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2000 PA Super 273
PRO GOLF MANUFACTURING,
IN THE SUPERIOR COURT OF
TRIBUNE REVIEW NEWSPAPER COMPANY,
T/D/B/A THE HERALD,
No. 65 WDA 2000
Appeal from the Judgment Entered December 16, 1999,
In the Court of Common Pleas of Allegheny County,
Civil Division at No. AR99-4838.
POPOVICH, FORD ELLIOTT and BROSKY, JJ.
***Petition for Reargument Filed 9/26/2000***
OPINION BY POPOVICH, J.:
Filed: September 12, 2000
***Petition for Reargument Denied 11/20/2000***
This is an appeal from the judgment entered on December 16, 1999,
in the Court of Common Pleas of Allegheny County. Appellant commenced
suit on August 6, 1999, setting forth a single cause of action for commercial
disparagement based upon the falsity of newspaper articles published by
appellee on September 23, 1997 and February 18, 1998. Appellant is in the
business of manufacturing golf equipment, repairing golf equipment and
providing golf instruction. Appellee published newspaper articles which
stated that several historic buildings, including the building in which
appellant's business is located, were being demolished. However, the
building in which appellant's business is located was never scheduled for
demolition. Appellant alleged that these publications resulted in a loss of
customers and pecuniary loss.
Appellee filed an answer and new matter stating that appellant's claim
was barred by the one-year statute of limitations for defamation actions (42
Pa.C.S.A. § 5523). Thereafter, appellee filed a motion for judgment on the
pleadings. Argument on appellee's motion was conducted, and the parties
submitted briefs. Appellee's motion was granted, and appellant filed a
timely notice of appeal. Upon review, we reverse and remand for trial.
Herein, appellant asks the following question:
Is [appellant's] cause of action of commercial
disparagement subject to the one year statute of limitation
as set forth in 42 Pa.C.S.A. § 5523?
Appellant's brief, at 3.
Our standard and scope of review in matters involving the grant or
denial of judgment on the pleadings is as follows:
[Appellate review of an order granting a motion for
judgment on the pleadings] is plenary. The appellate court
will apply the same standard employed by the trial court.
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 presented
by the party against whom the motion is filed, considering
only those facts which were specifically admitted. Further,
the court may grant judgment on the pleadings only where
the moving party's right to succeed is certain and the case
is so free from doubt that trial would clearly be a fruitless
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Lewis v. Erie Ins. Exchange, 2000 Pa.Super. LEXIS 721, *6-7 (Pa.Super.
2000)(quoting Kafando v. State Farm Mut. Auto. Ins. Co., 704 A.2d 675,
676 (Pa.Super. 1998)(citations omitted)). "The reviewing court is to
determine if the trial court's action respecting the motion for judgment on
the pleadings `was based on a clear error of law or whether there were facts
disclosed by the pleadings which should properly go to the jury.'" Id.
(quoting Kelly v. Nationwide Ins. Co., 606 A.2d 470, 471 (Pa.Super.
1992)). Herein, there were no factual issues disclosed by the pleadings that
should properly go to the jury. Therefore, our review is to determine
whether the trial court committed a clear error of law.
The argument before this court concerns the statute of limitations
applicable to appellant's cause of action. Appellant argues that the two-year
statute of limitations set forth in 42 Pa.C.S.A § 5524(7),1 which controls
actions for both the intentional and negligent injury to persons and property,
governs his cause of action for commercial disparagement. Appellee argues
that the one-year statute of limitation for defamation actions set forth in 42
Pa.C.S.A § 5523(1)2 governs appellant's cause of action. As claimed by the
1 42 Pa.C.S.A. 5524(7) requires that the following be commenced within
two years: "Any other action or proceeding to recover damages for injury to
person or property which is founded on negligent, intentional, or otherwise
tortious conduct or any other action or proceeding sounding in trespass,
including deceit or fraud, except an action or proceeding subject to another
limitation specified in this subchapter."
2 42 Pa.C.S.A. 5523(1) requires that an action arising in libel, slander or
invasion of privacy commence within one year.
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parties and confirmed by our research, this question has yet to be answered
by the appellate courts of this Commonwealth.
Although we shall use the term "commercial disparagement" in our
analysis, this cause of action is described by various terms. As noted by the
Superior Court of New Jersey,
. . . Sometimes it is called slander of title, sometimes
slander of goods, or disparagement of goods, or trade
libel, or unfair competition, or interference with
prospective advantage, or whatever else the fancy of the
particular Judge or writer may lead to select. . . .
Vaccaro Construction Co. v. A.J. DePace, Inc., 137 N.J. Super. 512, 349
A.2d 570, 572 (1975)(citation omitted). The Restatement (Second) of
Torts § 623A labels this tort as "injurious falsehood." Regardless of the
label, the publication of a disparaging statement concerning the business of
another is actionable where: (1) the statement is false; (2) the publisher
either intends the publication to cause pecuniary loss or reasonably should
recognize that publication will result in pecuniary loss; (3) pecuniary loss
does in fact result; and (4) the publisher either knows that the statement is
false or acts in reckless disregard of its truth or falsity. Restatement
(Second) of Torts § 623(A) (1977).
While an action for commercial disparagement resembles an action for
defamation, the two torts have "several important differences." Menefee v.
Columbia Broadcasting System, Inc., 458 Pa. 46, 52, 329 A.2d 216, 219
(1974). The difference that we find most significant is the distinct interests
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protected by the two torts. The tort of defamation protects against damage
to one's reputation. As recognized by the Pennsylvania Supreme Court,
The most important function of an action for defamation is
to give the innocent and injured plaintiff a public
vindication of his good name. Its primary purpose is to
restore his unjustly tarnished reputation and `reputation is
the estimation in which one's character is held by his
neighbors or associates.' Restatement, Torts § 577,
comment b (1938).
Graham v. Today's Spirit, 503 Pa. 52, 57, 468 A.2d 454, 457
(1983)(quoting Gaetano v. Sharon Herald Co., 426 Pa. 179, 183, 231
A.2d 753, 755 (1967)). In contrast, the tort of commercial disparagement
protects one's economic interests against pecuniary loss. See Restatement
(Second) of Torts § 623(A), comment g (1977). For this reason, a cause
of action for commercial disparagement requires the showing of actual
pecuniary loss. Although a cause of action for defamation must also show
harm, the type of harm associated with a defamation action encompasses
impairment of reputation and standing in the community, personal
humiliation, mental anguish or suffering. See Agriss v. Roadway Exp.,
Inc., 483 A.2d 456, 467 (Pa.Super. 1984)(quoting Gertz v. Robert Welch,
Inc., 418 U.S. 323, 350, 94 S.Ct. 2997, 3012, 41 L.Ed.2d 789 (1974)). In
sum, defamation and commercial disparagement are two distinct torts. See
Zerpol Corp. v. DMP Corp., 561 F.Supp. 404, 408 (E.D. Pa. 1983).
Despite the fact that commercial disparagement and defamation are
two distinct torts that protect different interests, overlap between the two
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torts often occurs. The following excerpt from the Restatement (Second)
of Torts § 623(A) recognizes this overlap yet further distinguishes
commercial disparagement from defamation:
Although the torts of defamation and injurious falsehood
protect different interests, they may overlap in some fact
situations. This happens particularly in cases of
disparagement of the plaintiff's business or product. If the
statement reflects merely upon the quality of what the
plaintiff has to sell or solely on the character of his
business, then it is injurious falsehood alone. Although it
might be possible to imply some accusation of personal
incompetence or inefficiency in nearly every imputation
directed against a business or a product, the courts have
insisted that something more direct than this is required
for defamation. On the other hand, if the imputation fairly
implied is that the plaintiff is dishonest or lacking in
integrity or that he is perpetrating a fraud upon the public
by selling something that he knows to be defective, the
personal defamation may be found. In this case, it is
common to sue in defamation because the damages are
more comprehensive. Action may be brought in the same
suit for both torts, however, so long as the damages are
Restatement (Second) of Torts § 623(A), comment g (1977).
Given that the torts of commercial disparagement and defamation
protect different interests and require different burdens of proof, we find
that these two torts should not be governed by the same statute of
limitations. In making our decision, we are aware that there are cases from
other jurisdictions that apply the one-year statute of limitations governing
defamation to commercial disparagement. See Buehrer v. Provident Mut.
Life Ins. Co., 123 Ohio St. 264, 175 N.E. 25 (1931)(holding that the one-
year statute of limitations for libel and slander and not the four-year statute
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of limitations for injury to property or for trespass upon real property was
applicable); Woodward v. Pacific Fruit & Produce Co., 165 Or. 250, 106
P.2d 1043 (1940)(applying one-year statute of limitations for libel and
slander, and finding no reason existed for distinguishing, in the statute of
limitations, between actions for libel and slander involving property or
involving persons); Norton v. Kanouff, 165 Neb. 435, 86 N.W.2d 72
(1957); Old Plantation Corp. v. Maule Industries, Inc., 68 So.2d 180
(S.Ct.Fla. 1953). However, we find that the better approach, and one
shared by other jurisdictions, is the application of a statute of limitations
that is longer than the statute which governs defamation actions. See
Guess, Inc. v. Jeff Hamilton, Inc., 176 Cal.App. 3d 473, 222 Cal.Rptr. 79
(1986)(recognizing the distinction between classic defamation and
commercial disparagement, the court applied the two-year statute of
limitations rather than the one-year statute governing defamation actions);
Kollenberg v. Ramirez, 127 Mich. App. 345, 339 N.W.2d 176 (1983);
Shelby v. Taylor, 57 N.C. App. 119, 290 S.E.2d 767 (1982); Vaccaro
Construction Co. v. A.J. DePace, Inc., 137 N.J. Super. 512, 349 A.2d 570
¶ 10 We hold that the two-year statute of limitations found in 42 Pa.C.S.A.
§ 5524(7) governs the tort of commercial disparagement. Since the tort of
commercial disparagement protects one's business or other economic
interest from pecuniary harm, we find that the following text of 42 Pa.C.S.A.
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§ 5524(7) accurately reflects the real nature of this cause of action: "[a]ny
other action or proceeding to recover damages for injury to . . . property
which is founded on negligent, intentional, or otherwise tortious conduct or
any other action or proceeding sounding in trespass . . . ." In contrast, the
one-year statute of limitations found in 42 Pa.C.S.A. § 5523(1) solely
governs torts that involve damage to reputation.
¶ 11 Not only do we find that the plain language of 42 Pa.C.S.A. § 5524(7)
warrants its application to commercial disparagement, but also we find the
policy underlying 42 Pa.C.S.A. § 5523(1) inapplicable to commercial
disparagement. "In enacting a one year statute of limitation in 12 P.S. § 31,
and then reenacting it in the Judicial Code in 1978, 42 Pa.C.S.A. § 5523(1),
the legislature has clearly expressed a public policy that the statute of
limitations for defamation should remain shorter than the limitation of action
for other torts." Evans v. Philadelphia Newspapers, Inc., 601 A.2d 330,
333 (Pa.Super. 1991). "It is therefore clear that a longstanding policy exists
in Pennsylvania to allow defendants in defamation cases an opportunity to
make a prompt investigation of claims made against them while the
evidence is still fresh in the minds of prospective witnesses." Id. While we
respect the policy underlying the one-year statute of limitations governing
defamation, we find this policy consideration subordinate to the distinct
burden of proof required of a claim for commercial disparagement.
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¶ 12 As stated previously, the tort of commercial disparagement seeks to
protect an individual's economic interests by redressing pecuniary harm.
Accordingly, a cause of action for disparagement requires a showing of
actual pecuniary loss. Unlike the harm associated with defamation, a
showing of actual pecuniary loss may not be calculable within one year.
Thus, while a plaintiff may know of the potential harm associated with the
disparaging statement immediately after publication, he or she may be
unable to demonstrate the existence or full extent of the pecuniary loss
caused by the disparagement until well after publication. As is well
established, "a statute of limitations begins to run as soon as the right to
institute suit arises." Adamski v. Allstate Ins. Co., 738 A.2d 1033, 1042
(Pa.Super. 1999). However, "[a] plaintiff need not know the precise extent
of her injuries before the statutory period begins to run." Sterling v. St.
Michael's School For Boys, 660 A.2d 64, 66 (Pa.Super. 1995)(citation
omitted). Therefore, given the nature of the damages claimed in a
commercial disparagement action coupled with the fact that the uncertainty
of damages will not toll the statute, plaintiffs often may be unable to bring
forth such a claim under a one-year statute of limitations.
¶ 13 Although we have determined that the two-year statute of limitations
governs the tort of commercial disparagement, the recurring dilemma in this
area remains whether the false publication gives rise to a cause of action for
defamation, commercial disparagement or both. In providing a solution to
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this problem, we find persuasive the reasoning of Evans v. Philadelphia
Newspapers, Inc., supra. The Evans case required this court to
determine whether a tortious interference with contract claim, which was
based upon a duplicative defamation claim, was barred by the one-year
statute of limitations applicable to defamation claims. Despite recognizing
the fact that the tort of contractual interference may be a separate and
distinct action from that of libel or slander, we found that one-year statute of
limitations applicable to the appellants' contractual interference claim.
Evans, 601 A.2d at 334-335. In reaching this conclusion, we engaged in
the following reasoning:
In a situation such as this, however, where the underlying
wrong which the complaint alleges is defamation by
publication of a libelous report, and the claim of injury set
out in each count springs from the act of publication, the
Appellants should not be able to circumvent the statute of
limitations by merely terming the claim tortious
interference when in essence it is one of defamation,
subject to a one year limitation of action. In such a
situation, we will look to the gravamen of the action, not to
the label applied to it by plaintiffs.
Id., 601 A.2d at 333 (emphasis added).
¶ 14 When faced with the question of whether a false publication gives rise
to an action for defamation, commercial disparagement or both, we agree
with Evans, supra, that the proper analysis should focus upon the
gravamen of the action and not the label applied to it by the plaintiff.
¶ 15 In reaching this conclusion, we are also persuaded by the Michigan
case of Kollenberg v. Ramirez, supra, wherein the Michigan court chose
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to resolve this recurring issue by looking to the form of damages sought by
the plaintiff as well as the elements of the action alleged. Kollenberg, 339
N.W.2d at 179-180. Thus, this analysis would concentrate on the
complained of publication as well as the elements and damages alleged. "If
the main complaint is a false charge of personal misconduct and the
damages alleged and proved are primarily personal and general, then the
claim must be regarded as one for libel or slander, even though incidental or
consequential business or property losses are also pleaded and proved; on
the other hand, if the main complaint is a false statement directly injurious
to a business or property interest, and the damages alleged and proved are
limited to business or property losses established with the specificity
required for those sorts of damages, then the claim may properly be
considered as one for business or property disparagement, even though
aspects of personal defamation may incidentally be involved." 50 Am. Jur.
2d Libel and Slander § 422 (1999). Accordingly, the resolution of this
dilemma, which in turn will decide the applicable statute of limitations, must
be determined on a case-by-case basis.
¶ 16 In the case sub judice, the false publication stated that appellant's
building was among several historical buildings scheduled for demolition.
Such language was merely false and in no way impugned or questioned the
reputation of appellant, appellant's products or appellant's services. In
addition, appellant's complaint avers nothing other than the suffering of
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pecuniary loss "in that the business has lost customers who have read or
heard of the false statements and has been deprived of income which it
otherwise would have earned." Appellant's Complaint, ¶ 11. Clearly, the
gravamen of appellant's cause of action is commercial disparagement rather
than defamation. Since we have determined that the tort of commercial
disparagement is subject to the two-year statute of limitations found in 42
Pa.C.S.A. § 5524(7), we find that the trial court erred by granting appellee's
motion for judgment on the pleadings.
¶ 17 For the foregoing reasons, we reverse the judgment of the trial court
and remand for trial consistent with the findings of this court.
¶ 18 Reversed and remanded. Jurisdiction relinquished.
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