Businesses Balk At Joining Pa. Virus Insurance Suit

By Matthew Santoni
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Law360 (July 28, 2020, 7:14 PM EDT) -- Nearly 30 northeastern Pennsylvania businesses with lawsuits against Erie Insurance Exchange over coverage of their COVID-19 losses said they don't want their cases grouped with others in a Pittsburgh state court because of differences in their policies and the circumstances surrounding their closures.

Three of those businesses from Lackawanna County filed objections Monday to the transfer and coordination of their cases with other lawsuits against Erie in the Allegheny County Court of Common Pleas, citing the differences in how their region reopened after the pandemic shutdown, what their insurance policies said and how each business suffered during the closure. Their attorneys represented a total of 29 similarly situated businesses that also wanted to keep their suits separate on the other side of the state.

"While each of these businesses have been impacted by the government shut down orders and threat of COVID-19, not all businesses were similarly situated," their objection said. "The specific facts and circumstances of each business and the impact that the government shut down orders have had on each of them cannot be viewed in a vacuum of a coordinated case."

The businesses asked Judge Christine Ward to exclude them from her coordination order, or to pause their case until the court decides whether Erie has to cover business losses due to state-mandated closures in response to the pandemic. If the court forced them to move to Pittsburgh, the businesses asked that their attorneys be appointed co-lead counsel or put on any steering committee for the litigation.

On July 23, Judge Ward granted a request from a pair of Pittsburgh-area restaurants to coordinate cases against Erie from Allegheny, Philadelphia and Lancaster counties, as well as any other pending or freshly filed state court suits against the insurer. The cases would be coordinated in Allegheny County's Complex and Commerce Litigation Center for pretrial motions, trial and any final resolutions, she said.

But she'd also offered the parties to the combined cases up to a month to file any objections, and on Monday, AutoBahn Title & Tag, Live With It gift store and Cheryl's Studio hair salon were the first to speak up, according to court records.

"It would be extremely inconvenient for the parties to try their cases in a foreign forum which they have no connection with and that is on the complete opposite side of the commonwealth," their objection said. "Objecting plaintiffs will be prejudiced by the coordination in the hardship of traveling across the state to litigate their claims."

Gov. Tom Wolf's orders closing "nonessential businesses" during the early spread of the pandemic affected some businesses differently, the objection said. It noted that some, like the restaurants that filed the initial lawsuits in Allegheny County, were allowed to remain partially open for carryout and delivery service, while other businesses were shut down completely or had occupancy limits.

The businesses also had differences in their insurance policies, suffered different losses during the shutdown, and reopened at different times as the state moved different counties through its three-stage reopening plan, the objection said.

"Each county was subject to varying timelines in terms of government closures. Governor Wolf's orders came in stages permitting certain businesses to reopen before others and even permitted businesses of certain counties to reopen before other counties," the objection said. "Not all plaintiffs sustained the same damages and each case must be tried on its own merit with its own evidence of financial losses that were actually sustained."

One option the businesses floated was pausing their cases until the court decided the threshold issue of whether COVID-19 closures were covered. The Lackawanna cases could then be sent back to their local courts and decided there.

"This alternative would prevent inconsistent rulings within the commonwealth and avoid the unnecessary trials of foreign matters in Allegheny County," the objection said. "This alternative would also allow plaintiffs to try their breach of contract claims in their chosen forum of Lackawanna County where their businesses are located and where their losses were sustained."

Counsel for the three Lackawanna County plaintiffs said they represented a total of 29 clients suing Erie over coverage in their own region. If they couldn't do the cases on their own, they sought a hearing to determine whether they could help lead the coordinated cases in Allegheny County.

"These individual businesses should be permitted to pursue their claims with counsel of their choosing and that the Northeastern Pennsylvania businesses who are or will make a claim against Erie should be represented by counsel familiar with the area and their businesses," the objection said.

Scott Cooper and John Goodrich, two of the attorneys representing the plaintiffs in Pittsburgh, said there had been a coordination conference but the Lackawanna County businesses hadn't raised the same issues then.

"Counsel ... had ample chance to raise these issues during the coordination hearing and now wants to delay things and get a second chance. Instead they simply agreed with everything Erie argued and supported the insurance company instead of the businesses," Cooper and Goodrich said in a statement Tuesday. "This appears to be a disgruntled firm being more concerned about themselves than getting this issue moving and decided so that businesses can survive."

Counsel for the Lackawanna County businesses and a representative for Erie declined to comment.

The Lackawanna County businesses are represented by Marion Munley and Melinda C. Ghilardi of Munley Law PC.

The Allegheny County restaurants are represented by James Haggerty of Haggerty Goldberg Schleifer & Kupersmith PC, Scott Cooper of Schmidt Kramer PC, John Goodrich of Jack Goodrich & Associates PC, Michael Boni, Joshua Snyder and John Sindoni of Boni Zack & Snyder LLC and Jonathan Shub of Shub Law Firm LLC.

Erie is represented by Richard DiBella and Tara Maczuzak of DiBella Geer McAllister Best PC, and Robert Horst, Robbery Runyon III and Matthew Malamud of Timoney Knox LLP.

The case is Joseph Tambellini Inc. v. Erie Insurance Exchange, case number GD-20-005137, in the Court of Common Pleas of Allegheny County, Pennsylvania.

--Editing by Marygrace Murphy.

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