Petition for Writ of Certiorari — Bel Air Auto Auction, Inc., Petitioner v. Great Northern Insurance Company

Supreme Court briefNov 8, 2021

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No. 21-_______

IN THE

SUPREME COURT OF THE UNITED STATES

_______________________

BEL AIR AUTO AUCTION, INC.,

Petitioner,

GREAT NORTHERN INSURANCE COMPANY,

__________________________

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

____________________________

PETITION FOR WRIT OF CERTIORARI BEFORE

JUDGMENT

_____________________________

Lawrence J. Gebhardt

Counsel of Record

Bar No. 315189

Gregory L. Arbogast

Bar No. 315173

Gebhardt & Smith LLP

One South St., Ste. 2200

Baltimore, MD 21202

(410) 385-5100

lgebh@gebsmith.com

garbogast@gebsmith.com

The Question Presented for Review.

Did the United States Court of Appeals for the

Fourth Circuit abuse its discretion and so far depart

from the accepted and usual course of judicial

proceedings as to call for the exercise by the Supreme

Court of its supervisory power when, by orders of the

Clerk acting for the Court, it denied Bel Air Auto

Auction Inc.’s motion for certification and motion for

reconsideration of that denial and refused to certify to

the Maryland Court of Appeals the novel questions of

Maryland insurance contract law as to which no

controlling

Maryland

appellate

decision,

constitutional provision, or statute existed and that

would have been determinative of the questions in Bel

Air’s appeal as well as the same questions in at least

eight other nearly identical cases pending in

Maryland state and federal courts.

The parties to the proceedings in the Fourth

Circuit.

The caption of the case contains the names of

the appellant and appellee. American Property

Casualty Insurance Association and National

Association of Mutual Insurance Companies, with

leave of court and over the opposition of Bel Air, have

filed an amicus curiae brief on behalf of Great

Northern.

Corporate Disclosure Statement.

As required by Supreme Court Rule 29.6, Bel

Air states that it is a privately held corporation with

no parent company and no public company owns any

stock or interest in it.

Directly related cases.

No other cases are “directly related” to this case

as defined by Supreme Court Rule 14(1)(b)(iii).

Table of Contents

The Question Presented for Review. ........................... i

The parties to the proceedings in the Fourth Circuit.

.......................................................................... ii

Corporate Disclosure Statement. ............................... ii

Directly related cases. ................................................ ii

Citations to the orders entered in this case by

the Clerk. .......................................................... 1

II.

Statement of the basis for the jurisdiction of

the Supreme Court. .......................................... 1

The orders as to which review is sought

were entered on June 30 and July 27,

2021. The appeal in the Fourth Circuit

has been briefed but oral argument has

not been scheduled and no decision has

been issued. Bel Air files this Petition

under Supreme Court Rule 11 and 28

U.S.C. § 2101(c) and is seeking

certiorari review before judgment has

been entered in the pending appeal for

an issue of such imperative public

importance as to justify deviation from

normal appellate practice and to require

immediate determination by the

Supreme Court. See United States v.

Nixon, 418 U.S. 683, 686–87 (1974)

(granting certiorari before judgment

because of the public importance of the

issues presented and the need for their

prompt resolution). ................................ 1

The imperative public importance of the

issue presented results from (a) the

SARS-19 pandemic and the wave of

business interruption suits filed and

iii

III.

IV.

pending in over 2,000 cases nationwide

and whose resolution will be materially

affected by a decision from the Supreme

Court on the issue presented and (b) the

relationship of federal and state courts

on matters governed entirely by state

law as determined by the state’s highest

court. ...................................................... 1

No rehearing was held on the motion for

certification or the motion for

reconsideration. ..................................... 2

Besides its jurisdiction under 28 U.S.C.

§ 1254(1) and Supreme Court Rule 11,

the Supreme Court has inherent

supervisory jurisdiction over lower

federal courts and the procedures used

by the lower federal courts to resolve

substantive issues such as the issue

presented by this Petition. .................... 2

Supreme Court Rule 29.4(b) and (c) are

inapplicable............................................ 2

The statute involved in this case. .................... 2

Statement of the Case. ..................................... 3

Jurisdiction of the lower courts. ........... 3

District Court. ............................. 3

Court of Appeals. ........................ 3

Factual and procedural background. .... 3

Factual background. ................... 4

Bel Air operates a vehicle

auction facility and related

businesses......................... 4

Bel Air purchased business

interruption insurance

from Great Northern........ 5

Procedural background............... 7

Bel Air sued for a

declaratory judgment in

state court after Great

Northern denied its

coverage claim. ................. 7

Great Northern removed

the case. ............................ 8

Bel Air moved for

summary declaratory

judgment and certification

to the Maryland Court of

Appeals. ............................ 8

The District Court

determined both that the

material facts were not in

genuine dispute and the

Maryland Court of Appeals

had not ruled on the

questions of law but still

refused certification. ...... 10

The Fourth Circuit

peremptorily denied Bel

Air’s motion for

certification. ................... 10

Argument in support of the Petition. ............ 11

The three questions of law for which Bel

Air requested certification are issues of

Maryland law as to which only the

Maryland Court of Appeals can give a

binding, precedential answer. ............. 11

The three questions of law are of major

importance in both the state of

Maryland and nationally. ................... 13

The lack of a decision by the Maryland

Court of Appeals can lead to different

rulings by different courts................... 16

This appeal involves more than a

dispute between two litigants. ............ 21

The Ohio Supreme Court has before it

on certification the question of whether

direct physical loss requires structural

change. ................................................. 22

Lehman Bros. v. Schein provides

authority that the Fourth Circuit should

have granted the motion for

certification. ......................................... 23

The Fourth Circuit’s refusal to certify

the three questions of law to the

Maryland Court of Appeals constituted

an abuse of discretion. ......................... 26

The Fourth Circuit’s refusal to certify

the three questions of Maryland law so

far departed from the accepted and

usual course of judicial proceedings as

to call for the exercise by the Supreme

Court of its supervisory power. ........... 29

APPENDIX TO THE PETITION

FOR WRIT OF CERTIORARI

TABLE OF CONTENTS

Memorandum Opinion of the United States

District Court for the District of Maryland

(April 14, 2021) .................................................... 1a

Order of the United States Court of

Appeals for the Fourth Circuit (June

30, 2021) ................................................................ 34a

Order of the United States Court of

Appeals for the Fourth Circuit (July

27, 2021) ................................................................ 35a

vii

Table of Cited Authorities

Cases

25 W. Hubbard, Inc. v. Illinois Casualty Company,

No. 2121L008823 (Ill. Cir. Ct. Sept. 1, 2021) ....... 13

Albemarle Paper Co. v. Moody, 422 U.S. 405

(1975) ..................................................................... 26

Arizonans for Off. Eng. v. Arizona, 520 U.S. 43

(1997) ............................................................... 23, 28

Bel Air Auto Auction, Inc. v. Great N. Ins. Co., No.

CV RDB-20-2892, 2021 WL 1400891 (D. Md.

Apr. 14, 2021) ........................................................ 10

Boardwalk Ventures CA, LLC v. Century-National

Ins. Co., No. 20STCV27359, 2021 WL 1215892

(Cal. Super. Mar. 18, 2021) ................................... 20

Boyter v. Comm'r, 668 F.2d 1382 (4th Cir. 1981) .... 30

Brockett v. Spokane Arcades, Inc., 472 U.S. 491

(1985) ..................................................................... 23

Circus LV, LP v. AIG Specialty Ins. Co., No. 2:20cv-01240-JAD-NJK, 2021 WL 769660 (D. Nev.

Feb. 26, 2021) ........................................................ 20

Communist Party of U.S. v. Subversive Activities

Control Bd., 351 U.S. 115 (1956) .......................... 32

Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 110

S. Ct. 2447, 110 L. Ed. 2d 359 (1990) ................... 27

Cordish Companies, Inc. v. Affiliated FM Insurance

Company, No. 21-2055 .......................................... 11

Cordish Cos., Inc. v. Affiliated FM Insurance Co.,

No. 1:20-cv-02419-ELH ......................................... 14

Dakota Girls, LLC v. Philadelphia Indem. Ins. Co.,

No. 2:20-cv-2035, 2021 WL 858489 (S.D. Ohio

Mar. 8, 2021) ......................................................... 22

Diamond v. Oreamuno, 248 N.E.2d 910 (N.Y.

1969) ................................................................ 24, 25

viii

Diamond. Schein v. Chasen, 478 F.2d 817, 819

(2nd Cir. 1973) ................................................. 25, 31

Dickerson v. United States, 530 U.S. 428 (2000) ..... 31

DIRECTV, Inc. v. Imburgia, 577 U.S. 47 (2015) ..... 12

Dukes Clothing, LLC v. Cincinnati Ins. Co., 2021

WL 1791488 (N.D. Ala. May 5, 2021) ................... 16

Elegant Massage, LLC v. State Farm Mut. Auto. Ins.

Co., No. 2:20-cv-265, 2020 WL 7249624 (E.D. Va.

Dec. 9, 2020) .......................................................... 17

Elkins v. Moreno, 435 U.S. 647 (1978) ..................... 23

Equity Plan. Corp. v. Westfield Ins. Co., No. 1:20CV-01204, 2021 WL 766802 (N.D. Ohio Feb. 26,

2021) ...................................................................... 17

Erie R. Co. v. Tompkins, 304 U.S. 64 (1938)............ 12

Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,

544 U.S. 280 (2005) ............................................... 28

Fitzgerald v. U. S. Lines Co., 374 U.S. 16 (1963) .... 32

Frazier v. Heebe, 482 U.S. 641 (1987) ...................... 31

French v. Hines, 957 A.2d 1000 (Md. App. 2008) .... 13

Gannett Co. v. Clark Const. Grp., Inc., 286 F.3d

737 (4th Cir. 2002) ................................................ 27

Gariety v. Vorono, 261 F. App'x 456 (4th Cir.

2008) ...................................................................... 30

Glyndon Hair Station, Inc. v. Erie Ins. Co., No.

C-03-CV-20-003393 (Md. Cir. Ct. September 16,

2021) ...................................................................... 14

Goodwill Indus. of Orange Ct. v. Phila. Indem. Co.,

No. 30-2020-01169032-CU-IC-CXC, 2021 WL

476268 (Cal. Sup. Ct. Jan. 28, 2021) .................... 20

Goucher Coll. v. Cont’l Cas. Co., No. C-03-CV21-000013, 2021 WL 2155039 (D. Md. May 27,

2021) ................................................................ 15, 21

GPL Enter. LLC v. Lloyds of London, No. C-10-CV20-000284 (Md. Cir. Ct. 2021), appeal docketed,

No. CSA-REG-0302-2021 (Md. Ct. Spec. App.

May 5, 2021) .......................................................... 14

Graveline v. Benson, 992 F.3d 524 (6th Cir. 2021) .. 27

Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct.

1923 (2016) ............................................................ 26

Hamilton Jewelry LLC v. Twin City Fire Ins. Co.,

Case No. 8:20-cv-02248-PWG ............................... 14

Henderson Rd. Rest. Sys., Inc. v. Zurich Am. Ins.

Co., No: 1:20 CV 1239, 2021 WL 168422 (N.D.

Ohio Jan. 19, 2021) ............................................... 17

Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.,

572 U.S. 559 (2014) ............................................... 27

Huskey v. Ethicon, Inc., 848 F.3d 151 (4th Cir.

2017) ...................................................................... 27

In re Soc’y Ins. Co. COVID-19 Bus. Interruption

Prot. Ins. Litig., No. 20 C 5965, 2021 WL 679109

(N.D. Ill. Feb. 22, 2021) ......................................... 16

JGB Vegas Retail Lessee, LLC v. Starr Surplus Lines

Ins. Co., No. A-20-816628-B, 2020 WL 7190023

(Nev. Dist. Ct. Nov. 30, 2020) ............................... 20

Kirtsaeng v. John Wiley & Sons, Inc., 136 S. Ct.

1979 (2016) ............................................................ 26

L&J Mattson’s Co. v. Cincinnati Ins. Co., Inc.,

2021 WL 1688153 (N.D. Ill. Apr. 29, 2021) .......... 16

Lehman Bros. v. Schein, 416 U.S. 386

(1974) ......................................................... 23, 25, 31

Levin v. Com. Energy, Inc., 560 U.S. 413 (2010) ..... 28

MacMiles, LLC v. Erie Ins. Exchange, No. GD-207753, 2021 WL 3079941 (Pa. Com. Pl. May 25,

2021) ...................................................................... 18

Mareik Inc. v. State Farm Fire and Casualty

Company, No. 20-2744, 2021 WL 1940647 (E.D.

Pa. May 5, 2021) .................................................... 19

Martin v. Franklin Cap. Corp., 546 U.S. 132

(2005) ..................................................................... 26

McDaniel Coll., Inc, v. Continental Casualty Co.,

No. RDB-21-0505, 2021 WL 2139404 (D. Md.

May 26, 2021) ........................................................ 21

McDaniel Coll., Inc., v. Cont’l Cas. Co., No. C-03CV-21-000012, 2021 WL 2139404 (D. Md. May

26, 2021) ................................................................ 15

McKesson v. Doe, 141 S. Ct. 48 (2020) ......... 23, 26, 28

Mendoza v. Nordstrom, Inc., 778 F.3d 834 (9th

Cir. 2015) ............................................................... 28

Nat'l Bank of Washington v. Pearson, 863 F.2d

322 (4th Cir. 1988) ................................................ 30

New Castle Hotels, LLC v. Zurich Am. Ins. Co., No.

X07-HHD-CV-216142969-S, 2021 WL 4478669

(Conn. Super. Ct. Sept. 7, 2021). .......................... 18

Nguyen v. Travelers Cas. Ins. Co. of Am., 2:20-CV00597-BJR, 2021 WL 2184878 (W.D. Wash.

May 28, 2021) ........................................................ 17

North State Deli, LLC v. Cincinnati Ins. Co., No.

20-CVS-02569, 2020 WL 6281507 (N.C. Super.

Oct. 09, 2020) ......................................................... 20

Posecai v. Wal-Mart Stores, Inc., 752 So.2d 762

(La. 1999) ............................................................... 28

Powell v. U.S. Fid. & Guar. Co., 88 F.3d 271 (4th

Cir. 1996) ............................................................... 30

Rhines v. Weber, 544 U.S. 269 (2005) ...................... 28

RW Restaurant Grp., LLC v. Charter Oak Fire Ins.

Co., No. 8:20-cv-02161-GJH .................................. 14

Santo’s Italian Cafe LLC v. Acuity Ins. Co., 508 F.

Supp. 3d 186 (N.D. Ohio 2020) ............................. 22

Sartin v. Macik, 535 F.3d 284 (4th Cir. 2008) ......... 29

Selective Way Ins. Co. v. Nationwide Prop. & Cas.

Ins. Co., 219 A.3d 20 (Md. App. 2019) .................. 13

Serendipitous, LLC/Melt v. Cincinnati Ins. Co.,

No. 2:20-CV-00873-MHH, 2021 WL 1816960

(N.D. Ala. May 6, 2021)......................................... 16

Sessoms v. State, 744 A.2d 9 (Md. 2000) .................. 12

Six Flags Am., L.P. v. Gonzalez-Perdomo, 242 A.3d

1143 (Md. App. 2020) ............................................ 12

Skillets, LLC v. Colony Ins. Co., No. 3:20cv678HEH, 2021 WL 926211 (E.D. Va. Mar. 10,

2021) ...................................................................... 17

Snoqualmie Entertainment Authority v. Affiliated

FM Ins. Co., No. 21-2-03194-0 SEA, 2021 WL

4098938 (Wash. Super. Sep. 03, 2021) ................. 17

Studio 417, Inc. v. Cincinnati Ins. Co., No. 20-cv03127-SRB, 478 F. Supp. 3d 794, 796 (W.D.

Mo. 2020) ............................................................... 17

Summit Hosp. Grp., Ltd. v. Cincinnati Ins. Co.,

No. 5:20-CV-254-BO, 2021 WL 831013 (E.D.N.C.

Mar. 4, 2021) ......................................................... 20

ThinkFood Grp. LLC v. Travelers Property

Casualty Company of America, No. 8:20-cv02201-PWG ............................................................ 14

Travco Ins. Co. v. Ward, 468 F. App'x 195 (4th Cir.

2012) ................................................................ 29, 30

Tubens v. Doe, 976 F.3d 101 (1st Cir. 2020) ............ 27

Uncork and Create, LLC v. The Cincinnati

Insurance Company, et al, No. 2:20-cv-00401 ...... 11

xii

Ungarean, DMD v. CNA, No. GD-20-006544, 2021

WL 1164836 (Pa. Com. Pl. Allegheny Cnty. Mar.

22, 2021) ................................................................ 19

United States v. Nixon, 418 U.S. 683 (1974).............. 1

United States v. Taylor, 487 U.S. 326 (1988)........... 26

Virginia v. Am. Booksellers Ass’n, Inc., 484 U.S.

383 (1988) .............................................................. 23

W. Pac. R. Corp. v. W. Pac. R. Co., 345 U.S. 247

(1953) ..................................................................... 32

Walters v. Inexco Oil Co., 670 F.2d 476 (5th Cir.

1982) ...................................................................... 28

Wells v. Chevy Chase Bank, F.S.B., 832 A.2d 812

(Md. 2003) .............................................................. 12

West v. Am. Tel. & Tel. Co., 311 U.S. 223 (1940) ..... 12

Westberry v. Gislaved Gummi AB, 178 F.3d 257

(4th Cir. 1999) ....................................................... 27

Zwillo V, Corp. v. Lexington Ins. Co., No. 4:2000339-CV-RK, 2020 WL 7137110 (W.D. Mo.

Dec. 2, 2020) .......................................................... 17

Statutes

28 U.S.C. § 1254 .......................................................... 2

28 U.S.C. § 1291 .......................................................... 3

28 U.S.C. § 1332 .......................................................... 3

28 U.S.C. § 1441 .......................................................... 3

28 U.S.C. § 2101 .......................................................... 1

Md. Code Ann., Cts. & Jud. Proc. § 12-603............ 2, 3

Other Authorities

https://cclt.law.upenn.edu/judicial-rulings/ ............. 13

xiii

Rules

Supreme Court Rule 10 ............................................ 32

Supreme Court Rule 11 .......................................... 1, 2

Supreme Court Rule 29.4 ........................................... 2

xiv

Citations to the orders entered in this

case by the Clerk.

The Clerk entered the Order dated June 30,

2021, denying the motion to certify (Doc: 31) and the

Order dated July 27, 2021, denying motion for

reconsideration (Doc: 33) in USCA4 Appeal: 21-1493.

This Petition is filed under Supreme Court Rule 11.

II.

Statement of the basis for the jurisdiction

of the Supreme Court.

The orders as to which review is sought

were entered on June 30 and July 27, 2021. The

appeal in the Fourth Circuit has been briefed but oral

argument has not been scheduled and no decision has

been issued. Bel Air files this Petition under Supreme

Court Rule 11 and 28 U.S.C. § 2101(c) and is seeking

certiorari review before judgment has been entered in

the pending appeal for an issue of such imperative

public importance as to justify deviation from normal

appellate practice and to require immediate

determination by the Supreme Court. See United

States v. Nixon, 418 U.S. 683, 686–87 (1974) (granting

certiorari before judgment because of the public

importance of the issues presented and the need for

their prompt resolution).

The imperative public importance of the

issue presented results from (a) the SARS-19

pandemic and the wave of business interruption suits

filed and pending in over 2,000 cases nationwide and

whose resolution will be materially affected by a

decision from the Supreme Court on the issue

presented and (b) the relationship of federal and state

courts on matters governed entirely by state law as

determined by the state’s highest court.

Prompt resolution of this issue is needed

because the rights of the litigants in this case and the

2,000 other pending cases will be substantially

affected and will be potentially, but needlessly,

prejudiced unless expeditious review by the Supreme

Court occurs.

No rehearing was held on the motion for

certification or the motion for reconsideration.

Besides its jurisdiction under 28 U.S.C. §

1254(1) and Supreme Court Rule 11, the Supreme

Court has inherent supervisory jurisdiction over lower

federal courts and the procedures used by the lower

federal courts to resolve substantive issues such as the

issue presented by this Petition.

Supreme Court Rule 29.4(b) and (c) are

inapplicable.

III.

The statute involved in this case.

Md. Code Ann., Cts. & Jud. Proc. § 12-603 is the

statute involved in this case. It states:

§ 12-603. POWER OF COURT OF

APPEALS TO ANSWER QUESTION

CERTIFIED BY COURTS OUTSIDE

STATE

The Court of Appeals of this State may

answer a question of law certified to it

by a court of the United States or by

an appellate court of another state or

of a tribe, if the answer may be

determinative of an issue in pending

litigation in the certifying court and

there is no controlling appellate

decision, constitutional provision, or

statute of this State.

Md. Code Ann., Cts. & Jud. Proc. § 12-603; see also

Md. Rule 8-305.

IV.

Statement of the Case.

Jurisdiction of the lower courts.

District Court.

The removal jurisdiction of the District Court

under 28 U.S.C. §§ 1441 and 1332 (a) existed based on

diversity of citizenship of the parties and the amount

in controversy. Plaintiff/appellant, Bel Air, is a

Maryland corporation with its principal place of

business in Harford County, Maryland and is a citizen

of the state of Maryland. Defendant/appellee, Great

Northern, is an Indiana corporation with its principal

place of business in New Jersey and is a citizen of a

state other than Maryland. The amount in

controversy, exclusive of interest and costs, exceeds

$75,000.

Court of Appeals.

The Circuit Court of Appeals has jurisdiction

under 28 U.S.C. § 1291 over Bel Air’s appeal from the

final judgment of the District Court entered against

it. The District Court entered a final judgment on

April 14, 2021; Bel Air appealed on April 27, 2021.

Factual

and

procedural

background.

This case emanates from the SARS-19

pandemic. Bel Air is one of the over 2,000 businesses

that has sought and is currently litigating insurance

coverage for the losses it sustained in connection with

the pandemic.

Factual background.

Bel Air operates a

vehicle auction facility

and related businesses.

Bel Air operates a vehicle auction facility and

related businesses in Belcamp, Maryland and several

other locations in Maryland. The presence of SARSCoV-2 in, on, around, and in the air of Bel Air’s facility

physically contaminated it. In response to the

pervasive physical contamination caused by SARSCoV-2, the State of Maryland and Harford County

issued orders compelling businesses to cease or

substantially reduce operations.

As a direct result of the physical contamination

by SARS-CoV-2 and the governmental orders

responding to this pervasive contamination, Bel Air

was compelled to curtail and reduce drastically its

operations. As an essential business, the

governmental orders permitted Bel Air to operate but

only on a limited, restricted basis. The governmental

orders also prohibited access to the Bel Air facility,

with only limited persons (such as managers and

essential employees, but not customers) permitted to

enter the facility.

Before the physical contamination of its facility

by SARS-CoV-2 and the issuance of the governmental

orders, large crowds of sellers and prospective buyers

attended and were present at Bel Air’s auctions. The

purchasers attending the auctions inspected and bid

on the vehicles as they moved through eleven auction

lanes.

Besides the vehicle auctions, Bel Air provided

other customer services, such operating a Vehicle

Enhancement Center where vehicles were restored

and enhanced for prospective sale and a full-service

restaurant catering to the auction attendees and other

persons doing business with Bel Air.

The ubiquitous presence of SARS-Cov-2 in, on,

around, and at the premises physically contaminated

Bel Air’s auction facility and, together with the

governmental orders, prevented Bel Air both from

using the auction facility as had been done before the

physical

contamination

occurred

and

the

governmental orders issued and from conducting the

related businesses, such as the full-service restaurant.

The large crowds that had attended the auctions and

patronized the related businesses could no longer do

so. While the SARS-CoV-2 was contaminating its

facility, several Bel Air employees contracted SARS19, although they do not know if they contracted the

disease at the Bel Air facility of elsewhere.

Other businesses operate within one mile of Bel

Air’s location. The pervasive presence of SARS-Cov-2

and COVID-19 also physically contaminated these

businesses and their property and made them subject

to the governmental orders, as occurred with Bel Air.

These

businesses

suffered

similar

physical

contamination from SARS-CoV-2 that, in combination

with the governmental orders, forced them to cease

entirely or curtail drastically their operations.

Bel

Air

purchased

business

interruption

insurance from Great

Northern.

Bel Air purchased from Great Northern an allrisk policy of property insurance that insured against

all perils other than those expressly excluded in the

policy. The Policy specifically states that Great

Northern will “pay for direct physical loss or damage

to” the insured premises caused by a covered peril (i.e.,

all perils other than those expressly excluded) that

occurs at or within 1,000 feet of the premises shown

in the Declarations. The policy, although a contract of

adhesion prepared by Great Northern, does not define

what “direct physical loss or damage” is, encompasses,

or requires.

The Policy includes business interruption

coverage that requires Great Northern to pay for loss

of business income due to the actual impairment of

operations caused by or resulting from the “direct

physical loss or damage to” the insured premises

resulting from any peril not expressly excluded in the

policy.

In addition, the policy, within the business

interruption section, provides Civil Authority

coverage. The Civil Authority provision covers loss of

business income for a thirty-day period due to actual

impairment of operations directly caused by

prohibition of access (without defining if the

prohibition must be a total prohibition of any access

by anyone or only a prohibition of some access) to the

insured premises by a civil authority that is the direct

result of direct physical loss or damage to property

away from but within one mile of the insured premises

(property other than the insured property).

The Policy also contained in its main section

(but not in the business interruption section) an Acts

and Decisions exclusion that purports to deny

coverage for any loss or damage to covered property

that results in any way or to any extent from the act

or decision of any person, group, organization, or

governmental body.

Procedural background.

Bel Air sued for a

declaratory judgment in

state court after Great

Northern

denied

its

coverage claim.

Bel Air filed a claim for business interruption

insurance coverage that Great Northern denied. Bel

Air then sued Great Northern in the Circuit Court for

Harford County, Maryland to obtain a declaratory

judgment construing the policy under Maryland law

and addressing the reasons Great Northern gave for

denying coverage. Bel Air sought a declaration that

the Policy afforded coverage

(i)

under its business interruption portion

for Bel Air’s loss of business income resulting from Bel

Air’s being deprived of the full use of its insured

premises caused by the presence and physical

contamination of the premises by SARS-Cov-2 and by

the governmental shutdown orders entered as a result

of the SARS-Cov-2 contamination, despite the absence

of any harmful or detrimental structural change or

alteration to the insured premises;

(ii)

under the Civil Authority coverage

provision for the prohibition of access required by the

governmental orders issued in response to SARS-Cov2 contamination that afflicted business properties

within one mile of Bel Air’s facility that substantially

restricted public access to Bel Air’s facility even

though all access to Bel Air’s facility was not

prohibited; and

(iii) despite the Acts and Decisions exclusion

in the policy, which had no application to the coverage

issues under the business interruption and Civil

Authority portions of the policy and did not exclude

the coverage that otherwise exists.

Great

Northern

removed the case.

Great Northern removed the case to the

District Court and filed an answer to the complaint.

Bel Air moved for

summary

declaratory

judgment

and

certification

the

Maryland

Court

Appeals.

After the removal to the District Court, Bel Air

immediately moved for a summary declaratory

judgement. At the same time, Bel Air moved for

certification to the Maryland Court of Appeals of the

following three questions of Maryland law that have

never been addressed by the Maryland Court of

Appeals and would have been dispositive of Bel Air’s

case and the other pending Maryland state and

federal cases involving the same issues:

(a)

Is the “direct physical loss or damage”

requirement in the Business Income With

Extra Expense and the Civil Authority

coverage provisions of the Great Northern

Insurance Company policy satisfied by a loss of

full use of property caused by contamination

from SARS-Cov-2 and Covid-19 or is a

structural alteration and change in property

necessary for coverage to exist?

(b)

Is the prohibition of access requirement

in the Civil Authority coverage provision of the

Great Northern policy satisfied by a substantial

prohibition of access or is a total prohibition of

all access necessary?

(c)

Does the Acts and Decisions exclusion in

the Great Northern policy exclude all coverage

under the in the Business Income and Extra

Expense and Civil Authority portions of the

policy?

See Motion To Certify Three Unresolved Questions of

Maryland Law To The Maryland Court of Appeals,

USCA4 Appeal: 21-1493 (Doc. 14).

Bel Air also requested the District Court to

defer ruling on the motion for a summary declaratory

judgment until the Maryland Court of Appeals had

answered the certified questions, which would have

fully resolved the appeal.

Great Northern, although it had denied almost

all the allegations of the complaint, moved for

judgment on the pleadings. Great Northern opposed

the motion for summary judgment but did not contest

the material facts Bel Air proffered as not being in

genuine dispute as required by Fed. R. Civ. P. 56(c).

The District Court denied the motion to certify

and the motion for declaratory summary judgment

and granted Great Northern’s motion for judgement

on the pleadings under Fed. R. Civ. P. 12(c). The

appeal to the Fourth Circuit followed.

The

District

Court

determined both that

the material facts were

not in genuine dispute

and the Maryland Court

of Appeals had not ruled

on the questions of law

but

still

refused

certification.

The District Court in its Memorandum Opinion

determined that “there is no genuine issue of material

facts as to Plaintiff Bel Air’s claims.” Bel Air Auto

Auction, Inc. v. Great N. Ins. Co., No. CV RDB-202892, 2021 WL 1400891, at *12 (D. Md. Apr. 14, 2021).

Based on this finding, the District Court determined

that only issues of Maryland law remained to be

resolved.

The District Court also acknowledged that the

Maryland Court of Appeals had not addressed the

questions of law before it but held that it could rule

based on general principles of contract interpretation

under Maryland law. Id. at *6.

The

Fourth

Circuit

peremptorily denied Bel

Air’s

motion

for

certification.

In the Fourth Circuit, Bel Air again moved for

certification of the three novel questions of Maryland

law to the Maryland Court of Appeals. The Clerk,

purportedly on behalf of the Court, denied the motion.

Bel Air moved for reconsideration, but the Clerk again

denied the motion.

The Clerk denied the motion for certification

and for reconsideration of the motion’s denial. The

Clerk gave no reason or explanation for the denials.

Argument in support of the allowance of the writ. 1

This Petition for Certiorari followed the denials

by the Clerk.

Argument in support of the Petition.

A. The three questions of law for which

Bel Air requested certification are

issues of Maryland law as to which

only the Maryland Court of Appeals

can give a binding, precedential

answer.

The three questions of law that Bel Air

requested be certified to the Maryland Court of

Appeals are questions of Maryland insurance contract

law. While federal courts have the power to adjudicate

cases based on Maryland law as to the parties before

it, a federal court’s doing so cannot conclusively

determine any questions of Maryland law that would

be binding precedent in other cases. Only the

Maryland Court of Appeals can conclusively state

what Maryland law is and have its pronouncement

constitute binding precedent in all federal or state

cases based on Maryland law.

A decision by the Fourth Circuit on the three

questions of Maryland law may be binding precedent

in federal courts in Maryland on these questions

(unless later contradicted by the Maryland Court of

Bel Air’s appeal is not the only pending Fourth

Circuit appeal in which certification has been requested on

similar issues. See Cordish Companies, Inc. v. Affiliated FM

Insurance Company, No. 21-2055 (Maryland law) and Uncork

and Create, LLC v. The Cincinnati Insurance Company, et al, No.

21-1311 (West Virginia law). The Fourth Circuit in a similar onesentence order signed by the Clerk also denied the appellant’s

motion to certify in Cordish on October 20, 2021.

Appeals) but would not be binding precedent in state

courts in Maryland or any other state applying

Maryland law. Erie R. Co. v. Tompkins, 304 U.S. 64,

78 (1938) (“Except in matters governed by the Federal

Constitution or by acts of Congress, the law to be

applied in any case is the law of the state.”); West v.

Am. Tel. & Tel. Co., 311 U.S. 223, 236 (1940) (“[T]he

highest court of the state is the final arbiter of what is

state law.”); DIRECTV, Inc. v. Imburgia, 577 U.S. 47,

54 (2015) (“Although we may doubt that the Court of

Appeal has correctly interpreted California law, we

recognize that California courts are the ultimate

authority on that law.”). The highest court in

Maryland is the Maryland Court of Appeals, and its

decisions establish the Maryland law of contracts, not

the decisions of the Fourth Circuit. Wells v. Chevy

Chase Bank, F.S.B., 832 A.2d 812, 828 (Md. 2003)

(“Contract interpretation . . . is a matter of state

law.”).

While a federal court is required to follow the

decisions of a state’s highest court (i.e., the Maryland

Court of Appeals), the courts of the state are not

required to follow the decisions of federal courts on

state law issues if the state court disagrees with a

federal court’s holding. Sessoms v. State, 744 A.2d 9,

16 (Md. 2000) (“The courts of this State, however, are

not bound by the holdings of a federal district court or

of a federal circuit court of appeals.”); Six Flags Am.,

L.P. v. Gonzalez-Perdomo, 242 A.3d 1143, 1153 (Md.

App. 2020) (“An opinion of a federal district court is

not binding on the circuit court or on this Court, but

at most might be a persuasive authority.” If “the

reasoning which supports the court’s opinion fails to

persuade, the opinion is no authority at all.”)

(citations omitted); Selective Way Ins. Co. v.

Nationwide Prop. & Cas. Ins. Co., 219 A.3d 20, 44 (Md.

App. 2019); French v. Hines, 957 A.2d 1000, 1035 (Md.

App. 2008).

These considerations support permitting the

Maryland Court of Appeals to conclusively determine

the principles of Maryland law when a conclusive

determination of these principles is of paramount

importance to a group of cases pending in both

Maryland state and federal court.

The three questions of law are of

major importance in both the state

of Maryland and nationally.

The three questions of Maryland law Bel Air

requested to be certified are of major importance in

the state of Maryland and nationally. Currently, there

are over 2,000 cases in federal and state courts in

which some or all of the three questions of law are at

issue. Of these pending cases, over 250 are on appeal

in state and Federal Courts, although no state’s

highest court has yet issued a decision on its state’s

law. See Trial Court Rulings on the Merits in Business

Interruption Cases, COVID COVERAGE LITIGATION

TRACKER, https://cclt.law.upenn.edu/judicial-rulings/

(last visited September 10, 2021). Insureds continue

to file new cases raising these issues. For example, a

group of Chicago area restaurants sued fifteen

insurance companies in the Cook County Circuit

Court on September 1, 2021. See 25 W. Hubbard, Inc.

v. Illinois Cas. Co., No. 2021-L-008823 (Ill. Cir. Ct.

Sept. 1, 2021). This case cannot be removed due to a

lack of complete diversity of the parties and will have

to be resolved in state court.

Besides Bel Air’s suit, insureds have filed at

least eight other suits in state and federal courts in

Maryland. Four cases are pending in the district court

before different district judges. See Hamilton Jewelry

LLC v. Twin City Fire Ins. Co., No. 8:20-cv-02248PWG; ThinkFood Grp. LLC v. Travelers Prop. Cas. Co.

of America, No. 8:20-cv-02201-PWG; RW Rest. Grp.,

LLC v. Charter Oak Fire Ins. Co., No. 8:20-cv-02161GJH; Cordish Cos., Inc. v. Affiliated FM Ins. Co., No.

1:20-cv-02419-ELH.; Tapestry, Inc. v. Factory Mutual

Insurance Co., No.: 1:21-cv-01941-GLR. The Cordish

case was just decided on a motion to dismiss and has

been appealed to the Fourth Circuit. Cordish Cos., Inc.

v. Affiliated FM Ins. Co., No. CV ELH-20-2419, 2021

WL 3883595, at *1 (D. Md. Aug. 31, 2021), Appeal No.

21-2055. Two other cases also were just decided on

motions to dismiss and could be appealed to the

Fourth Circuit. See ThinkFood Grp. LLC v. Travelers

Prop. Cas. Co. of Am., No. 8:20-CV-02201-PWG, 2021

WL 4478725, at *1 (D. Md. Sept. 30, 2021) and

Hamilton Jewelry, LLC v. Twin City Fire Ins. Co., Inc.,

No. 8:20-CV-02248-PWG, 2021 WL 4214837, at *1 (D.

Md. Sept. 16, 2021).

Insureds have filed at least two other cases in

Maryland state courts that were not removed by the

insurance companies. See GPL Enter. LLC v. Lloyds

of London, No. C-10-CV-20-000284 (Md. Cir. Ct.

2021), appeal docketed, No. CSA-REG-0302-2021 (Md.

Ct. Spec. App. May 5, 2021); Glyndon Hair Station,

Inc. v. Erie Ins. Co., No. C-03-CV-20-003393 (Md. Cir.

Ct. September 16, 2021). In GPL, the circuit court

ruled in favor of Lloyds after the insurance company

presented to the circuit court the District Court’s

decision in Bel Air’s case. The ruling is on appeal to

the Maryland Court of Special Appeals (CSA-REG0302-2021) and likely will eventually reach the

Maryland Court of Appeals. Bel Air has filed an

amicus brief in this appeal.

Two cases filed in state court but removed to

federal court have been remanded to state court for

lack of diversity due to the inclusion of an instate

insurance broker as a defendant. Goucher Coll. v.

Cont’l Cas. Co., No. C-03-CV-21-000013, 2021 WL

2155039 (D. Md. May 27, 2021); McDaniel Coll., Inc.,

v. Cont’l Cas. Co., No. C-03-CV-21-000012, 2021 WL

2139404 (D. Md. May 26, 2021). These cases are

pending in the Circuit Court for Baltimore County,

Maryland. See id. They will likely reach the Maryland

appellate courts once a decision has been rendered by

the Circuit Court.

A decision by the Maryland Court of Appeals

will provide binding precedent in these state and

federal Maryland cases and a certainty of result to the

parties to these cases as well as parties in potential

future cases. A decision by the Maryland Court of

Appeals also will provide definitive, if not binding,

precedent for the numerous cases pending around the

country. A decision by the Maryland Court of Appeals

will enable the judges of the federal courts in

Maryland to apply Maryland law uniformly to the

pending cases rather than predict what the Maryland

Court of Appeals will determine Maryland law to be,

once a case finally reaches the Maryland Court of

Appeals for decision.

A decision by the Fourth Circuit, while

unquestionably persuasive, would not be binding on

any of the state cases. The Fourth Circuit’s prediction

as to how the Court of Appeals will decide the

questions of law would only bind the federal courts

applying Maryland law.

And, what would the fate be of the litigants in

the Maryland cases when the Maryland Court of

Appeals, as it eventually will do, issues a decision on

the certification questions? If the decision is contrary

to the Fourth Circuit’s decision, the losing party in the

appeal and all of the pending federal cases will be

unfairly affected and have little or no recourse.

The lack of a decision by the

Maryland Court of Appeals can lead

to different rulings by different

courts.

The absence of a decision by the Maryland

Court of Appeals can lead to different rulings by

different judges of the Maryland federal and state

courts, as has happened and is happening in other

states. A ruling by one district court judge does not

preclude another district court judge or a state court

judge from issuing a contrary ruling. This unsettling

result has occurred around the country and is likely to

continue to occur.

The following federal decisions reached

contrary conclusions on the issue of whether loss of

use versus structural alteration or change satisfies

the requirement in the policies of “direct physical loss

or damage.” Compare Serendipitous, LLC/Melt v.

Cincinnati Ins. Co., No. 2:20-CV-00873-MHH, 2021

WL 1816960 (N.D. Ala. May 6, 2021) (denying a

motion to dismiss) with Dukes Clothing, LLC v.

Cincinnati Ins. Co., 2021 WL 1791488 (N.D. Ala. May

5, 2021) (granting a motion to dismiss); compare In re

Soc’y Ins. Co. COVID-19 Bus. Interruption Prot. Ins.

Litig., No. 20 C 5965, 2021 WL 679109 (N.D. Ill. Feb.

22, 2021) (denying motions to dismiss for summary

judgment in multi-district case) with L&J Mattson’s

Co. v. Cincinnati Ins. Co., Inc., No. 20 C 7784, 2021

WL 1688153 (N.D. Ill. Apr. 29, 2021) (granting a

motion to dismiss); compare Henderson Rd. Rest. Sys.,

Inc. v. Zurich Am. Ins. Co., No: 1:20 CV 1239, 2021

WL 168422 (N.D. Ohio Jan. 19, 2021) (granting

summary judgment for the insured), vacated, In re

Zurich Am. Ins. Co., No. 21-0302, 2021 WL 4473398

(6th Cir. Sept. 29, 2021) with Equity Plan. Corp. v.

Westfield Ins. Co., No. 1:20-CV-01204, 2021 WL

766802 (N.D. Ohio Feb. 26, 2021) (granting a motion

to dismiss); compare Studio 417, Inc. v. Cincinnati Ins.

Co., No. 20-cv-03127-SRB, 478 F. Supp. 3d 794, 796

(W.D. Mo. 2020) (denying motion to dismiss) with

Zwillo V, Corp. v. Lexington Ins. Co., No. 4:20-00339CV-RK, 2020 WL 7137110 (W.D. Mo. Dec. 2, 2020)

(granting a motion to dismiss); compare Skillets, LLC

v. Colony Ins. Co., No. 3:20cv678-HEH, 2021 WL

926211 (E.D. Va. Mar. 10, 2021) (granting a motion to

dismiss) with Elegant Massage, LLC v. State Farm

Mut. Auto. Ins. Co., No. 2:20-cv-265, 2020 WL 7249624

(E.D. Va. Dec. 9, 2020) (denying a motion to dismiss).

State courts have reached conclusions contrary

to federal courts in their states and have rejected the

federal cases as precedent. The Superior Court of

Washington provides a very recent example. There,

the Superior Court rejected the holding of a federal

court in Washington and the other federal decisions

upon which it relied and granted partial summary

judgment to the insured. See Snoqualmie

Entertainment Authority v. Affiliated FM Ins. Co., No.

21-2-03194-0 SEA, 2021 WL 4098938 (Wash. Super.

Sep. 03, 2021). As the Superior Court held:

Second, the Court respectfully

declines to adopt the reasoning from

the U.S. District Court for the

Western District of Washington in

Nguyen v. Travelers Cas. Ins. Co. of

Am., 2:20-CV-00597-BJR, 2021 WL

2184878 (W.D. Wash. May 28, 2021).

This Court is not persuaded by

Nguyen’s reliance on the opinions of

other federal district court opinions

across the country that applied the

laws of other states, nor its holding

that the undefined phrase “all-risks of

physical loss or damage” cannot be

reasonably interpreted by the average

lay person to include the insured’s

inability to physically use, control, or

manipulate its property as a result of

the COVID-19 closure orders and

Tribal resolutions.

Id. at *6.

The Superior Court of Connecticut in New

Castle Hotels, LLC v. Zurich Am. Ins. Co. recently

rejected Zurich’s reliance on federal decisions when it

denied the insurer’s motion to dismiss and applied

Connecticut’s pleading standard rather than the

federal Bell Atlantic plausibility standard. No. X07HHD-CV-216142969-S, 2021 WL 4478669, at *5

(Conn. Super. Ct. Sept. 7, 2021).

For another example of state courts rejecting

federal precedent, the Court of Common Pleas of

Allegheny County granted the insureds summary

judgment in two cases despite a welter of contrary

rulings by Pennsylvania district courts. Compare

MacMiles, LLC v. Erie Ins. Exchange, No. GD-207753, 2021 WL 3079941 (Pa. Com. Pl. May 25, 2021)

(“this Court concluded that the meaning of the term

“loss” reasonably encompasses the act of losing

possession [and/or] deprivation, which includes the

loss of use of property absent any harm to property)

and Ungarean, DMD v. CNA, No. GD-20-006544, 2021

WL 1164836, at *10 (Pa. Com. Pl. Allegheny Cnty.

Mar. 22, 2021) (“[T]his Court determined that

Plaintiff provided a reasonable interpretation that: [1]

there was ‘direct physical loss of or damage to

property’ other than Plaintiff’s property; and [2] the

‘direct physical loss of or damage to property’ other

than Plaintiff’s property caused civil authorities to

take action(s) that prohibited access to Plaintiff’s

property.”) with Mareik Inc. v. State Farm Fire and

Casualty Company, No. 20-2744, 2021 WL 1940647,

at *4 (E.D. Pa. May 5, 2021) (“[T]his Court finds that

‘direct physical loss to Covered Property’ means an

immediate, actual, identifiable, and material impact

to the structure of a building or to tangible items

located therein.”).

For yet another example, the California

Superior Court denied a demurrer filed by

Philadelphia

Indemnity

despite

the

almost

unanimous plethora of California federal cases

granting motions to dismiss or for judgment on the

pleadings to insurance companies, noting:

The Court recognizes that California

federal cases have require[d] a

physical change in the property or

permanent dispossession of the

property to qualify as “direct physical

loss” and have generally rejected

arguments that business losses due to

coronavirus and Covid-19 are covered

under Business Income, Extra

Expenses

and

Civil

Authority

provisions. . . . However, these

federal California cases are not

binding on this Court.”

Goodwill Indus. of Orange Ct. v. Phila. Indem. Co.,

No. 30-2020-01169032-CU-IC-CXC, 2021 WL 476268,

at *3 (Cal. Sup. Ct. Jan. 28, 2021) (emphasis added);

see also Boardwalk Ventures CA, LLC v. CenturyNational Ins. Co., No. 20STCV27359, 2021 WL

1215892, at *3 (Cal. Super. Mar. 18, 2021) (noting

that “no California court has issued any opinion that

is binding on this Court interpreting the policy

language at issue” and rejecting the “litany of

unpublished federal district court cases” interpreting

California law as “not binding on this Court”).

Similar results have occurred in other states.

Compare North State Deli, LLC v. Cincinnati Ins. Co.,

No. 20-CVS-02569, 2020 WL 6281507 (N.C. Super.

Oct. 09, 2020) (granting the insured summary

judgment) with Summit Hosp. Grp., Ltd. v. Cincinnati

Ins. Co., No. 5:20-CV-254-BO, 2021 WL 831013

(E.D.N.C. Mar. 4, 2021) (granting a motion to

dismiss); compare JGB Vegas Retail Lessee, LLC v.

Starr Surplus Lines Ins. Co., No. A-20-816628-B, 2020

WL 7190023, at *3 (Nev. Dist. Ct. Nov. 30, 2020)

(denying a motion to dismiss) with Circus LV, LP v.

AIG Specialty Ins. Co., No. 2:20-cv-01240-JAD-NJK,

2021 WL 769660 (D. Nev. Feb. 26, 2021) (granting a

motion to dismiss).

And when a Maryland state court case reaches

the Maryland Court of Appeals, a decision by the

Maryland Court of Appeals could contradict the

decisions of the Fourth Circuit and the other federal

cases but leave the losing parties in those federal

cases without a remedy under Maryland law that has

been resolved by Maryland’s highest court in their

favor and contrary to the rulings of the federal courts.

This outcome could eventually occur in the case on

appeal to the Maryland Court of Special Appeals and

the two cases remanded by the District Court to the

Circuit Court for Baltimore County. See GPL, No. C20

10-CV-20-000284 (Md. Cir. Ct. 2021), appeal docketed,

No. CSA-REG-0302-2021 (Md. Ct. Spec. App. May 5,

2021); McDaniel Coll., Inc, v. Continental Casualty

Co., No. RDB-21-0505, 2021 WL 2139404 (D. Md. May

26, 2021); Goucher Coll., 2021 WL 2155039, two cases

where the plaintiffs, as educational institutions, have

the resources to match the insurance company

opposing them. This is an outcome that may likely

occur if the Supreme Court does not require the

Fourth Circuit to issue a certification order and the

Fourth Circuit rules against Bel Air on the merits.

This appeal involves more than a

dispute between two litigants.

This case is not a one-off case between an

insurance company and its insured, where the focus is

on only the appellant and the appellee. This is a case

of national importance where the rights of many

insurance companies and their insureds are at issue.

The only way the Fourth Circuit can ensure that its

answer to the questions on appeal is correct is to

certify the three questions to the Maryland Court of

Appeals. A certain answer from the Maryland Court

of Appeals is far more desirable than a prediction from

the Fourth Circuit, no matter how well thought-out

and reasoned, about how the Maryland Court of

Appeals will rule. Certainty is much better than

speculation when the rights of so many persons

beyond those before the Court are in focus.

The questions Bel Air has requested be certified

will be dispositive of the appeal. No decision of the

Maryland Court of Appeals or the provisions of any

statute or constitution resolve the questions presented

for certification. The District Court, although denying

the motion to certify, acknowledged the absence of any

controlling authority from the Maryland Court of

Appeals on the certification questions.

The Ohio Supreme Court has before

it on certification the question of

whether direct physical loss

requires structural change.

In Neuro-Communication Services, Inc., v.

Cincinnati

Insurance

Company

(“NueroCommunication”), the District Court certified to the

Ohio Supreme Court the question of whether

contamination by SARS-CO-V 2 could constitute

physical loss under a property policy with essentially

the same business interruption coverage language as

Bel Air’s policy. No. 4:20-CV-1275, 2021 WL 274318

(N.D. Ohio Jan. 19, 2021). The case is pending before

the Ohio Supreme Court. See Neuro-Communication

Servs., Inc., v. Cincinnati Ins. Co., Case No. 2021-0130

(Ohio Jan. 28, 2021). If the Ohio Supreme Court rules

that structural alteration is not required for coverage

to exist, the ruling will contradict rulings by district

courts in Ohio in favor of the insurance companies but

will leave the insureds in those cases that may no

longer appeal the district court’s incorrect ruling

without the ability to obtain what Ohio law says they

are entitled to receive. See e.g. Dakota Girls, LLC v.

Philadelphia Indem. Ins. Co., No. 2:20-cv-2035, 2021

WL 858489 (S.D. Ohio Mar. 8, 2021) (dismissing the

complaint); Santo’s Italian Cafe LLC v. Acuity Ins.

Co., 508 F. Supp. 3d 186 (N.D. Ohio 2020) (same).

In explaining its decision, the District Court in

Neuro-Communication pointed to the lack of

controlling precedent of the Supreme Court of Ohio:

“Dozens, if not hundreds of cases seeking coverage for

losses related to the pandemic under policies similar

or identical to that at issue in this case [that] have

been filed in both federal and state courts in Ohio,”

and the problem “differing interpretations of Ohio

contract law by different courts threaten to

undermine the uniform application of that law to

similarly situated litigants.” Neuro-Commc’n, 2021

WL 274318, at *1. As the District Court further noted

“The certification procedure invoked here will allow

the Supreme Court of Ohio to decide these questions

and bring uniformity to the application of state law to

these policies.” Id. at * 2.

The reasons for the District Court’s

certification in Neuro-Communication apply equally

to this case. The Maryland Court of Appeals should be

given the opportunity to provide a uniform

interpretation of Maryland insurance contract law

regarding the Sars-Covid-2 and Covid-19 problem and

business interruption insurance.

Lehman Bros. v. Schein provides

authority that the Fourth Circuit

should have granted the motion for

certification.

The Supreme Court in several decisions has

recognized the benefits of certifying novel, undecided

questions of state law that can be dispositive of the

case before the Court to the highest court of the state

whose law controls the decision. See McKesson v. Doe,

141 S. Ct. 48 (2020); Arizonans for Off. Eng. v.

Arizona, 520 U.S. 43 (1997); Virginia v. Am.

Booksellers Ass’n, Inc., 484 U.S. 383 (1988); Brockett

v. Spokane Arcades, Inc., 472 U.S. 491 (1985); Elkins

v. Moreno, 435 U.S. 647 (1978); Lehman Bros. v.

Schein, 416 U.S. 386 (1974).

While most of the Supreme Court’s certification

decisions involved the determination of an issue of

state law that potentially would eliminate the need to

reach a constitutional issue or the interpretation of a

state statute that had not previously been construed

by the state’s highest court, Lehman Bros. did not and

involved only a question of state common law. This

decision presents the primary authority relied upon

by Bel Air in petitioning for certiorari.

Lehman Bros. involved several consolidated

shareholders’ derivative suits based on diversity of

citizenship. The plaintiffs filed suit in the United

States District Court for the Southern District of New

York. The plaintiffs alleged that the corporation’s

president disclosed a drop in the corporation’s

earnings that was not yet public to a brokerage, which

in turn disclosed the information to several mutual

funds that sold stock before the earnings drop became

public. Although filed in federal court in New York,

Florida law provided the rule of decision under New

York’s choice-of-law rules. The district court, applying

Florida law, dismissed the complaints on the basis

that the president and the brokerage did not sell any

stock and did not commit any breach of fiduciary duty

or other wrongful act that injured the corporation. The

district court rejected the holding of the New York

Court of Appeals in Diamond v. Oreamuno, 248

N.E.2d 910 (N.Y. 1969) that an allegation of damage

to the corporation was not essential when confidential

information, which constituted a corporate asset, was

exploited for the benefit of a corporate officer having a

fiduciary relationship to the corporation. The district

court noted that the Florida Supreme Court had not

considered the issue, although several Florida lower

courts had held that damage to the corporation was

required.

The Second Circuit reversed. The Second

Circuit looked to the law of other jurisdictions,

particularly New York, for assistance in determining

how the Florida Supreme Court would rule and how it

would apply the holding of the New York Court of

Appeals in Diamond. The Second Circuit predicted

that the Florida Supreme Court would agree with

Diamond. Schein v. Chasen, 478 F.2d 817, 819 (2nd

Cir. 1973). The dissenting judge, however,

emphasized that he could not understand why the

majority refused to utilize Florida’s certification

statute and rule. In words apt to Bel Air’s request for

certification, the dissent stated that “[t]he uncertainty

inherent in the majority’s speculation over what the

Florida courts would decide if faced with this novel

question of tippee liability under state common law

fiduciary principles in a stockholders’ derivative

action would be dispelled authoritatively and finally.”

Id. at 829.

The Supreme Court vacated the Second

Circuit’s reversal and remanded so that the Second

Circuit could “reconsider whether the controlling

issue of Florida law should be certified to the Florida

Supreme Court pursuant to Rule 4.61 of the Florida

Appellate Rules.” Lehman Bros., 416 U.S. at 391–92.

Noting that Florida law was controlling but did not

decisively resolve the issue, resort to Florida’s

certification procedure “would seem particularly

appropriate in view of the novelty of the question and

the great unsettlement of Florida law.” Id. at 391.

On remand, the Second Circuit certified the

controlling question of law to the Florida Supreme

Court, which agreed with and approved the district

court’s reversed decision. The Second Circuit

thereupon affirmed the district court’s judgment.

Schein v. Chasen, 519 F.2d 453, 454 (2nd Cir. 1975).

Although the petitioners in Lehman Bros. did

not ask the district court or the Second Circuit to

certify the question to the Florida Supreme Court

until the petitioners filed a motion for reconsideration

in the Second Circuit, Bel Air from the outset has

attempted to have Maryland law determined by the

Maryland Court of Appeals, not a federal court

speculating on how the Maryland Court of Appeals

would rule.

The Fourth Circuit’s refusal to

certify the three questions of law to

the Maryland Court of Appeals

constituted an abuse of discretion.

The decision on whether to certify a question of

undecided state law to a state’s highest court rests

within the sound discretion of the federal court

considering a certification request. McKesson, 141 S.

Ct. 48, 51 (2020); Lehman Bros. v. Schein, 416 U.S.

386, 390 (1974). But (d)iscretion is not whim” and

must be based, not on inclination, but on judgment

“guided by sound legal principles.” Martin v. Franklin

Cap. Corp., 546 U.S. 132, 139 (2005). The Circuit

Court’s discretion is neither unlimited nor unfettered

by meaningful standards and sound legal principles.

And its exercise is always subject to judicial review.

Kirtsaeng v. John Wiley & Sons, Inc., 136 S. Ct. 1979,

1985 (2016); Halo Elecs., Inc. v. Pulse Elecs., Inc., 136

S. Ct. 1923, 1932 (2016); Albemarle Paper Co. v.

Moody, 422 U.S. 405, 416 (1975).

“Whether discretion has been abused depends,

of course, on the bounds of that discretion and the

principles that guide its exercise.” United States v.

Taylor, 487 U.S. 326, 336 (1988). An abuse of

discretion occurs when a court, in exercising its

discretion, bases its decision on an erroneous view of

the law or incorrect assessment of the evidence.

Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 572

U.S. 559, 563, n.2 (2014); Cooter & Gell v. Hartmarx

Corp.,110 S. Ct. 2447, 2461 (1990). But as the Fourth

Circuit has noted, even when a court applies the

correct legal principles to adequately supported facts,

a reviewing court should reverse for abuse of

discretion if it “has a definite and firm conviction that

the court below committed a clear error of judgment

in the conclusion it reached upon a weighing of the

relevant factors.” Westberry v. Gislaved Gummi AB,

178 F.3d 257, 261 (4th Cir. 1999) (citation omitted).

See also Huskey v. Ethicon, Inc., 848 F.3d 151, 158

(4th Cir. 2017); Gannett Co. v. Clark Const. Grp., Inc.,

286 F.3d 737, 741 (4th Cir. 2002).

Other Circuit Courts of Appeal have reached a

similar conclusion. See e.g. Graveline v. Benson, 992

F.3d 524, 546 (6th Cir. 2021) (“Abuse of discretion is

defined as a definite and firm conviction that the trial

court committed a clear error of judgment.”) (citation

omitted); Tubens v. Doe, 976 F.3d 101, 104 (1st Cir.

2020) (“Abuse occurs when a material factor deserving

significant weight is ignored, when an improper factor

is relied upon, or when all proper and no improper

factors are assessed, but the court makes a serious

mistake in weighing them.”) (citation omitted).

The Fourth Circuit’s refusal to certify the three

dispositive, unresolved questions of Maryland law to

the Maryland Court of Appeals without any

explanation for its refusal constituted an abuse of

discretion. The importance of a definitive and

precedential answer to the three questions of law, not

just to the parties to this case but to other litigants in

Maryland and throughout the country, underscores

and emphasizes this abuse of discretion.

The issues on appeal are “novel issues of state

law peculiarly calling for the exercise of judgment by

the state courts.” McKesson, 141 S. Ct. at 51. To

answer these questions, the Maryland Court of

Appeals will have to “consider “various moral, social,

and economic factors,” among them “the fairness of

imposing liability,” “the historical development of

precedent,” and “the direction in which society and its

institutions are evolving.” Id. (quoting Posecai v. WalMart Stores, Inc., 752 So.2d 762, 766 (La. 1999); see

also Arizonans for Official English, 520 U.S. at 79

(“Speculation by a federal court about” how a state

court would weigh . . . the economic consequences [of

imposing or withholding liability] is particularly

gratuitous when the state courts stand willing to

address questions of state law on certification.”).

Refusing to permit a state’s highest court to weigh in

on the law of its state, particularly when that law will

affect numerous parties in pending cases, constitutes

an affront to federalism and the relationship of federal

and state courts of constitutional significance. See

Levin v. Com. Energy, Inc., 560 U.S. 413, 421 (2010)

(“The comity doctrine counsels lower federal courts to

resist engagement in certain cases falling within their

jurisdiction.”); Exxon Mobil Corp. v. Saudi Basic

Indus. Corp., 544 U.S. 280, 292 (2005); Rhines v.

Weber, 544 U.S. 269, 273 (2005); Mendoza v.

Nordstrom, Inc., 778 F.3d 834, 836 (9th Cir. 2015);

Am. States Ins. Co. v. LaFlam, 672 F.3d 38, 44 (1st

Cir. 2012) (noting that federalism dictates

certification where the “case involves major state

policy that ‘will certainly impact future cases’”);

Walters v. Inexco Oil Co., 670 F.2d 476, 478 (5th Cir.

1982) (“Indeed, as the case involves question of local

Mississippi policy, [certification] accords with our

carefully wrought system of federalism. We should

hesitate to ‘trade our judicial robes for the garb of

prophet’”).

The Fourth Circuit’s refusal to

certify the three questions of

Maryland law so far departed from

the accepted and usual course of

judicial proceedings as to call for

the exercise by the Supreme Court

of its supervisory power.

In stark contrast to its terse, indeed brusque,

denial of Bel Air’s motions, the Fourth Circuit in other

cases having less national and statewide import has

certified significant questions to the highest court of

the state whose law controls the decision. In Sartin v.

Macik, 535 F.3d 284, 291 (4th Cir. 2008), the Fourth

Circuit lamented that North Carolina did not have a

certification process, noting that “[a] certification

process would greatly facilitate the resolution of

unresolved questions of state law like the present one

by ensuring the correct legal outcome, aiding in

judicial economy, and manifesting proper respect for

federalism.” Sartin v. Macik, 535 F.3d 284, 291 (4th

Cir. 2008).

In Travco Ins. Co. v. Ward, 468 F. App’x 195

(4th Cir. 2012), the Fourth Circuit set out the factors

that justified certifying a question on the construction

of an insurance policy to the Virginia Supreme Court:

Several factors justify certification.

…[W]e find no clear controlling

Virginia precedent to guide our

decision. There are no disputed fact

issues, and the questions presented

are pure questions of state law which

have not been squarely addressed by

the Supreme Court of Virginia. In

addition, we recognize the importance

of allowing the Supreme Court of

Virginia to decide questions of state

law and policy with such far-reaching

impact.

468 F. App’x at 201 (emphasis added). These same

factors are present in this case and similarly justify

and argue for certification. The Fourth Circuit, acting

through the Clerk and not a Judge, never explained

why certification was proper and desirable in Travco

Ins. Co. v. Ward but is not proper and desirable in this

case, in which the certification questions are being

litigated in over 2000 cases nationwide and eight in

Maryland alone.

The Fourth Circuit has certified questions of

law to a state’s highest court on at least 31 other

occasions, sometimes in officially reported decisions.

When it has denied certification, the Fourth Circuit

has provided the reasons for its decision, sometimes in

officially published decisions. See e.g. Powell v. U.S.

Fid. & Guar. Co., 88 F.3d 271 (4th Cir. 1996); Nat’l

Bank of Washington v. Pearson, 863 F.2d 322 (4th Cir.

1988); Boyter v. Comm’r, 668 F.2d 1382 (4th Cir.

1981). At other times, the reasons were given in

unofficially published decisions. See e.g. Gariety v.

Vorono, 261 F. App’x 456 (4th Cir. 2008). In this case,

the Fourth Circuit has given no reason for denying

certification.

The Clerk’s order denying certification in this

case provided no explanation why certification was

the right procedure in those 31 cases but not this case.

Bel Air is entitled to such an explanation. Bel Air is

entitled to have its rights under Maryland law decided

by the Maryland Court of Appeals, not the United

States District Court for the District of Maryland or

the United States Court of Appeals for the Fourth

Circuit, when those rights are dependent upon a

resolution of questions of Maryland law that have

never been decided, much less squarely confronted, by

the Maryland Court of Appeals, only Court that can

give a final, definitive, and conclusive answer.

The other litigants in Maryland courts

addressing these same issues are likewise entitled to

the benefit of binding precedent from the Maryland

Court of Appeals. A decision by the Fourth Circuit,

while perhaps binding on the pending Federal cases,

will not bind the Maryland state court cases or in any

way constrain the Maryland Court of Appeals, just as

the Florida Supreme Court was not constrained by the

Second Circuit’s decision in Schein v. Chasen, 478

F.2d 817 (2nd Cir. 1973). Yet unlike the petitioners in

Lehman Bros., Bel Air will have no recourse if the

Fourth Circuit affirms the District Court and the

Maryland Court of Appeals eventually, as will

happen, decides that they were incorrect as a matter

of Maryland law.

The Supreme Court has inherent supervisory

power over the Circuit Courts of Appeal. Dickerson v.

United States, 530 U.S. 428, 437 (2000) While a

Circuit Court of Appeals has discretion to adopt local

rules or procedures, that discretion is not without

limits or bounds. Frazier v. Heebe, 482 U.S. 641, 645,

(1987). As stated in Frazier v. Heebe, the Supreme

Court “may exercise its inherent supervisory power to

ensure that these local rules (or procedures) are

consistent with “‘the principles of right and justice.’”

(citations omitted; parenthetical material added). Id

at 645. As noted in an earlier case, where “a particular

mode of trial [or deciding motions] being used by many

judges is so cumbersome, confusing, and time

consuming that it places completely unnecessary

obstacles in the paths of litigants seeking justice in

our courts, we should not and do not hesitate to take

action to correct the situation.” Fitzgerald v. U.S.

Lines Co., 374 U.S. 16, 21 (1963) (deciding trial

procedures in admiralty actions); see also Communist

Party of U.S. v. Subversive Activities Control Bd., 351

U.S. 115, 124 (1956) (“This Court is charged with

supervisory functions in relation to proceedings in the

federal courts. Therefore, fastidious regard for the

honor of the administration of justice requires the

Court to make certain that the doing of justice be

made so manifest that only irrational or perverse

claims of its disregard can be asserted.”) (citation

omitted); West Pac. R. Corp. v. West Pac. R. Co., 345

U.S. 247, 260 (1953) (Regarding the Circuit Court of

Appeals en banc procedures, noting that “In the

exercise of our ‘general power to supervise the

administration of justice in the federal courts,’ the

responsibility lies with this Court to define these

requirements and insure their observance.”)

Supreme Court Rule 10(a) underscores these

principles by indicating that one of the basis for

review by writ of certiorari is a demonstration that “a

United States court of appeals … has so far departed

from the accepted and usual course of judicial

proceedings, or sanctioned such a departure by a

lower court, as to call for an exercise of this Court’s

supervisory power.” Sup. Ct. R. 10(a). The Fourth

Circuit’s denial of the motion for certification via the

Clerk and subsequent denial of the motion for

reconsideration also via the Clerk, comes within the

purview of this Rule.

The Fourth Circuit did not give Bel Air’s

motion serious, earnest, and thoughtful consideration

when viewed in the context of

•

the lack of any direct and controlling

authority from the Maryland Court of Appeals on the

novel questions of law presented for certification;

•

the prevalence of the three questions of

law in over 2,000 cases nationwide, including

Maryland state and federal courts;

•

the dominant importance of a decision

by the Maryland Court of Appeals to Bel Air and to

other Maryland plaintiffs in pending cases; and

•

the potential that Bel Air will be denied

its contractual rights if the Maryland Court of Appeals

in one of the other pending state court cases disagrees

with the eventual decision of the Fourth Circuit.

Instead of explaining why certification was not

proper or desirable, the Fourth Circuit relegated

issuing a ruling to the Clerk, as though it were a mere

procedural matter (such as extending the time to file

a brief). In light of the other Fourth Circuit cases in

which questions of law were certified to a state’s

highest court for a determinative conclusion, the

Fourth Circuit did not explain why Bel Air’s case was

different or why certification was proper in those case

but not in Bel Air’s case. In sum, the Fourth Circuit

did not treat Bel Air fairly in the denial of its motions.

That the unfairness should be reviewed by the

Supreme Court in its supervisory power over the

administration of justice in the Fourth Circuit.

Lawrence J. Gebhardt

Bar No. 315189

Gregory L. Arbogast

Bar No. 315173

Gebhardt & Smith LLP

One South St., Ste. 2200

Baltimore, MD 21202

(410) 385-5100

lgebh@gebsmith.com

garbogast@gebsmith.com

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.