a form of “publication.”
Id. at *6.
Nevertheless, that it was unavailing because “the sole offensive and injurious conduct that gives rise to DPS's federal action is M & R's filing of the third arbitration, Design III, against DPS in January 2005.” Id. at *6.
To be sure, the alleged offensiveness of that third arbitration demand relates to the fact that M & R already had its rights under the contract with DPS determined in the two prior arbitrations. But the offensive behavior, and the source of the corresponding injury to DPS, is the third filing, not the ones that preceded it. . . .
This is not a situation reasonably contemplated by the “first publication” exclusion, which is aimed at insulating an insurer from an exposure for harm that was already inflicted by an earlier publication predating the period of coverage. See, e.g., Applied Bolting Tech. Prod., Inc. v. USF & G, 942 F.Supp. 1029, 1037 (E.D.Pa.1996) (barring coverage for injuries that arise out of “oral or written publication” of any material, whose publication occurred prior to the beginning of the policy period).
Id. at *6-7.
