Sign on the entrance of a small business in the Hampden neighborhood of Baltimore, Maryland, a day after Gov. Larry Hogan ordered the closure of all nonessential businesses in the state to try to control the spread of the COVID-19 virus on March 24, 2020. Photo: Diego M. Radzinschi/ALM

Plaintiffs who sued their insurance companies to recoup revenue lost due to COVID-19 are keeping a close watch on an upcoming appeal in the U.S. Court of Appeals for the Third Circuit.

But courts have split on whether business interruption insurance suits that are still pending should be placed on hold until the appeal is decided.

On Thursday, a federal judge in Camden said the upcoming consolidated appeal of 14 cases did not warrant a stay of a pending suit over business interruption coverage.

That follows a November 2020 ruling from a federal judge in Philadelphia who allowed another business interruption insurance case to be stayed, pending outcome of the same Third Circuit appeal.

Nationwide, more than 2,000 suits have been filed against insurance carriers over denial of business interruption coverage during the pandemic, according to the University of Pennsylvania Law School's Covid Coverage Litigation Tracker. Many have been dismissed.

U.S. District Judge Noel Hillman dismissed a suit against ACE Property and Casualty Co. by the operators of seven dental offices who were contesting the denial of business interruption coverage. The plaintiffs requested a stay pending the outcome of the Third Circuit appeal, citing a case from the Eastern District of Pennsylvania in which U.S. District Judge Paul Diamond granted a stay of one suit against an insurance company until the Third Circuit issues its ruling in one of the 14 consolidated cases.

The consolidated appeals focus on interpretation of the policy terms "physical loss" and "physical damage" in the context of the pandemic and related government closure orders.

Diamond granted the stay in an order that provided no explanation. The plaintiff in the Pennsylvania suit that was granted a stay is a Philadelphia law firm, Sidkoff, Pincus & Green.

But Hillman was not swayed by the action of his Philadelphia counterpart.

"This court will not needlessly delay what it views as the straightforward outcome in this case and unnecessarily prolong this proceeding at the district court level simply because the Third Circuit may, at a later date, rule in a contrary manner," he wrote.

Hillman noted that the plaintiff sought the stay "despite essentially conceding there are no substantive grounds for this court to distinguish this case from numerous others from just the past year," which were dismissed.

Hillman denied the stay and granted ACE's motion for judgment on the pleadings after finding the virus exclusion policy language in the present case nearly identical to that of another case he recently dismissed, Delaware Valley Plumbing Supply v. Merchants Mutual Insurance.

The lawyers for the dental offices, Ashley Nechemia and Robert Williams of Mattleman, Weinroth & Miller in Cherry Hill, did not respond to a request for comment. Daren McNally of Clyde & Co in Florham Park declined to comment.

No date has been set for the consolidated Third Circuit appeal.

The consolidation was granted after the Judicial Panel for Multidistrict Litigation declined to create a nationwide proceeding to hear litigation over business interruption insurance coverage. The JPML found that variations in policy language for businesses in different states and different industries would loom larger than any common factual questions.

Charles Toutant

Charles Toutant

Charles Toutant is a litigation writer for the New Jersey Law Journal.

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