Businesses Ask 3rd Circ. To Combine Virus Coverage Appeals

By Daphne Zhang
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Law360 (February 2, 2021, 10:50 PM EST) -- Attorneys for policyholders in eight COVID-19 coverage disputes have asked the Third Circuit to consolidate their appeals for argument, saying one combined proceeding will more efficiently resolve unaddressed issues of Pennsylvania law.

The policyholders' counsel argued Monday that consolidation will free the court from receiving redundant briefings regarding key coverage issues under Pennsylvania law. The insureds have also requested the Third Circuit to ask the Pennsylvania Supreme Court to certify whether the pandemic causes "physical loss" covered in insurance policies.

"This is a serious case that will have a serious impact on whether thousands of small businesses will be able to survive," said Richard Golomb, one of the attorneys representing the policyholders.

Golomb said their motion to consolidate is a "precursor" to their asking the Pennsylvania high court to rule that the businesses are entitled to coverage under their all-risk commercial property policies despite a virus exclusion.

The eight appeals were filed by policyholders including a law firm, restaurants, optical filter shops, a gallery, and a beer garden, all of which have been denied COVID-19-related loss coverage by their insurers including Hartford Casualty Co., Admiral Indemnity Co., Twin City Fire Insurance Co., Lloyd's of London, Berkshire Hathaway, Cincinnati Insurance Co. and National Fire & Marine Insurance Co.

The federal courts have tossed those suits, siding with insurers that the businesses did not incur physical damage or loss to property, a precondition for coverage under Pennsylvania law

The businesses have appealed to challenge the district courts' ruling and urge the Third Circuit to ask the Pennsylvania Supreme Court to certify the question regarding the interpretation of "physical loss" and "virus exclusion" under the context of the pandemic.

"Each case turns on the resolution of issues of Pennsylvania law that the Supreme Court of Pennsylvania has not specifically addressed in the context of the COVID-19 pandemic," the attorneys said in the brief.

Specifically, the policyholders hope that the state court can certify whether a property's loss of use due to COVID-19 infestation and government closure orders constitutes physical loss and if a virus exclusion should apply when the plaintiffs' losses were solely caused by state shut-down orders.

The businesses also want the Third Circuit to ask the state court to determine whether the virus exclusion should be estopped when insurers allegedly misrepresented it to regulators to gain approval.

In the brief, the attorneys argued that the policyholders' certification request is reasonable, referencing that an Ohio federal judge has recently asked the state's high court to certify whether COVID-19 causes property damage covered in insurance policies. The judge has said the "unresolved" question of Ohio law belongs to the Ohio Supreme Court to ensure uniformity of state law applications.

Counsel for the insurers could not be immediately reached for comment. 

The policyholders are represented by Richard M. Golomb and Kenneth J. Grunfeld of Golomb & Honik PC and Alan M. Feldman, Daniel J. Mann and Edward S. Goldis of Feldman Shepherd Wohlgelernter Tanner Weinstock & Dodig LLP

Counsel information for the insurers was not immediately available. 

The cases are Wilson et al. v. Hartford Casualty Co. et al., case number 20-3124, LH Dining LLC v. Admiral Indemnity Co., case number 21-1038, Newchops Restaurant Comcast LLC v. Admiral Indemnity Co., case number 21-1039, ATCM Optical Inc. et al. v. Twin City Fire Insurance Co., case number 21-1107, Adrian Moody et al. v. The Hartford Financial Group et al., case number 21-1106, 4431 Inc. et al. v. Cincinnati Ins. Cos., case number 20-3594, Independence Restaurant Group v. Certain Underwriters at Lloyd's of London, case number 21-1175, and 1 S.A.N.T. Inc. v. Berkshire Hathaway Inc. et al., case number 21-1109, all in the U.S. Court of appeals for the Third Circuit. 

--Editing by Jay Jackson Jr.

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

Attached Documents

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Case Information

Case Title

Rhonda Wilson, et al v. USI Insurance Services LLC, et al


Case Number

20-3124

Court

Appellate - 3rd Circuit

Nature of Suit

4110 Insurance

Date Filed

October 20, 2020


Case Title

4431 Inc, et al v. Cincinnati Insurance Companies, et al


Case Number

20-3594

Court

Appellate - 3rd Circuit

Nature of Suit

4110 Insurance

Date Filed

December 23, 2020


Case Title

LH Dining LLC v. Admiral Indemnity Company


Case Number

21-1038

Court

Appellate - 3rd Circuit

Nature of Suit

4110 Insurance

Date Filed

January 08, 2021


Case Title

Newchops Restaurant Comcast v. Admiral Indemnity Company


Case Number

21-1039

Court

Appellate - 3rd Circuit

Nature of Suit

4110 Insurance

Date Filed

January 08, 2021


Case Title

Adrian Moody, et al v. Twin City Fire Insurance Co


Case Number

21-1106

Court

Appellate - 3rd Circuit

Nature of Suit

4110 Insurance

Date Filed

January 21, 2021


Case Title

ATCM Optical Inc, et al v. Twin City Fire Insurance Co


Case Number

21-1107

Court

Appellate - 3rd Circuit

Nature of Suit

4110 Insurance

Date Filed

January 21, 2021


Case Title

1 SANT Inc v. Berkshire Hathaway Inc, et al


Case Number

21-1109

Court

Appellate - 3rd Circuit

Nature of Suit

4110 Insurance

Date Filed

January 21, 2021


Case Title

Independence Restaurant Group v. Certain Underwriters at Lloyds


Case Number

21-1175

Court

Appellate - 3rd Circuit

Nature of Suit

3110 Insurance

Date Filed

January 29, 2021

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