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Eagles Can't Send Dispute To State Court, Insurer Says

By Max Jaeger · May 24, 2021, 6:17 PM EDT

The Philadelphia Eagles' bid to get an insurance dispute sent back to state court "flies in the face of reality," the team's insurer said Friday, arguing that Pennsylvania federal courts should referee their battle over whether the team's policy against loss or damage covers forced pandemic closures.

The Eagles have contended that state courts should answer "novel" legal questions about whether insurers are on the hook for losses that event venues suffered under government-mandated shutdowns. But Factory Mutual Insurance says the action should stay with the federal courts, because it's an open-and-shut contract dispute analogous to several dozen cases that Pennsylvania district courts have settled.

"Thus, plaintiff's assertion that this court cannot decide this matter because there are novel issues of state law that must be decided by the Pennsylvania courts flies in the face of reality," Factory Mutual said in a response to the team's April motion to remand.

The Eagles want a declaratory judgment saying its policy against physical loss or damage covers revenue lost as a result of the coronavirus pandemic, which would necessitate a payout by Factory Mutual. But the insurer contends the action is little more than a breach-of-contract claim "masquerading" as a declaratory judgment action.

"Clearly, plaintiff wants money damages and is not simply seeking a declaration of its rights under an insurance contact [sic]," Factory Mutual argued Friday.

The Rhode Island-based insurer's response runs down a list of mechanical reasons why the suit belongs in federal court, including diversity, convenience and a lack of parallel state action or public interest.

The Eagles filed their single-count complaint against Factory Mutual in the Court of Common Pleas of Philadelphia County on March 21, claiming the policy's extended coverage capped at $1 billion per occurrence for "all risks of physical loss or damage."

But Factory Mutual denied the team coverage, citing a "contamination" exclusion and got the case removed to federal court before requesting a dismissal on April 23. A week later, the Eagles asked U.S. District Judge Michael M. Baylson to return the case to state court.

A University of Pennsylvania analysis found that federal courts are friendlier to insurers when it comes to motions to dismiss action related to coronavirus closures, while state courts tend to side with plaintiffs.

Federal courts grant motions to dismiss at a rate of just over 92%, compared to 56% in state courts, according to the school's COVID Coverage Litigation Tracker. The feds are also more likely to permanently toss cases, the research shows.

There are some 130 similar claims pending in Pennsylvania federal courts, Factory Mutual said in court papers.

"Indeed, Federal district courts in Pennsylvania have already held that the presence of COVID-19 — whether present at a specific insured property or supposedly 'ubiquitous' in a general area — is not physical loss or damage," the filing said, noting there have been at least 30 instances of such a ruling.

Lawyers for the Eagles declined to comment on pending litigation.

Representatives for Factory Mutual did not immediately respond to a request for comment.

The Philadelphia Eagles Limited Partnership is represented by Linda Kornfeld, Charles A. Fitzpatrick IV, James T. Giles and James R. Murray of Blank Rome LLP.

Factory Mutual Insurance Company is represented by Richard D. Gable Jr. of Butler Weihmuller Katz Craig LLP.

The case is Philadelphia Eagles Limited Partnership v. Factory Mutual Insurance Company, case number 2:21-cv-01776, in the U.S. District Court for the Eastern District of Pennsylvania.

--Additional reporting by Melissa Angell and Shawn Rice. Editing by Gemma Horowitz.

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