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Law360 (January 11, 2021, 5:59 PM EST ) A Pennsylvania federal judge Monday axed a Philadelphia bowling alley's suit seeking coverage from its insurer for COVID-19 related losses, holding that it is too early for federal courts to rule on an issue involving unresolved questions of state law that are pending in state courts.
U.S. District Judge Jan E. DuBois freed Everest National Insurance Co. from having to cover V&S Elmwood Lanes Inc.'s alleged losses due to the pandemic and state-mandated closures.
"Due to the relative recency of the pandemic, Pennsylvania state courts have not yet developed a body of case law applicable to the state law issues presented in this case," Judge DuBois said.
Virus-related coverage disputes are ongoing and unresolved questions of state law, the judge said in the order, adding that there are more than 35 COVID-19 business interruption insurance cases in Pennsylvania state courts.
V&S held an insurance policy with Everest that excludes virus-related losses. In July, V&S sued Everest, seeking a declaration that it is entitled to coverage and the policy's virus exclusion does not apply. According to the suit, the bowling alley had to shut down in March due to state mandated closures amid the pandemic.
"The Court declines to exercise jurisdiction and dismisses this action without prejudice to plaintiff's right to file a declaratory judgment action in state court," Judge DuBois said on Monday.
In the order, the judge said that since the bowling alley owner was only seeking a declaration instead of bringing other claims against the carrier, the court can decide not to rule on the case. When a plaintiff only asserts a claim for declaratory relief, "the court retains discretion to decline jurisdiction of the entire action," he said, citing case law.
Counsel for V&S did not immediately reply to questions regarding whether the operator is planning to sue the insurer again in state court and assert more claims apart from declarative relief against Everest.
"Federal courts should hesitate to entertain a declaratory judgment action where the action is restricted to issues of state law," DuBois said in the order. "The public interest is not better served by a federal court deciding this declaratory judgment action, which presents novel and unsettled state law issues."
Counsel for Everest did not immediately respond to a request for comment.
V&S is represented by Arnold Levin, Frederick S. Longer, Laurence S. Berman and Daniel C. Levin of Levin Sedran & Berman
Everest is represented by Michael J. Smith and Marc R. Kamin of Stewart Smith Law
The case is Everest V&S Elmwood Lanes, Inc. v. National Insurance Co., case number 20-3444, in the U.S. District for the Eastern District of Pennsylvania.
--Editing by Michael Watanabe.
For a reprint of this article, please contact reprints@law360.com.
