Law360 (May 4, 2021, 5:51 PM EDT) -- A U.K. insurer pushed back on Monday to LA Fitness' bid to throw out its California federal suit over $10 million in pandemic-related losses, saying the gym is avoiding courts in the Golden State where policyholders have faced adverse decisions in their COVID-19 fights.
Beazley Underwriting Ltd. told U.S. District Judge Cormac J. Carney to keep the suit over coverage to Fitness International LLC — LA Fitness' parent — concerning pandemic-related shutdown orders in California, not Washington.
Beazley argued LA Fitness ignores the fact that its first choice of forum was in California state court where it sued other insurers under a different policy. When that initial suit was removed to federal court, rather than asking for a remand, Beazley said LA Fitness "rushed to re-file" in Washington.
"Fitness International no doubt thought it would receive a favorable ruling in Washington, as it only filed suit in that state after two superior courts issued rulings [in] favor of policyholders in COVID-19 business interruption suits. These decisions are in direct conflict with California law," Beazley said.
Beazley and LA Fitness filed coverage suits in California federal court and Washington state court days apart from each other. LA Fitness asked that the California federal suit be tossed and that Beazley be added to the Washington suit involving other insurers under a $500 million policy for losses at its 700 gyms.
LA Fitness accused Beazley, which subscribes to 10% of a $100 million primary layer to the policy, of preemptively filing suit to choose its own forum to avoid "its reckoning in state court." Beazley's suit lacks the other insurers and represents a small part of the total limits, according to the gym chain.
In Monday's filing, Beazley said LA Fitness has six times as many gyms in California as Washington. And LA Fitness and Beazley's contract is separate and different from the other insurers, according to Beazley, as the policy contains a California choice-of-law clause and an exclusion for communicable diseases such as the coronavirus.
There won't be any duplication of coverage issues, Beazley argued, saying Washington isn't better served to interpret California law concerning this COVID-19 business interruption dispute.
While LA Fitness argued Beazley only covers 2% of the overall limits, the insurer argued $10 million is not a "paltry sum." And the Washington state suit won't address 100% of the coverage available, Beazley said, noting an English court has already enjoined LA Fitness from suing one subscribing insurer.
"Fitness International filed suit in Washington state under the ruse of lack of diversity jurisdiction, but this is nothing more than a thinly veiled attempt at avoiding clearly applicable California law. This is a textbook example of forum shopping," Beazley said, asking that the gym not be rewarded for taking "two bites of the same apple."
Representatives for Beazley and LA Fitness didn't immediately respond to requests for comment Tuesday.
Beazley is represented by James L. Wraith and Sara M. Parker of Selvin Wraith Halman LLP.
LA Fitness is represented by Michael J. Finnegan and Christopher Butler of Pillsbury Winthrop Shaw Pittman LLP.
The case is Beazley Underwriting Ltd. v. Fitness International LLC, case number 8:21-cv-00642, in the U.S. District Court for the Central District of California.
--Editing by Bruce Goldman.
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