Wednesday, May 20, 2020

Pennsylvania Western Federal District Court Punts Covid-19 Related Business Interruption Insurance Coverage Question Back to State Court

A Western Federal District Court rejected an effort by a carrier to remove a Covid-19 Business Interruption Insurance coverage case in the matter of Danoia's Eatery, LLC v. Motorists Mutual Ins. Co., No. 20-706 (W.D. Pa. May 19, 2020 Fischer, S.J.),

The Plaintiff's Declaratory Judgment Complaint sought a declaration that the carrier was required to provide insurance coverage for business interruption losses brought on by the mandated government closures due to the Covid-19 pandemic.

Notably, the Court issued the Order to remand the case sua sponte even before the Plaintiff filed any Motion to Remand after the carrier had filed its Notice of Removal.

The court went through the standard of review under 28 U.S.C. Section 1447(c) and emphasized that the federal courts are courts of limited jurisdiction.

The Court noted that it had questions as to whether there was complete diversity between the parties to enable the Court to exercise subject matter jurisdiction over the case.

Significantly, the Western Federal District Court also noted that, even if there was diversity, the Court would still choose to exercise its discretion under the Declaratory Judgment Act not to exercise jurisdiction over the Covid-19 business interruption coverage question presented due to the fact that Pennsylvania state law on the issue was unsettled.

The Court held that the "Plaintiff's Complaint raises novel insurance coverage issues under Pennsylvania law which are best reserved for the state court to resolve in the first instance."  See Op. at p. 5.

Anyone wishing to review this case may click this LINK.

I send thanks to Attorney Scott Cooper of the Harrisburg, PA law firm of Schmidt Kramer for bringing this case to my attention.

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