PITTSBURGH – Coronavirus lawsuits have come to Pittsburgh, as an insurance company is now the defendant in two separate cases - one of them a class action - alleging it is not covering losses sustained by a number of its policyholder restaurants during quarantine.
Joseph Tambellini, Inc. (doing business as “Joseph Tambellini Restaurant”) and HTR Restaurants, Inc. (doing business as “Siebs Pub”), individually and on behalf of a class of similarly situated persons, all of Pittsburgh, filed separate suits on April 17 in the Allegheny County Court of Common Pleas versus Erie Insurance Exchange, of Erie.
According to the plaintiffs, they were holders of insurance policies with Erie that took effect in the summer of 2019 (in July and August, respectively) and lasted for the duration of one year.
“The Erie Policy is an ‘All Risks’ policy which provides coverage for losses to the insured premises unless specifically excluded. The Erie Policy does not exclude the losses caused by the coronavirus pandemic. The Erie Policy provides coverage for the losses incurred by [the plaintiffs] as a result of the coronavirus pandemic and the actions of the government in response thereto,” the lawsuits state.
On March 6, Pennsylvania Gov. Tom Wolf issued a Proclamation of Disaster Emergency due to the coronavirus and in subsequent weeks, other orders required the closure of all “non-life sustaining businesses” and state residents to stay at home whenever possible (with limited exceptions).
As a result of both the impact of the virus and the governor’s orders, businesses like the plaintiffs’ which operated in closed environments have been forced to shut down and furlough their employees, in addition to sustaining commercial losses on several fronts.
The plaintiffs believed those losses were covered by their insurance policies from Erie Insurance Exchange, and made claims to the defendant.
However, the defendant denied paying the plaintiffs’ claim requests.
“Defendant Erie has denied and/or refused to acknowledge coverage for the losses of [plaintiffs] caused by the coronavirus and the referenced orders. Defendant Erie has wrongfully refused to provide coverage to [plaintiffs] under the Erie Policy. The denial and refusal to acknowledge coverage to [plaintiffs] under the Erie Policy is a material breach and in direct violation of the specific terms and provisions of the Erie Policy. Defendant Erie must be enjoined from continuing to deny and/or refuse to acknowledge coverage to insureds for losses caused by the COVID-19 virus and the referenced orders,” the lawsuits state.
According to plaintiff counsel Scott B. Cooper, the plaintiffs are seeking relief under the insurance policies they have been paying premiums on for years.
“These businesses have either been totally shut down or effectively shut down because they can only do curbside [service] or take-out, through no fault of their own, because of the virus and the pandemic. What this seeks is the coverage under the policies that people have been paying for,” Cooper said.
Cooper explained that there are usually two types of coverage in such policies.
One is “Business Interruption," which covers physical losses and use of the premises or damage to the premises, and lasts for the duration of the insurance policy. The other is “Civil Authority” which has a more limited scope, in that it takes effect 72 hours after a business is shut down and lasts for only six weeks.
“The people have been paying for these premiums for all these years, and now the insurance company is saying, ‘We don’t have to cover it, because we just have a lot of claims at one time.’ They’re just blanket-denying every claim without even investigating them,” Cooper stated.
In the class action lawsuit brought by HTR Restaurants, a successful class certification would mean the preservation of any putative plaintiffs’ claims through a tolling of the statutes of limitations associated with those same claims.
“One of the tricks that the insurance companies put in the policies is, generally, if there’s a breach of contract, you have four years to file a lawsuit. But, if you look in the policies, they lower it to two years or even sometimes, one year, and the courts enforce that. This puts everyone who’s an Erie-insured [policyholder] on the same page, that they’re all being protected by the [HTR] case,” Cooper said.
In a separate matter filed on Monday in the U.S. District Court for the Eastern District of Pennsylvania, counsel for two Philadelphia-based restaurant plaintiffs, Chops and River Twice, filed a petition to open a multi-district litigation in Philadelphia federal court, in order to consolidate recently filed cases of this exact same nature at the federal level, nationwide. The petition was filed by attorneys at Golomb & Honik and Levin Sedran & Berman, all located in Philadelphia.
In the instant case, the plaintiffs are seeking declaratory, compensatory and injunctive relief in the form of judicial orders stating they are entitled to coverage for losses caused by the coronavirus, enjoining the defendant from denying said coverage and mandating the payment of said coverage to the plaintiffs.
The plaintiffs are represented by John P. Goodrich of Goodrich & Associates in Pittsburgh, Scott B. Cooper of Schmidt Kramer in Harrisburg, James C. Haggerty of Haggerty, Goldberg, Schleifer & Kupersmith and Jonathan Shub of Kohn Swift & Graf, both in Philadelphia.
The defendant has not yet retained legal counsel.
Allegheny County Court of Common Pleas cases GD-20-005137 & GD-20-005138
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com