Last week, two businesses, Newchops Restaurant Comcast LLC and LH Dining LLC, asked the U.S. Judicial Panel on Multidistrict Litigation (MDL) to set up an MDL before a judge in the Eastern District of Pennsylvania to address whether business interruption policies provide coverage for losses sustained as a result of the COVID-19 pandemic. (Multidistrict Request Could Bring Flood of Federal Insurance Coverage Cases to Eastern District of PA) Now another business, Joseph Tambellini, Inc. D/B/A Joseph Tambellini Restaurant has filed an Emergency Application for Extraordinary Relief to the Supreme Court of Pennsylvania to declare that an insurance policy, issued by Erie Insurance Exchange, provides coverage for losses reportedly sustained as a result of the COVID-19 pandemic.
The King’s Bench Power, codified at 42 Pa. C.S. § 726, grants the Pennsylvania Supreme Court the power to assume plenary jurisdiction over any matter currently pending before any Pennsylvania court that involves “an issue of immediate public importance.” If the court decides to assume jurisdiction, it has authority to “enter a final order or otherwise cause right and justice to be done.”
The Supreme Court has exercised these powers only in rare circumstances. Historically, it has exercised jurisdiction in cases that involved constitutional challenges, grand juries, election disputes, and judicial misconduct. A review of the Supreme Court’s opinions over the last few years shows that only a handful were granted.
In the petition, the restaurant maintains that all businesses in Pennsylvania have sustained losses, and that all insurers in Pennsylvania “have denied all claims and have disclaimed coverage for the losses, damage and expenses suffered by businessowners as a result of the COVID-19 pandemic and the related governmental orders.” Petitioner asserts that the Erie "All Risks" policy provides coverage for property, business, personal property, business income, extra expense, contamination, civil authority and unidentified additional coverages. Petitioner seeks a determination that Erie wrongfully denied its claim, and that it is entitled to coverage for its losses.
Whether the Supreme Court grants the petition remains to be seen, but if it does, based on historical data, this would be a deviation from the cases in which it has invoked its power to remedy immediate harms. This would also be a departure from its high threshold of only taking on select significant cases that can be and must be handled extremely quickly to protect the integrity of the judicial system as well as its citizens. Regardless of the outcome, the petition has a potential for significant financial consequences for business interruption insurers and reinsurers, and carriers should consider filing an amicus brief.
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