By Matthew Santoni

Law360 (May 20, 2020, 2:33 PM EDT) -- A Pennsylvania federal judge quickly sent a Pittsburgh restaurant's lawsuit seeking coverage for coronavirus-related losses back to state court Tuesday, reasoning that there weren't any state court rulings on similar claims the federal court could rely on.

Just four days after Motorists Mutual Insurance Co. removed a complaint by DiAnoia's Eatery LLC seeking coverage of its losses due to state-mandated closures to slow the COVID-19 pandemic, U.S. District Judge Nora Barry Fischer remanded the case because the state courts had yet to weigh in on a slew of similar insurance cases.

"Plaintiff's complaint raises novel insurance coverage issues under Pennsylvania law which are best reserved for the state court to resolve in the first instance," Judge Fischer wrote in her order remanding the case. "Any declaration issued by this court as to the parties' rights under the insurance policy would be merely predicting how Pennsylvania courts would decide these novel issues arising from the COVID-19 pandemic, a matter of great public concern, with little persuasive authority from state courts on these issues."

Judge Fischer cited her discretion to reject jurisdiction under the Declaratory Judgment Act, although she also said Motorists had failed to show complete diversity of citizenship because it hadn't investigated whether any of DiAnoia's ownership was based in Ohio like the insurer.

An Italian restaurant based in Pittsburgh's Strip District, DiAnoia's and its associated carry-out storefront, Pizzeria Davide, filed the complaint against Motorists in the Allegheny County Court of Common Pleas on April 28. They claimed Motorists breached its contract by denying coverage and sought a declaratory judgment from the court that the COVID-19 closures and the business losses associated with losing all their sit-down customers were covered by their policy. The insurer removed the suit to federal court May 15, citing its Ohio citizenship and DiAnoia's Pennsylvania citizenship.

The restaurant was one of many businesses that have sued their insurers in Pennsylvania. The state's Supreme Court on May 14 rejected a petition from another Pittsburgh establishment asking to expedite such cases, which Judge Fischer wrote was another reason for declining to take DiAnoia's case while the state courts still grappled with the same questions.

In its 2014 ruling in Reifer v. Westport Insurance Corp. , the Third Circuit had said eight factors should be considered when weighing whether a federal court can turn down jurisdiction, including "a general policy of restraint when the same issues are pending in state court," Judge Fischer wrote.

"Where state law is uncertain or undetermined, the proper relationship between federal and state courts requires district courts to step back and be 'particularly reluctant' to exercise DJA jurisdiction," she quoted from the Reifer decision. "The state's interest in resolving its own law must not be given short shrift simply because one party or, indeed, both parties, perceive some advantage in the federal forum."

In COVID-19 coverage lawsuits, the state courts had not yet decided enough cases for the federal courts to rely on, and the Reifer factors weighed in favor of letting those cases and DiAnoia's play out in state court, the opinion said.

"While legal commentators predict a high volume of these types of insurance coverage cases to be brought by policyholders and insurance companies, there is not yet a body of caselaw developed by Pennsylvania courts on these issues due to the relative recency of the COVID-19 pandemic," Judge Fischer wrote.

Scott Cooper, one of the attorneys representing DiAnoia's, said his side hadn't even asked for the case to be remanded before the judge made her ruling.

"We are very pleased that the federal judges seem to recognize that this is an issue of state law that will be ultimately be decided by the Pennsylvania state courts," he told Law360 on Wednesday. "Remanding the case sua sponte should send a message to all insurance companies. Hopefully, this will expedite the movement of the issue through the courts so that our clients who have incurred these losses through no fault of their own will get what they paid for."

An attorney for Motorists declined to comment.

DiAnoia's is represented by James C. Haggerty of Haggerty Goldberg Schleifer & Kupersmith PC, Scott B. Cooper of Schmidt Kramer PC, John P. Goodrich of Jack Goodrich & Associates PC and Jonathan Shub of Kohn Swift & Graf PC.

Motorist's Mutual Insurance is represented by Matthew A. Meyers and Robert E. Dapper Jr. of Burns White LLC.

The case is DiAnoia's Eatery LLC v. Motorists Mutual Insurance Co., case number 2:20-cv-00706, in the U.S. District Court for the Western District of Pennsylvania, and case number GD-20-005273 in the Court of Common Pleas of Allegheny County, Pennsylvania.

--Editing by Gemma Horowitz.

Update: This article has been updated with a response from an attorney for Motorists Mutual Insurance.

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