On November 5, 2019, Black Knight Inc. brought suit in Florida state court against PennyMac Loan Services LLC (“PennyMac”) alleging breach of contract and trade secret misappropriation under the Florida Uniform Trade Secrets Act. PennyMac allegedly used its access to Black Knight’s trade secrets and other confidential information relating to its proprietary mortgage servicing software platform (“MSP”) to work with third party software engineers and improperly develop an imitation mortgage-processing system. PennyMac purportedly did so to replace the MSP system and thereby avoid paying Black Knight the contractually required fees and save it years and hundreds of millions of dollars in development costs. Black Knight seeks monetary damages and injunctive relief and declaratory judgment on ownership of loan service modules.

One day later, on November 6, 2019, PennyMac filed a lawsuit in the Central District of California against Black Knight alleging violations of the Sherman Act and Cartwright Act and unfair competition based on an alleged pattern of anti-competitive and discriminatory practices to maintain control over the loan servicing systems market. PennyMac claims that it paid “extraordinarily high prices and fees for an under-performing and antiquated product,” was subjected to unconscionable contract terms, and had to incur “extraordinary technology expenses” to independently develop modules to support customer needs when performing mortgage servicing obligations. PennyMac seeks monetary and punitive damages among other relief.

How these dueling lawsuits will play out remains to be seen…