Pa. Eatery's COVID Loss Suit Sent Back To State Court, Again

By Daphne Zhang
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Law360 (August 27, 2020, 8:15 PM EDT) -- A Pennsylvania federal judge Thursday once again sent a Pittsburgh restaurant's pandemic coverage suit back to state court, re-stressing her position from three months ago that there aren't enough state court rulings on COVID-19 coverage that the federal court can rely on.

U.S. District Judge Nora Barry Fischer said Motorists Mutual Insurance Co.'s third attempt to remove the case to federal court "fares no better," and remanded DiAnoia's Eatery LLC's suit back to the Court of Common Pleas of Allegheny County, closing the case in the Western District of Pennsylvania.

"While a high volume of these types of insurance coverage cases have been brought by policyholders and insurance companies in state and federal courts across the country, including multiple cases in this district, there is not yet a body of case law developed by Pennsylvania courts due to the relative recency of the COVID-19 pandemic," Judge Fisher wrote.

In May, the Judge sent the suit back to state court just four days after Motorists Mutual removed it to the district court, holding that the state courts had not yet decided enough cases for the federal courts to rely on. In June, the insurer removed the case to the district court a second time.

Motorists Mutual has argued that DiAnoia's own pleadings show that the business and its owners are based in Pennsylvania, while Motorists Mutual is based in Ohio. It also said that the eatery's suit is "a hybrid action seeking both damages for breach of contract and a declaration of coverage" so the court should keep jurisdiction of the case.

Judge Fischer disagreed on Thursday, pointing out that the restaurant was solely seeking a declaration that its losses from state closure orders should be covered but never pursued breach of contract or bad faith claims against the insurer.

The judge maintained her position from May that DiAnoia raises novel insurance coverage questions under Pennsylvania law, including business interruption and civil authority, which are best reserved for the state court to resolve in the first place.

"Insurance coverage is a creation of state law, with policy language and premium rates being approved by the Pennsylvania Insurance Department in a highly regulated industry," Judge Fischer said. "Likewise, the shutdown orders and other restrictions placed on plaintiff's business were issued by state and local authorities."

DiAnoia's, an Italian restaurant in Pittsburgh's Strip District, and its associated carry-out storefront Pizzeria Davide filed the complaint against Motorists in state court on April 28. The insurer removed the suit to federal court May 15, citing its Ohio citizenship and DiAnoia's Pennsylvania citizenship.

The restaurant is one of many businesses that have sued their insurers in Pennsylvania. The state's Supreme Court on May 14 rejected a petition from another Pittsburgh establishment asking to expedite such cases, which Judge Fischer has referenced as another reason for declining to take DiAnoia's case while the state courts still grappled with the same questions.

In Thursday's order, Judge Fisher also cited Third Circuit rulings that when "state law is uncertain," district courts need to "step back," because the "state's interest in resolving its own law must not be given short shrift simply because one party or, indeed, both parties, perceive some advantage in the federal forum."

Scott B. Cooper of Schmidt Kramer PC, representing DiAnoia's, told Law360 Thursday that they hope the case can "move forward as quickly as possible in the state courts to ultimately have the Pennsylvania Supreme Court make a definitive ruling on this unprecedented legal issue."

Counsel for Motorists Mutual declined to comment.

DiAnoia's is represented by James C. Haggerty of Haggerty Goldberg Schleifer & Kupersmith PC, Scott B. Cooper of Schmidt Kramer PC, John P. Goodrich of Goodrich & Associates PC and Jonathan Shub of Kohn Swift & Graf PC.

Motorists Mutual Insurance is represented by Matthew A. Meyers, Robert E. Dapper Jr. and Taylor M. Wantz of Burns White LLC.

The case is DiAnoia's Eatery LLC v. Motorists Mutual Insurance Co., case number 2:20-cv-00787, in the U.S. District Court for the Western District of Pennsylvania and DiAnoia's Eatery LLC v. Motorists Mutual Insurance Co., case number GD-20-005273, in the Court of Common Pleas of Allegheny County, Pennsylvania.

--Additional reporting by Mike Curley and Matthew Santoni. Editing by Brian Baresch.

For a reprint of this article, please contact reprints@law360.com.

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