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Law360 (August 14, 2020, 2:01 PM EDT) -- A California federal judge has given the go-ahead to two lawsuits between law firm Geragos & Geragos APC and Travelers Indemnity Co. of Connecticut over coverage for losses stemming from COVID-related shutdowns, finding there is diversity jurisdiction and refusing to dismiss, stay or remand either case.
In an order filed Wednesday, U.S. District Judge Philip S. Gutierrez addressed motions from Geragos & Geragos in both cases, as the firm sought to remand its own suit back to state court and either dismiss or stay Travelers' countersuit.
Focusing first on Geragos & Geragos' suit, the judge found the case had complete diversity, as the firm is based in California, while Travelers is based in Connecticut. While Geragos & Geragos had named Los Angeles Mayor Eric Garcetti as a defendant and had argued that his presence defeated diversity, Judge Gutierrez found Garcetti had been fraudulently added to the suit.
While Geragos & Geragos' claims stem from the mayor's shutdown orders, the lawsuit does not make any allegations against Garcetti, the judge wrote, adding that it is at heart a contract dispute between the firm and its insurer, and does not seek to challenge the orders themselves.
Geragos & Geragos first sued Travelers in state court on April 10, accusing the insurer of failing to honor its losses during the COVID-19 pandemic. According to the firm, the coverage should have been triggered when Garcetti issued an order closing nonessential businesses on March 15. Travelers removed the suit to federal court in May.
While the firm had also argued that the federal court should decline jurisdiction over the declaratory judgment claim, Judge Gutierrez on Wednesday said he saw no reason to, as the firm's amended complaint includes other causes of action that put it in federal jurisdiction.
Geragos & Geragos had also pointed to the other coverage suits it's involved in against Travelers in California state court, saying those are parallel actions and the removal to federal court creates duplicative actions. Travelers hasn't removed any of those cases to federal court.
The judge, however, said those involve different parties and the firm hasn't identified "exceptional circumstances" that warrant the federal court's abstention. He added there is "at least a doubt" that those actions would resolve all the issues before the court in the federal cases.
Travelers filed its own federal court case 10 days after Geragos & Geragos' original filing, asserting the policy Geragos & Geragos holds simply does not cover the outbreak and has exclusions specifically for business losses resulting from a virus.
Geragos & Geragos pushed the court to dismiss Travelers' countersuit in June, arguing that Travelers was forum shopping and that the suit duplicates its own actions against Travelers seeking coverage.
In Wednesday's order, Judge Gutierrez said the Travelers countersuit should not be dismissed for many of the same reasons that the Geragos & Geragos action should not be remanded, adding that because the court has found that the suits are in the correct forum, Travelers cannot be said to have forum shopped.
Putting both cases in the same district court provides "one comprehensive proceeding" for the claims, the judge wrote.
A spokesperson for Travelers said the company is pleased with the decision to continue the case in federal court.
Representatives for Geragos & Geragos could not immediately be reached for comment Friday.
Travelers is represented by Theodore J. Boutrous Jr., Richard J. Doren and Deborah L. Stein of Gibson Dunn & Crutcher LLP and Stephen E. Goldman and Wystan M. Ackerman of Robinson & Cole LLP.
Geragos & Geragos is represented by its own Mark J. Geragos, Ben J. Meiselas and Matthew M. Hoesly.
The case is Travelers Casualty Insurance Co. of America v. Geragos & Geragos APC, case number 2:20-cv-03619, in the U.S. District Court for the Central District of California.
--Additional reporting by Jeff Sistrunk and Hailey Konnath. Editing by Alyssa Miller.
For a reprint of this article, please contact reprints@law360.com.
