JUL-BUR ASSOCIATES INC. v. SELECTIVE INSURANCE COMPANY OF AMERICA
2:20-cv-01977
| E.D. Pa. | Feb 11, 2021Background
- Jul-Bur Associates / Julie's Bottega purchased an "all-risk" commercial property policy effective March 15, 2020–March 15, 2021.
- Pennsylvania issued COVID-19 emergency and business-shutdown orders in mid‑March 2020; Julie's closed March 16 and claimed lost business income.
- Julie's submitted a claim under the policy's Civil Authority provision; Selective denied coverage, citing economic-loss noncoverage and a virus exclusion.
- Plaintiffs filed an Amended Complaint seeking only declaratory relief (no breach or other independent causes of action).
- The district court considered the policy (submitted with the defense motion) as integral to the complaint and evaluated whether to exercise discretionary jurisdiction under the Declaratory Judgment Act.
- The court dismissed the federal declaratory action without prejudice, declining to exercise jurisdiction and directing plaintiffs to state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court should retain jurisdiction under the Declaratory Judgment Act | Federal forum appropriate for coverage declaration | Court should dismiss federal DJA action (Selective moved to dismiss) | Court declined to exercise discretion and dismissed without prejudice |
| Whether COVID-19 business‑interruption questions present unsettled state law | Policy covers losses under Civil Authority / "direct physical loss" | Losses are merely economic or excluded by virus exclusion | Court found state-law issues novel and better resolved in state courts |
| Whether existence of independent claims requires retention of jurisdiction | Plaintiffs sought only declaratory relief and disavowed other claims | No independent claim exists to compel federal retention | Because no independent claim, court had discretion to decline jurisdiction |
Key Cases Cited
- Reifer v. Westport Ins. Corp., 751 F.3d 129 (3d Cir. 2014) (articulates non‑exhaustive factors for declining DJA jurisdiction)
- Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942) (DJA confers discretionary jurisdiction)
- Wilton v. Seven Falls Co., 515 U.S. 277 (1995) (DJA discretion reaffirmed)
- In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410 (3d Cir. 1997) (court may consider documents integral to the complaint)
- Rarick v. Federated Serv. Ins. Co., 852 F.3d 223 (3d Cir. 2017) (district court has near‑obligation to exercise jurisdiction when independent claims exist)
- State Auto Ins. Cos. v. Summy, 234 F.3d 131 (3d Cir. 2000) (federal courts should often defer to state courts on unsettled state law)
- Nationwide Mut. Ins. Co. v. Buffetta, 230 F.3d 634 (3d Cir. 2000) (district court in diversity must apply state substantive law)
- Atlantic Mut. Ins. Co. v. Gula, [citation="84 F. App'x 173"] (3d Cir. 2003) (federal courts should hesitate to decide declaratory claims restricted to state law)