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Law360 (May 17, 2021, 5:38 PM EDT ) Strathmore Insurance Co. said Legal Sea Foods is "merely forum shopping" in seeking to send its COVID-19 business interruption suit to Massachusetts' top court, telling the First Circuit that there's no real dispute under Bay State law.
Legal Sea Foods is challenging U.S. District Judge Nathaniel M. Gorton's March 5 ruling that the mere presence of coronavirus cases at a few locations didn't amount to a "physical loss" under the restaurant chain's insurance policy. The seafood chain argues Judge Gorton's decision was not adequately rooted in state law or precedent, and that the Massachusetts Supreme Judicial Court should be allowed to answer whether the restaurant's "structural integrity" had to be affected by the coronavirus to trigger coverage.
But Strathmore said in a response brief Thursday that Legal Sea Foods hasn't cited a specific state law or previous holding that it wants the justices to examine. It said the seafood chain is just looking for another set of ears to reconsider its rejected claims that coronavirus particles "hanging in the air" and on surfaces at its restaurants constituted physical damage.
"What Legal seeks is not a ruling on a discrete question of law, but simply another opportunity to argue that the factual allegations concerning its economic losses were sufficient to trigger coverage under the policy," Strathmore argued. "Legal has not presented a genuine request for advice from the Supreme Judicial Court on an important legal issue; it is merely forum shopping."
The insurer also said certification to the state justices is not appropriate because even a ruling in the restaurant chain's favor wouldn't change the outcome of the case.
According to Strathmore, Legal Sea Foods didn't become aware of the alleged coronavirus infections at its locations until recently, and those supposed infections weren't mentioned until the restaurant's second amended complaint. This means that even if Massachusetts' top court were to find that these infections constituted coverable damage, it said, Legal Sea Foods still couldn't claim that those infections were the reason it shut down its restaurants.
"The [second amended complaint] reiterates that Legal closed its restaurants in response to government orders that temporarily banned on-premises dining," Strathmore said. "Thus, even if Legal had plausibly alleged 'direct physical loss,' it would not be entitled to coverage because the [second amended complaint] does not allege any facts suggesting that the presence of the virus caused a necessary suspension of its business activities at any insured location."
The insurer added that Judge Gorton's order was consistent with similar decisions from other courts, both in Massachusetts and nationwide, that have shut down various legal pursuits of coverage for pandemic-related losses.
It cited an April ruling from a Washington federal judge refusing a similar request from a group of dentist and orthodontic offices to have the state Supreme Court weigh in on the meaning of physical loss and virus exclusions.
Strathmore said the First Circuit should follow the example of the Washington judge, who ruled that these questions weren't "unique or exceptional" enough to warrant certification.
"These principles apply with equal force here," the insurer said. "Because the district court's decision dismissing this case was grounded in well-established principles of Massachusetts law, there is no cause to certify the proposed question to the Supreme Judicial Court."
A representative for Strathmore declined to comment on the response brief Monday. Counsel for Legal Sea Foods did not respond to a request for comment.
Legal Sea Foods is represented by Christopher M. Pardo, Nicholas D. Stellakis, Harry L. Manion III and Michael S. Levine of Hunton Andrews Kurth LLP.
Strathmore is represented by Gregory P. Varga, Jonathan E. Small and Julianna M. Charpentier of Robinson & Cole LLP.
The case is Legal Sea Foods LLC v. Strathmore Insurance Co., case number 21-1202, in the U.S. Court of Appeals for the First Circuit.
--Additional reporting by Shawn Rice and Chris Villani.
For a reprint of this article, please contact reprints@law360.com.
