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Law360 (July 7, 2020, 8:00 PM EDT) -- An Ohio bar and record shop urged a federal judge to reject Cincinnati Insurance Co.'s bid to bring in the Ohio Supreme Court to certify whether COVID-19 causes a physical loss at the heart of the insurer's case, saying the issues don't involve questions of state law but are governed by "universal principles" for interpreting "standardized" insurance terms.
Troy Stacy Enterprises Inc., which owns Craft & Vinyl in Columbus, told an Ohio federal court Monday that the question of whether the pandemic creates physical damage in property insurance did not include any important issues unique to Ohio law. It is "premature" to involve the Ohio Supreme Court, which is not in a position to answer the question at this stage.
The bar alleged that Cincinnati is seeking a favorable ruling before the case is consolidated in multidistrict litigation, noting there are pending motions to centralize the litigation with the Judicial Panel on MDL.
Prematurely involving the state supreme court before the JPML's decision will "create the potential for inconsistent rulings affecting the nationwide litigation of the COVID-19 business interruption cases," Troy Stacy said in the memorandum.
Adam J. Levitt of DiCello Levitt Gutzler LLC, an attorney representing the bar, told Law360 on Tuesday that his firm filed an MDL transfer motion on behalf of Troy Stacy, restaurant chains, hotels and other businesses to get the cases centralized in the Northern District of Illinois. The matter is set for hearing at the end of the month.
Troy Stacy brought a class suit against Cincinnati in April, alleging that the insurer wrongfully denied its COVID-19 related loss claims when its all-risk policy did not have a virus exclusion. The craft beer pub operates a vinyl record shop and plays live music on-site in Columbus, Ohio. It shut down in mid-March due to government orders, according to court records.
Cincinnati requested the federal court to seek input from the Ohio Supreme Court over the dispute in early June. The insurer wanted the state supreme court to certify if the presence of COVID-19 on a property surface constitutes a direct physical loss to property and if the presence of a person infected with the virus creates a direct physical loss to property.
In Monday's memorandum, Troy Stacy said that the questions that Cincinnati seeks to certify "are not even questions of Ohio law in any meaningful sense" and do not affect vital state interests. The pub argued that the issues at hand are dictated by "well-worn principles" of private insurance contract interpretation.
Troy Stacy said the insurance industry uses standardized terms in policies and "if the presence of COVID-19 meant 'direct loss to property' for a policyholder in Ohio but not one in another state, that actuarial data on losses would be rendered meaningless, undermining both the property insurance market and the reliability of standard contract terms."
Cincinnati's request to certify the questions "is not only improvident, but simply another example of the insurance industry's effort to fragment and complicate what is actually a very straightforward analysis across policies and across companies," said Levitt, the bar's attorney.
The pub contended that courts within the Sixth Circuit have routinely held that the insurance policy interpretation are not issues that should be handed off to state supreme courts. And the Ohio supreme court is not in a position to offer input to the relevant pandemic loss questions at the moment, it added.
"Whether COVID-19 caused or constituted 'direct physical loss to property' will require scientific experts, including epidemiologists, to educate us all on the nature of the 'direct loss' caused by this particular virus," Troy Stacy said in the memorandum.
The pub is seeking to represent all business interruption policyholders who have been denied coverage for COVID-19 losses by Cincinnati.
Counsel from Cincinnati did not immediately respond to requests for comment.
Troy Stacy is represented by Mark Abramowitz, Adam J Levitt, Kenneth P Abbarno and Mark A. DiCello of DiCello Levitt Gutzler LLC.
Cincinnati is represented by Michael K Farrell and Rodger L. Eckelberry of BakerHostetler.
The case is Troy Stacy Enterprises Inc. v. The Cincinnati Insurance Company, case number 1:20-cv-00312, in the U.S. District Court for the Southern District of Ohio.
--Editing by Michael Watanabe.
For a reprint of this article, please contact reprints@law360.com.
