King’s Bench Petition Seeks to Consolidate All COVID-19 Business Interruption Insurance Cases in Pennsylvania | White and Williams LLP

On Wednesday, April 29, 2020, a Pittsburgh-based restaurant filed an emergency petition with the Pennsylvania Supreme Court asking it to invoke its “King’s Bench” and statutory powers to assume extraordinary jurisdiction over the case. pending restaurant business interruption insurance against the Erie Insurance Exchange and to establish and coordinate a system to resolve all similar COVID-19 business interruption insurance cases in Pennsylvania.

The Pennsylvania Supreme Court’s “King’s Bench” power and its related but distinct “extraordinary jurisdiction” power each allow Pennsylvania’s highest court to assume control – through the exercise of its own plenary jurisdiction – over matters of immediate public importance. The power of “extraordinary jurisdiction” of the court is statutory: 42 Pa. CS §726 authorizes the Court, at its discretion and on its own initiative or at the request of a party, to assume this plenary jurisdiction on any question of immediate public importance. and is then pending in any court in the State of Pennsylvania. Pursuant to § 726, the Court may exercise this power at any stage of the underlying case and thereafter make a final order “or otherwise cause law and justice to be done”. 42 Pa. CS §726 (2020).

The power of “King’s Bench”, on the other hand, is authorized by Section 1 of the Schedule to the Judicial Article of the Pennsylvania state constitution. It allows the state Supreme Court to assume full jurisdiction over a matter even when no case is pending in a Pennsylvania court. Pa. RAP 3309 governs applications for relief to the Supreme Court of Pennsylvania under these powers and requires the opposing party to file an answer to such a petition no later than 14 days after service of the application. amici curiae may also file a response to the motion with leave of the court through a leave motion filed with the proposed response within the same time period. The Court may hold oral argument to determine whether to grant or dismiss the application. If the Court grants the request, jurisdiction is transferred to the Supreme Court of Pennsylvania.

The Supreme Court of Pennsylvania has previously exercised these seldom-used powers to decide cases involving election disputes, public employee strikes, prison overcrowding, grand jury investigations, powers of the legislature, and allegations of wrongdoing. judicial misconduct. More recently, the Court invoked those powers to uphold Pennsylvania Governor Tom Wolf’s March 19, 2020 executive order requiring the closure of non-essential businesses due to the spread of COVID-19.

The plaintiff in Wednesday’s claim – Joseph Tambellini, Inc. d/b/a Joseph Tambellini Restaurant – originally filed a lawsuit against Erie Insurance Exchange in state trial court seeking damages to following Erie’s denial of its COVID-19 business interruption insurance claim. The restaurant’s motion asks the Supreme Court of Pennsylvania to assume control of this trial court case and all of Pennsylvania’s other COVID-19 business interruption insurance cases. The restaurant argues that its cover case, and all other Pennsylvania state court cases like it, present issues of immediate public importance because the corporate plaintiffs need a speedy resolution to their disputes. business interruption coverage, and the inherent delay in the due process and appeals process to reach a final resolution of these issues would cause them undue hardship.

Interestingly, instead of asking the Supreme Court of Pennsylvania to collect and handle each of the COVID-19 business interruption insurance claim cases itself, the restaurant’s petition also asks the Court, among others, establish and coordinate a system for the resolution of all COVID-19 business interruption cases filed in Pennsylvania in a county before one or more judges. The restaurant’s petition requests that the Pennsylvania Supreme Court’s requested exercise of plenary jurisdiction over these cases be similar to the exercise of jurisdiction by the Federal Multidistrict Litigation Committee to consolidate federal court cases into one proceeding. We have previously written about two separate petitions seeking to consolidate all federal COVID-19 business interruption cases in a single federal district court. The Supreme Court of Pennsylvania previously delegated the duties of issuing findings of fact and conclusions of law to a lower court for ultimate review by the Supreme Court. For example, Erfer v. Commonwealth, 794 A.2d 325, 568 Pa. 128 (2002); Malinowski v. Nanticoke Micro Techs., Inc., No. 51 MM 2009, 2010 Pa. LEXIS 1372 (June 24, 2010). The petition appears to be asking the Pennsylvania Supreme Court to take a similar approach to resolving COVID-19 business interruption insurance cases.

A significant increase in insurance litigation regarding COVID-19 business interruption claims for the foreseeable future is just as likely in Pennsylvania and other state court systems as expected for the federal court system. However, this prospect does not necessarily equate to an immediate agreement by insurers to consolidate all of these cases in a single court. In particular, the restaurant’s petition raises many of the same issues inherent in similar MDL petitions filed on April 23, 2020. Differences in policy language and coverage forms, disparate locations of plaintiffs and defendants across the state, and significant differences in the types of claims commercial losses may prove too overwhelming for effective consolidation and resolution of these cases.

For example, insurers may point out that material differences in business interruption coverage arrangements among the many different policy forms at issue in these cases could result in a finding of coverage in one case but not in another for similar facts. There may also be substantial differences between COVID-19 cases in whether and to what extent policyholders, their insurance brokers and underwriters have discussed the availability of coverage for viral contamination and/or pandemics which may also influence final coverage determinations in these cases. case. Claims handling practices in the administration of COVID-19 business interruption insurance claims can also vary significantly from insurer to insurer as different claims reviewers may differ. focused and relied on different information to determine coverage in each case. Similarly, the facts of each particular business loss involved are likely to vary significantly from one COVID-19 case to another, as each business is different, the circumstances of each business interruption are different, and the Every company’s actual loss is different. These may differ significantly depending on the nature of the insured’s business, the extent to which the insured’s business was effectively interrupted, and whether the claim involves direct viral contamination of the insured’s property. Therefore, some may object to consolidating vastly different COVID-19 business interruption insurance cases across the state into a single proceeding on the grounds that these cases are not conducive to uniform resolution and quickly for these reasons.

The restaurant’s petition is accelerating the debate on how best to resolve the expected wave of insurance coverage disputes over COVID-19 business interruption insurance claims. It is important to note that the petition at issue is an attempt to address the administration of all Pennsylvania state court COVID-19 business interruption cases, which would not be affected by federal MDL petitions filed. on April 23, 2020. Since most, if not all, of the United States will likely see an increase in such insurance disputes in state courts, we expect to see similar efforts in other states, whether through court filings or otherwise, to streamline the resolution of these cases.

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