Document Type
Article
Disciplines
Insurance Law
Abstract
Following the emergence of COVID-19 and resulting civil orders seeking to stop its spread, many businesses filed claims with their insurance providers for “business interruption” coverage, a type of insurance intended to compensate businesses for income lost during a temporary forced closure. When insurance companies roundly denied these claims, many small-business owners filed lawsuits in state courts. Insurance company defendants largely removed these cases to federal courts, and business owner plaintiffs filed to remand back to state court. In one consolidated appeal heard by the Third Circuit, DiAnoia’s Eatery, LLC v. Motorist Mutual Insurance Co., businessowner plaintiffs seeking remand to state court argued these claims involved novel state law issues. Although the district courts agreed, the Third Circuit reversed, and held federal courts in Pennsylvania and New Jersey could not use their statutorily granted discretion to remand the actions to state court. This Note asserts the Third Circuit’s holding in DiAnoia’s Eatery, LLC misinterpreted circuit precedent which, properly applied, permitted the district courts to remand the claims to state court under the Declaratory Judgment Act. But the Note also argues that DiAnoia’s Eatery, LLC is merely one example of a trend seen nationwide in which circuit courts issued decisions on this issue prior to the ultimate authority—state courts—ruling. It explains how federal courts instead turned inwards, relying not on binding state court precedent but rather on other federal court decisions; an approach which displaced state courts’ proper role, and risked mass federal reversal by the U.S. Supreme Court. This Note provides an important building block in a field of scholarship which has generally, thus far, criticized federal courts’ initial near-monopoly on business interruption claims, the influence they exerted on the development of this caselaw, and finally, the merits of their dismissal of COVID19 business interruption claims. This Note goes further, arguing that in addition to those concerns, federal courts were the improper forum for these suits, and that remanding them to state courts under the Declaratory Judgment Act was, and is, the best approach.
Recommended Citation
Johnson, Gabriel L., "Like a Good Neighbor, State Courts Are There: The Case for Remanding COVID-19 Business Interruption Actions to State Court" (2025). Connecticut Insurance Law Journal. 407.
https://digitalcommons.lib.uconn.edu/cilj/407
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