Pa. Restaurants, Dentist Join Surge Seeking Virus Coverage

By Matthew Santoni
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Law360 (June 8, 2020, 8:23 PM EDT) -- A surge of lawsuits seeking insurance coverage for business losses due to COVID-19 closures was filed in Pennsylvania state court Friday, including individual claims and proposed class-action suits from four Pittsburgh-area restaurants and a dental practice.

Pittsburgh-based restaurants Umami, Round Corner Cantina and Cobra Lounge all filed suits against Motorists Commercial Mutual Insurance Co., with Cobra seeking to represent a class of businesses that suffered coronavirus-closure-related losses and were denied coverage by Columbus-based Motorists; the suburban Rochester Inn & Hardwood Grill filed a proposed class action against Arizona-based Nautilus Insurance Co.; and Smile Savers Dentistry filed a proposed class action against Chicago-based CNA Insurance.

The claims were all filed in state court, despite Motorists fighting to remove a similar case brought by Pittsburgh restaurant DiAnoia's Eatery to federal court, because the attorneys behind the cases say the lawsuits focused only on state law claims and would be decided more quickly by a state court.

The insurers "will most likely try to remove every case to federal court and we will ask them to be remanded since these are all only declaratory judgement actions seeking a decision of state insurance laws," said Scott Cooper of Schmidt Kramer, one of the attorneys handling the five cases filed Friday. "Handling them in state courts will expedite the issue getting to the Pennsylvania State Supreme Court instead of waiting for the Third Circuit to ask for certification."

In all the complaints, the plaintiffs cited Pennsylvania Gov. Tom Wolf's March 19 order closing all nonessential businesses in order to slow the person-to-person transmission of the highly contagious coronavirus, and they sought declaratory judgments that their insurers were obligated to cover their losses and expenses due to the pandemic and the shutdowns.

"The COVID-19 virus, as evidenced by these orders, causes damage to property, particularly in places of business … where the operation of the business requires interaction, gatherings and contact in areas where there exists a heightened risk of contamination by the COVID-19 virus," the complaints all said.

Cobra wanted to represent Motorists customers that had been denied, while Smile Savers dentist Timothy Ungarean and Rochester Inn owner Dumont Brothers Inc. wanted to do the same for spurned holders of CNA and Nautilus insurance policies, respectively.

The same team of attorneys had tried to get the Supreme Court of Pennsylvania to use its "King's Bench" jurisdiction to weigh whether businesses could claim COVID-19 damages despite their insurers claiming they had suffered no physical damage. They also asked the court to streamline "hundreds, if not thousands" of similar cases by grouping them together in a handful of courts similar to a federal multidistrict litigation.

Insurers and insurance trade groups opposed the prospect of broad rulings on insurance coverage and argued that every business's policy and circumstances were different, while the businesses' attorneys insisted the high court could tackle the "threshold issue" of whether insurance customers could claim damages even if they hadn't been physically contaminated or damaged by the virus. Pennsylvania's justices declined the case May 14.

The proposed class-action complaints by Cobra Lounge, Smile Savers and the Rochester Inn all noted that a Pittsburgh federal judge had previously rejected jurisdiction over similar claims in the DiAnoia's case, ruling that she could decline jurisdiction even over parties from different states and remand the case to state court under the declaratory judgment act.

"Federal jurisdiction was declined by Judge Nora Barry Fischer in a similar case which was remanded sua sponte by the court," the Cobra Lounge complaint said.

Motorists had the DiAnoia's case bounced back to federal court June 2, arguing the restaurant's claim for declaratory relief was merely an "artfully pled" breach-of-contract claim that could not be rejected.

Representatives of the insurers did not immediately respond to requests for comment Monday.

The businesses are represented by James C. Haggerty of Haggerty Goldberg Schleifer & Kupersmith PC, Scott B. Cooper of Schmidt Kramer PC, John P. Goodrich of Jack Goodrich & Associates PC and Jonathan Shub of Kohn Swift & Graf PC.

Counsel information for Motorists, Nautilus and CNA was not immediately available.

The cases are Umami Pittsburgh LLC v. Motorists, case number GD-20-006549; The Cocorico Corp., doing business as Round Corner Cantina, v. Motorists, case number GD-20-006548; King Cobra Group LLC v. Motorists, case number GD-20-006546; Timothy Ungarean DMD, doing business as Smile Savers Dentistry, v. CNA et al., case number GD-20-006544; and Dumont Bros. Inc., doing business as Rochester Inn & Hardwood Grill, v. Nautilus Insurance Co., case number GD-20-006542; all in the Court of Common Pleas of Allegheny County, Pennsylvania.

--Editing by John Campbell.

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