Five days after Sentinel Insurance Co. sought to ax the complaint via a motion for judgment on the pleadings, Ambulatory Care Center PA urged the court to stay the litigation pending the Third Circuit ruling, saying the appeals "would almost assuredly resolve the underlying issues in this case." Sentinel does not oppose hitting the pause button, the center said.
"The consolidated appeal presents the same common core questions as those in defendant's MJOP, including, inter alia, the application of the policies' virus exclusions vis-à-vis the threshold question of coverage and the interpretation of 'physical loss,' as well as issues regarding the applicability of the policies' 'civil authority' provision," the center said in its stay motion.
In consolidating the 14 appeals — some of which involve Sentinel affiliate Twin City Fire Insurance Co. — the Third Circuit directed that similar appeals be stayed "until the above-captioned appeals have been resolved or until further order."
The appellate court took that step "presumably because the Third Circuit expects that the resolution of the fourteen appeals will be informative and perhaps determinative of the issues in any newly filed appeal," the center said Wednesday. "Therefore, just as the Third Circuit has ordered a stay of cases, this court should stay proceedings pending the outcome of the appeals in the Third Circuit as whatever opinion the Third Circuit issues, that opinion will likely be dispositive regarding defendant's theories for dismissal set forth in its MJOP."
Ambulatory Care Center, which runs a facility in Vineland, New Jersey, launched the suit on May 13, 2020, seeking a declaratory judgment that Sentinel must cover the losses that the business suffered after Gov. Phil Murphy suspended elective medical and surgical procedures as part of the state's effort to curb the spread of COVID-19.
Sentinel — part of Hartford Financial Services Group Inc. — on Friday moved for a judgment in its favor, arguing in part that a virus exclusion in the center's policy barred such coverage.
That provision "provides that Sentinel 'will not pay for loss or damage caused directly or indirectly by ... [the presence], growth, proliferation, spread or any activity of ... virus,'" the insurer said. Such virus exclusions have been at the heart of numerous legal battles between insurers and their customers over coverage related to the coronavirus outbreak.
In calling on the court to pause the matter, the center argued on Wednesday that a stay would not prejudice either side and would rather "simplify the issues," adding that it would promote "judicial efficiency" and avoid "duplicative, wasteful litigation."
"For the parties and this court to expend resources litigating the MJOP without certainty about where the Third Circuit will come down on the very questions presented in the MJOP is antithetical to the goal of ensuring judicial economy," the center said.
By staying the action, the court "can ensure that the parties are not required to litigate potentially unnecessary issues, nor would the court be called upon to expend its own limited resources to rule on matters that will be similarly ruled upon by the Third Circuit," the center said.
The center also pointed out how, in the similar case of Sidkoff, Pinkus & Green v. Sentinel Insurance Co. Ltd., a Pennsylvania federal court on Nov. 6 "decided sua sponte to stay the case pending decision from the Third Circuit, against the very same defendant as in this case."
That court was "faced with the prospect of ruling on a dispositive motion regarding business interruption coverage claims under very similar factual circumstances," the center said. The Third Circuit case underlying the case in Sidkoff is now part of the consolidated appeals.
"It is entirely inconsistent for the Sidkoff case to be stayed and for the instant case to be fully briefed, litigated and ruled upon in light of the consolidated appeals," the center said. "The facts here are analogous to that case, and the factor of judicial economy therefore dictates that this Court should stay litigation pending the resolution of the Third Circuit's ruling."
Counsel for the parties did not immediately respond to requests for comment Wednesday.
Ambulatory Care Center is represented by Richard M. Golomb and Kenneth J. Grunfeld of Golomb & Honik PC, Arnold Levin, Frederick Longer and Daniel Levin of Levin Sedran & Berman LLP and W. Daniel "Dee" Miles III, Rachel N. Boyd and Paul W. Evans of Beasley Allen Crow Methvin Portis & Miles PC.
Sentinel is represented by James L. Brochin and Sarah D. Gordon of Steptoe & Johnson LLP.
The case is Ambulatory Care Center PA v. Sentinel Insurance Co. Ltd., case number 1:20-cv-05837, in the U.S. District Court for the District of New Jersey.
--Editing by Steven Edelstone.
For a reprint of this article, please contact reprints@law360.com.