A Belcamp company denied insurance for lost business during the pandemic has lost its bid for a U.S. Supreme Court order requiring the federal court considering the business’s appeal to ask Maryland’s top court for its interpretation of the state’s insurance law before ruling.
The justices denied without comment last week Bel Air Auto Auction Inc.’s request for the order. In seeking the order, Bel Air stated the 4th U.S. Circuit Court of Appeals improperly denied the company’s request that it ask the Maryland Court of Appeals to resolve outstanding state law issues critical to Bel Air’s claim that its lost business was covered under its policy with Great Northern Insurance Co.
Bel Air stated in papers filed with the Supreme Court last month that it should exercise its supervisory authority over lower federal courts and direct the 4th Circuit to ask the Maryland high court to rule on the applicability of state law to policy provisions related to lost business following a gubernatorial order that companies limit customer access due to COVID-19.
Great Northern, whose denial of coverage was upheld by the U.S. District Court in Baltimore, had waived its right to respond to Bel Air’s request for Supreme Court review.
The case was docketed at the Supreme Court as Bel Air Auto Auction Inc. v. Great Northern Insurance Co., No. 21-694.
Following the Supreme Court’s denial, the case has returned to the 4th Circuit for its review of U.S. District Judge Richard D. Bennett’s April decision that the business-interruption provision of Great Northern’s insurance coverage for Bel Air did not apply to business lost following Gov. Larry Hogan’s announcement in March 2020 of a state of emergency to stanch the pandemic.
Hogan ended the state of emergency last summer.
Bennett issued his decision after concluding he had no need to accept Bel Air’s request that he ask the Maryland Court of Appeals for its interpretation of the state’s insurance
The case involved a straightforward application of “basic principles of Maryland contract law” that did not require a certified question to the state’s high court, Bennett ruled.
“Quite simply, this court is unpersuaded that the COVID-19 virus in some way physically altered Bel Air’s covered properties or the surrounding areas in a manner that triggers coverage under the plain language of the policy,” Bennett added. “A mere loss of property is not ‘physical damage’ within the meaning of Maryland law.”
Bel Air appealed to the 4th Circuit, which rejected the company’s request that it ask the state’s top court whether property loss and access must be total to be covered under Maryland insurance law pertaining to policy interpretation.
In its ill-fated request to the Supreme Court, Bel Air stated that an order requiring the 4th Circuit to seek answers from the Court of Appeals is necessary to provide uniformity for Maryland litigants in insurance-related litigation in federal and state courts.
“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,” wrote Bel Air’s attorney, Lawrence J. Gebhardt, of Gebhardt & Smith LLP in Baltimore.
Gebhardt did not immediately return a telephone message Monday seeking comment on the case.
Bel Air, which holds a weekly car auction, sued Great Northern in Harford County Circuit Court in August 2020 seeking a declaratory judgment that the insurance policy’s business-interruption provision covered Bel Air’s lost business due to Hogan’s order.
Bel Air said its losses came from cancellation of its live in-person auctions and the closure of its on-site restaurant during the governor’s stay-at-home and safer-at-home orders.
New Jersey-based Great Northern moved the case to federal court in October 2020, citing its diversity in citizenship with Maryland-based Bel Air and an amount in controversy exceeding $75,000.
Great Northern argued in U.S. District Court that its policy coverage did not apply because the pandemic did not result in physical loss or damage to Bel Air’s property and the emergency order did not prohibit all access to the property, as company employees were permitted to work.
The case is docketed in the 4th Circuit as Bel Air Auto Auction Inc. v. Great Northern Insurance Co., No. 21-1493.