Acknowledging there was not yet a body of case law developed by the state court, the federal district court remanded the claim. Dianoia’s Eatery, LLC v. Motorists Mutual Ins. Co., Civil Action No. 20-706 (W.D. Pa. May 19, 2020).
Dianoia’s filed a complaint in state court against Motorists Mutual seeking a declaratory judgment for coverage for business interruption losses due to COVID-19 shut down orders. Motorists Mutual removed to federal district court.
The court remanded the case to state court for lack of subject matter jurisdiction by diversity. Alternatively, the court declined to exercise subject matter jurisdiction over the case under the Declaratory Judgment Act.
In diversity jurisdiction, Motorists Mutual had the burden to show complete diversity. Since plaintiff was a limited liability company, Motorists Mutual had to conduct a reasonable investigation to determine the citizenship of the LLC’s members and at least aver that none of its members shared Motorists Mutual’s Ohio citizenship. This was not performed by Motorists Mutual.
Even if the court had diversity jurisdiction, it would decline to exercise its jurisdiction pursuant to the discretionary authority under the Declaratory Judgment Act. Where the state law was was uncertain or undetermined, the federal court should be reluctant to exercise its jurisdiction under the Declaratory Judgment Act.
Plaintiff’s complaint raised novel coverage issues under Pennsylvania law which were best reserved for the state court to resolve in the first instance. Therefore, the case was remanded to the state court.