By Matthew Santoni

Law360 (May 7, 2020, 7:33 PM EDT ) Erie Insurance Exchange, AIG and a slew of insurance trade organizations pressed Pennsylvania's Supreme Court Thursday to reject a Pittsburgh restaurant's request for the justices to weigh broad questions of whether insurers must cover business losses related to the COVID-19 pandemic.

In an answer to Joseph Tambellini Inc.'s application for the Supreme Court to use its "King's Bench" jurisdiction and skip the lower state courts, Erie said the disputes over whether each business' insurance covers coronavirus closures should be decided individually, since every business' contract and circumstances could be different. The insurer said the court should decline to use extraordinary judicial powers usually reserved for pressing questions about government power.

"While the ongoing COVID-19 crisis itself is obviously of immediate importance to the nation as a public health matter, the instant contractual dispute and other unidentified insurance coverage contractual disputes between private parties are not matters of immediate public importance," Erie's response said. "Tambellini conflates the public importance of the public health aspects of the COVID-19 pandemic generally, with its private lawsuit against Erie. Individualized insurance coverage disputes, like the case at bar, do not as a matter of fact or law involve matters of 'immediate public importance.'"

In addition to Erie's response, insurance giant AIG and several professional organizations representing the insurance industry asked the court for permission to file amicus briefs opposing broad, statewide rulings on business insurance coverage.

The restaurant, based in Pittsburgh's Highland Park neighborhood, had sued Erie April 17, claiming that Pennsylvania Gov. Tom Wolf's orders closing "non-essential businesses" to reduce the spread of the coronavirus had caused the restaurant lost business and other damages that should have been covered under its Erie insurance policy.

On April 29, Tambellini asked the state Supreme Court to exercise its special power to assume jurisdiction over any lower court proceedings to more expeditiously decide whether the restaurant and other establishments like it should be covered. Anticipating "hundreds, if not thousands" of similar suits — and many have already been filed as individual and class-action complaints against various insurers — Tambellini also asked the Supreme Court to consider consolidating cases in something like a federal multidistrict litigation to speed up disposition of similar cases.

But Erie and the other insurers argued Thursday that superficially "similar cases" actually hinged on circumstances that were unique to each policy holder.

"Different insurers employ different policy forms, endorsements, and exclusions, and any findings are limited to the specific contractual language as applied to the specific facts of a particular case. The idea that any court can — with no record before it, in a vacuum, and at the beginning of the case — issue sprawling, industry-wide rulings that will adjudicate potentially thousands of unknown disputes involving myriad contract forms, an exponential number of different types of businesses and varying underlying facts is, respectfully, unthinkable," Erie's response said. "Never in the history of this commonwealth has a court attempted such a 'star chamber' procedure, and this court should not countenance it now."

One brief, submitted by the American Property Casualty Insurance Association, Insurance Agents and Brokers of Pennsylvania, Insurance Federation of Pennsylvania, National Association of Mutual Insurance Companies, Pennsylvania Association of Mutual Insurance Companies and the Pennsylvania Defense Institute, said that the individualized nature of insurance contracts made it unlikely that Tambellini's case could set a precedent that would clear up all the other pending COVID-19 insurance claims.

"Even assuming that a flood of litigation is to come, this court could not stem the tide through a decision in this case. Future cases will involve a variety of policies, each with a variety of coverages, and different provisions within those coverages, and each intersecting with a unique set of facts and circumstances," the industry groups' brief said.

AIG also said there could be no "one-size-fits-all" ruling given the variety of insurers and policy-holders.

All the briefs said having the Supreme Court step in and skip the lower courts would be an unprecedented step for a case not involving an exercise of governmental power.

"This court has never exercised plenary, original jurisdiction in a case such as this, and for good reason: the commonwealth has established a court system to adjudicate such claims, and this court serves as the highest appellate court, not a de facto trial court to hear cases in the first instance," Erie's response said.

Erie said there had been no record developed in the Allegheny County Court of Common Pleas, with the case skipping almost straight from a complaint to the petition for King's Bench jurisdiction.

AIG's brief also noted that although Tambellini's petition could have implications for businesses and insurers across the Keystone State, none had been given any notice under Pennsylvania's rules of appellate practice. Those other insurers would be indispensable parties to the lawsuit, and without them the justices could not exercise jurisdiction

"Because it would be extremely cumbersome to comply with the rule's notice requirements, Tambellini simply ignores them. This demonstrates precisely why the single, massive, extraordinary jurisdiction matter proposed is not appropriate, and indeed violates due process rights," AIG's brief said. "Here, the absent and insurers and policyholders, whose rights Tambellini would have this court adjudicate in absentia, have essential contractual rights that cannot be adjudicated without them."

Scott Cooper of Schmidt Kramer PC, one of the attorneys representing Tambellini and other businesses that have sued in state court, said the insurers failed to address that every policy would share the same threshold issue, and that the issue was still fundamentally a question of state law.

"Erie and the amici's are avoiding the central issue which is that the businesses are sustaining a physical loss which the insurance companies agreed to pay for and collected premiums," he said. "We hope the court addresses the threshold issue which is of importance to everyone."

Counsel for Erie and the trade groups declined to comment beyond what was in their briefs. Attorneys for AIG did not immediately respond to requests for comment.

Tambellini is represented by James C. Haggerty of Haggerty Goldberg Schleifer & Kupersmith PC, Scott B. Cooper and Abbie C. Trone of Schmidt Kramer PC, John P. Goodrich and Lauren Nichols of Jack Goodrich & Associates PC, and Jonathan Shub of Kohn Swift & Graf PC.

Erie is represented by John M. Elliott, Frederick P. Santarelli, Patrick R. Casey and Matthew G. Boyd of Elliott Greenleaf PC, Richard W. DiBella and Tara Maczuzak of DiBella Geer McAllister & Best PC, Robert T. Horst of Timoney Knox LLP, and Adam Kaiser and Tiffany Powers of Alston & Bird LLP.

AIG is represented by Keith Moskowitz, Clifford B. Levine, Alice B. Mitinger, Mark A. May and David F. Russey of Dentons.

The insurance trade groups are represented by Robert L. Byer, Damon N. Vocke, Robert M. Palumbos and Jonathan I. Aronchick of Duane Morris LLP.

The case is Tambellini Inc. v. Erie Insurance Exchange, case number 52 WM 2020, in the Supreme Court of Pennsylvania.

--Editing by Adam LoBelia.

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