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Law360 (June 15, 2020, 6:26 PM EDT ) Insurance broker Swingle Collins & Associates has urged a Texas federal judge to excuse it from a suit accusing it of misrepresentation in a COVID-19-related business loss dispute, saying a Dallas restaurant group failed to allege any wrongdoing on its part.
Swingle Collins said Friday that all the injuries Vandelay Hospitality Group LP is alleging and the recovery it is seeking are entirely between the group and its insurer, Cincinnati Insurance Co. The broker claimed Vandelay's adding it as a defendant is a "brazen and transparent attempt" to destroy the federal court's "diversity subject matter jurisdiction" and keep the case in state court.
Vandelay sued Cincinnati and its registered agent Baron Cass of Swingle Collins in April, asking a Texas state court to rule that its business interruption policy should cover the more than $1 million in damages it experienced from state-mandated closures amid the COVID-19 pandemic.
Vandelay submitted its business loss claim to Cincinnati through Cass in early March and heard back from Cincinnati a few weeks later that the pandemic is not covered under its policy. Cincinnati moved the case to a Texas federal court in May.
In its dismissal motion, the broker said that nothing of what Vandelay alleged concerns any errors caused by Swingle Collins or its agent Cass. All of Vandelay's alleged damages against it are the very same damages it is seeking against Cincinnati, it said in the motion.
"Plaintiff has not shown, and cannot demonstrate, a distinct, concrete injury caused by Swingle Collins apart from the damages it claims it suffered as a result of Cincinnati's purported breach of contract," the broker said.
Swingle Collins contended that it has no contractual relationship with the restaurant group, and Vandelay's claimed losses "were the subject matter of the agreement" between the restaurant group and Cincinnati.
"Permitting the plaintiff to sue a contractual stranger for consequential damages for failures arising from the contract would 'disrupt the risk allocations that plaintiff bargained for in its contract' with another party," Swingle Collins said in the motion.
The broker added that Vandelay's negligence and misrepresentation claims against it could not stand. Vandelay failed to present any specific "factual allegation" of how and when Swingle Collins provided it with "false information," instead repeating the same damages it is alleging against Cincinnati, the broker said.
Representatives of Swingle Collins, Cincinnati and Vandelay could not be reached for comment Monday.
Swingle Collins is represented by Robert A. Bragalone and Nathan D. Pearman of Gordon & Rees LLP.
Cincinnati is represented by Susan Jan Hueber of Litchfield Cavo LLP.
Vandelay is represented by Shauna A. Izadi and Jason H. Friedman of Friedman Feiger LLP
The case is Vandelay Hospitality Group v. The Cincinnati Insurance Co. et al., case number 3:20-cv-01348, in the U.S. District Court for the Northern District of Texas.
--Editing by Bruce Goldman.
For a reprint of this article, please contact reprints@law360.com.
