Dianoia’s Eatery. LLC v. Motorists Mutual Ins. Co.

Insurance coverage and coronavirus were at the core of this case. In these consolidated appeals, three restaurants sued in state court seeking a declaration that their respective insurer was obligated to provide coverage for COVID-19-related losses. Each insurer removed its case to federal court, invoking diversity jurisdiction. Then, each District Court exercised its discretion under the Declaratory Judgment Act (“DJA), 28 U.S.C. §§ 2201–02, to abstain from hearing the case and ordered the matter be remanded to state court. The insureds appealed the District Courts’ exercise of discretion. The Third Circuit reversed, holding that the District Courts erred when they weighed factors relevant to the exercise of discretion under the DJA. The Courts either: 1. misinterpreted certain factors established in Reifer v. Westport Ins. Corp., 2. failed to squarely address the alleged novelty of state law issues, or 3. did not create a record sufficient to enable a review for abuse of discretion.

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