Last month, a Pittsburgh-based restaurant asked the Pennsylvania Supreme Court, the Commonwealth’s highest state court, to exercise jurisdiction over the restaurant’s lawsuit against its insurer for business income coverage allegedly triggered by the COVID-19 pandemic and related government orders that limit the restaurant’s business activities. That, however, is not the extraordinary part, as the application also asked the court to exercise jurisdiction over all COVID-19-related coverage litigation in Pennsylvania. In a small victory for insurers, on May 14, 2020, the Pennsylvania Supreme Court denied the application without opinion.
Joseph Tambellini, Inc. D/B/A Joseph Tambellini Restaurant filed a lawsuit against its insurer, Erie Insurance Exchange, in the Court of Common Pleas of Allegheny County, over a dispute about whether its commercial property policy provides coverage for business income losses allegedly due to mandatory business restrictions related to COVID-19. A short time later, Tambellini filed an Application for Extraordinary Relief with the Pennsylvania Supreme Court that asked the court to exercise its King’s Bench authority and the Court’s Extraordinary Jurisdiction powers to assume jurisdiction of the litigation.
Tambellini argued its case presents issues of immediate public importance to all Pennsylvania citizens seeking insurance coverage for losses, damages and expenses caused by government responses to the COVID-19 pandemic. Tambellini also argued that the Supreme Court should exercise jurisdiction over the case now because the case will eventually end up before the Supreme Court due to contemplated appeals regardless of the outcome at the trial stage.
Tambellini’s application also asked the court to exercise plenary jurisdiction over all COVID-19 insurance coverage litigation in Pennsylvania, since “hundreds, if not thousands” of insurance coverage disputes arising from COVID-19 will be filed in Pennsylvania. As part of its request, Tambellini sought coordination by the court of all COVID-19 insurance coverage cases in Pennsylvania “in a fashion not unlike that utilized by the Federal Courts … on Multidistrict Litigation.”
Erie countered that the parties’ private contract dispute is not a matter of immediate public importance and that Tambellini failed to provide factual support of its claim that COVID-19 litigation will overburden the Commonwealth’s trial courts. Erie also asserted that any decision reached by the Pennsylvania Supreme Court could not have broad effect due to the variety of coverage forms and policy provisions used by different insurance companies.
Various insurers and trade associations filed amicus briefs that generally dovetailed with Erie’s arguments. Notably, the amici argued that that using Tambellini’s framework and broad-based applicability would violate the due process rights of all Pennsylvania insurers, and asserted that if the court were to issue the broad-based proclamation advocated by Tambellini, all insurers in Pennsylvania must be joined to the litigation as indispensable parties.
The Supreme Court made short work of Tambellini’s application, which was denied without opinion. Without an opinion, it is not known whether the application would have met with similar fate had Tambellini limited its requested relief to having the Supreme Court exercise its jurisdiction over only this specific contract dispute. However, given the exceedingly narrow matters over which the Supreme Court exercises its King’s Bench and Extraordinary Jurisdiction powers, we suspect the result would have been the same, even had the application not requested the court establish and then oversee a judicial program for handling all COVID-19 litigation.
The decision represents a small procedural victory for Pennsylvania-based insurers, by affording them the opportunity to have disputes over coverage litigated on a case-by-case, policy-by-policy basis in the normal manner in which such matters are litigated before state trial courts. The larger test will come in individual cases, where policy language will be measured against the facts of each case.
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