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Law360 (June 3, 2020, 9:01 PM EDT) -- Geragos & Geragos APC on Tuesday asked a California federal judge to dismiss Travelers Casualty Insurance Co. of America's suit seeking a declaration that it does not have to cover the law firm's financial losses during the COVID-19 pandemic, arguing the insurer "clearly engaged" in forum shopping.
The Los Angeles-based firm argued that Travelers is trying to avoid having the coverage dispute heard in state court, noting that the insurance company filed its suit just 10 days after Geragos & Geragos sued Travelers for coverage in Los Angeles County Superior Court. The insurer has also removed Geragos & Geragos' parallel suit to federal court, a move the firm derided as improper in Tuesday's dismissal motion.
Geragos & Geragos said it would not promote judicial efficiency for the federal court to allow Travelers' suit to proceed. The firm noted it is also litigating three other business interruption insurance coverage suits against Travelers in California state court, one involving a retail space owned by principal Mark J. Geragos and two involving other business owners in Los Angeles County. The insurer did not remove any of those three matters to federal court.
The three state court cases concern the "same exact factual circumstances and issues" as those in Travelers' federal court action, raising the specter of inconsistent decisions on the same legal questions, Geragos & Geragos asserted.
"Since this action raises novel and important state legal issues, it is better suited to be heard in state court to avoid this court's needless determination of state law," the firm said.
Geragos & Geragos first sued Travelers in state court on April 10, accusing the insurer of failing to honor its losses during the COVID-19 pandemic. According to the firm, the coverage should have been triggered when Los Angeles Mayor Eric Garcetti issued an order closing nonessential businesses on March 15.
On April 20, Travelers responded with its complaint in federal court, asserting the policy Geragos & Geragos holds simply does not cover the outbreak and has exclusions specifically for business losses resulting from a virus.
"Travelers understands that the COVID-19 pandemic has affected the public and the vast majority of businesses throughout the country (and world) in unprecedented ways," the complaint says. "But these challenging and unfortunate circumstances do not create insurance coverage for losses that fall outside the terms of a policyholder's insurance contract."
Then, on May 15, Travelers removed Geragos & Geragos' state court suit to federal court. A week later, the insurer moved to dismiss the firm's complaint, reiterating its arguments that the firm's policy was not designed to cover its claimed losses.
In a phone interview, Mark J. Geragos told Law360 on Wednesday that Travelers' pursuit of its federal court suit was a "publicity stunt." He noted the insurer filed its complaint the day before its quarterly earnings call, in which it reported a 25 percent decline in net income compared to the first quarter of 2019, from $796 million to $600 million.
"State court is where the dispute belongs," Geragos said. "The only reason wanted to file in federal court was to deflect attention away from bad earnings."
In an emailed statement, a Travelers spokesperson told Law360, "we are transferring these cases to the court presiding over our declaratory judgement action. This is a simple procedural step toward resolving these cases in a prompt and consistent manner."
Travelers is represented by Theodore J. Boutrous Jr., Richard J. Doren and Deborah L. Stein of Gibson Dunn & Crutcher LLP and Stephen E. Goldman and Wystan M. Ackerman of Robinson & Cole LLP.
Geragos & Geragos is represented by its own Mark J. Geragos, Ben J. Meiselas and Matthew M. Hoesly.
The case is Travelers Casualty Insurance Co. of America v. Geragos & Geragos APC, case number 2:20-cv-03619, in the U.S. District Court for the Central District of California.
--Editing by Emily Kokoll.
Update: This article has been updated with a comment from a Travelers spokesperson.
For a reprint of this article, please contact reprints@law360.com.
