EAST ST. LOUIS – Washington restaurants that sued Zurich American Insurance in St. Clair County circuit court for coverage of lockdown losses must pursue the claim in Washington, U.S. Magistrate Judge Gilbert Sison ruled on Feb. 11.
Sison transferred their complaint to the District of Columbia, after finding Zurich properly removed it from St. Clair County to federal court.
“It is more reasonable and logical, and in fact the general expectation and perception would be, that a lawsuit would take place in a district that has a closer connection to the key people, places, and events,” he wrote.
“Indeed, to hold otherwise would raise questions as to why this district was handling a matter where the public health decisions made, the adverse effect of those decisions, and the key events regarding contract formation and performance all occurred outside of this district.”
Joseph Bartholomew, of Bruce Cook’s firm in Belleville, filed the complaint for Knightsbridge Restaurant Group on Oct. 26.
He acted as local counsel for six lawyers at the Cohen Millstein firm in Washington.
“Knightsbridge believed that it had purchased comprehensive coverage that would apply to business interruption under circumstances like this, where plaintiff has done everything right to protect its businesses and the public,” Bartholomew wrote.
He wrote that owner Ashok Bajaj “is not a risk assessment professional aware of every possible catastrophe that might occur.”
He asserted Illinois jurisdiction because Zurich has headquarters in Schaumburg.
He asserted St. Clair County jurisdiction because Zurich operates there.
Filing of the complaint made it public record, and Zurich obtained a copy before Knightsbridge served it.
Zurich removed it to district court on Nov. 3, asserting diversity of citizenship between itself and Knightsbridge entities.
Zurich moved for transfer to Washington on Nov. 20, claiming each restaurant was less than five miles from the District of Columbia courthouse.
Its counsel Jared Clapper of Chicago claimed Cohen Millstein was in the same building as one of the restaurants.
Clapper argued Cohen Millstein’s group on the case was the size of Cook’s entire firm.
He wrote that St. Clair County “has a reputation for being plaintiff friendly and where meritless claims are allowed to survive.”
On Oct. 25, Bartholomew moved to remand the complaint to St. Clair County.
Bartholomew wrote that the action asserted state law claims for declaratory judgment, breach of contract, and breach of good faith.
He claimed Zurich improperly removed the complaint before being served.
He claimed that as an Illinois citizen, Zurich couldn’t remove it.
He opposed transfer on Dec. 4, stating that the restaurants would accept the costs of litigating in their chosen forum.
Sison addressed removal first, quoting a rule of Congress that an action may not be removed if any party “properly joined and served” was a citizen of the state.
He found most courts relied on the rule’s plain meaning and permitted removal if it occurred before service was effectuated.
He cited three decisions to that effect from the Southern District of Illinois, five from the Northern District, and one from the Central District.
He acknowledged the unusual result, but he found federal courts must assume that ordinary meaning accurately expresses legislative purpose.
On transfer, he wrote, “It is true that the plaintiff’s choice of forum is typically accorded great weight.
“That choice, however, is afforded little significance where none of the relevant conduct occurred in the chosen forum.”
He found that although the decision to deny coverage was made in Illinois, the event occurred in the Northern District.
He wrote that the underwriter for the policy was in Washington and the assistants were 53 miles away in Maryland.
"The legitimacy of the courts as an institution is founded in part on the public’s expectations and perceptions," he wrote.
"The questions that could be raised by keeping the lawsuit in this district could detrimentally impact those expectations and perceptions.”