COMPLAINT 399 Morse Street NE, Washington, DC 20002, JURY TRIAL DEMANDED Plaintiffs, V

Filed and Attested by the Office of Judicial Records 30 JUL 2020 10:09 am M. BRYANT

Casey M. Preston (Bar No. 86508) COHEN MILSTEIN SELLERS & TOLL PLLC 3 Logan Square 1717 Arch Street, No. 3610 Philadelphia, PA 19103 Telephone: (267) 479-5700 Facsimile: (267) 479-5701 [email protected] Counsel for Plaintiff

[Additional counsel on signature page]

FIRST JUDICIAL DISTRICT OF PENNSYLVANIA COURT OF COMMON PLEAS OF PHILADELPHIA COUNTY CIVIL ACTION TOSCA LLC D/B/A RISTORANTE TOSCA, 555 12th Street NW Washington, DC 20004; SL DC, LLC D/B/A SAN LORENZO, Case No.: 200701865 1316 9th Street NW, Washington, DC 20001; and ITALIANA LLC D/B/A STELLINA PIZZERIA, COMPLAINT 399 Morse Street NE, Washington, DC 20002, JURY TRIAL DEMANDED Plaintiffs, v.

ERIE INSURANCE GROUP 100 Erie Insurance Place, PO Box 1699 Erie, PA 16530,

Defendant.

Case ID: 200701865 NOTICE TO DEFEND

NOTICE AVISO

You have been sued in court. If you Le han demandado a usted en la wish to defend against the claims set forth in corte. Si usted quiere defendersfJe de estas the following pages, you must take action demandas expuestas en las paginas within twenty (20) days after this complaint siguientes, usted tiene veinte (20) dias de and notice are served, by entering a written plazo al partir de la fecha de la demanda y la appearance personally or by attorney and notificacion. Hace falta ascentar una filing in writing with the court your defenses comparencia escrita o en persona o con un or objections to the claims set forth against abogado y entregar a la corte en forma you. You are warned that if you fail to do so escrita sus defensas o sus objeciones a las the case may proceed without you and a demandas en contra de su persona. Sea judgment may be entered against you by the avisado que si usted no se defiende, la corte court without further notice for any money tomara medidas y puede continuar la claimed in the complaint of for any other demanda en contra suya sin previo aviso o claim or relief requested by the plaintiff. notificacion. Ademas, la corte puede decider You may lose money or property or other a favor del demandante y requiere que usted rights important to you. cumpla con todas las provisiones de esta You should take this paper to your demanda. Usted puede perder dinero o sus lawyer at once. If you do not have a lawyer propiedades u otros derechos importantes or cannot afford one, go to or telephone the para usted. office set forth below to find out where you Lleve esta demanda a un abogado can get legal help. immediatamente. Si no tiene abogado o si no tiene el dinero suficiente de pagar tal Philadelphia Bar Association servicio. Vaya en persona o llame por Lawyer Referral and Information Service telefono a la oficina cuya direccion se One Reading Center encuentra escrita abajo para averiguar donde Philadelphia, Pennsylvania 19107 se puede conseguir asistencia legal. Telephone (215) 238-1701 Asociacion De Licenciados De Filadelfia Servicio De Referencia E Informacion Legal 1101 Market St., 11th Piso Filadelfia, Pennsylvania 19107 (215) 238-6333

Case ID: 200701865 Plaintiffs Tosca LLC, doing business as Ristorante Tosca (“Tosca”); SL DC, LLC, doing business as San Lorenzo (“San Lorenzo”); and Italiana LLC, doing business as Stellina

Pizzeria (“Stellina”) (collectively, “Plaintiffs” or “Plaintiff Restaurants”) file suit against Erie

Insurance Group (“Erie” or “Defendant”) and allege as follows.

INTRODUCTION

1. Governments around the world have enacted stringent countermeasures in order to combat the COVID-19 pandemic, requiring the closure of many businesses and restricting almost all public activities.

2. Restaurants, in particular, have suffered immediate and precipitous losses. This impact on restaurants will have a devastating impact on the nation’s economy and social life. As of 2016, Americans spend more than half of their food budget eating outside the home.

According to The Brookings Institution, food preparation and service is the second most common occupation in the United States; waiting tables is the eighth most common. At the start of 2020, there were more than 12 million Americans working at over 600,000 food service and drinking establishments nationwide. Food & Wine reports that approximately 8 million restaurant workers have been laid-off or furloughed since mid-March. Before the COVID-19 pandemic materialized, the National Restaurant Association predicted 2020 sales would be $899 billion. As of July 16, 2020, the Association’s research shows that restaurants lost $145 billion in sales during the first four months of the COVID-19 pandemic. The outlook is dire for the tens of thousands of restaurants that will never reopen.

3. Plaintiffs bought full-spectrum, comprehensive insurance to protect all aspects of its insured business – not just for damage to insured premises and equipment – but also for interruptions in business operations that result in loss of business income. The Plaintiff

Restaurants believed that they had purchased comprehensive coverage that would apply to 3

Case ID: 200701865 business interruptions under circumstances like this, where Plaintiffs has done everything right to protect their businesses and the public. Such coverage is important, if not vital, because profit margins in the restaurant industry are slim and, unlike in the insurance industry, reserve funds tend to be low. Hence, business interruptions are a particular concern of this industry.

4. Erie, from whom Plaintiffs had purchased such insurance, swiftly denied the claims made by the Plaintiff Restaurants. Though its reasons are cursory, the denial appears to be based on an unreasonable reading of its policy, which tracks form policies issued by Defendant on a take-it-or-leave-it basis. Defendant denied the claim despite having pocketed significant premiums for the many policies it has issued to the Plaintiffs over the years. The Plaintiff

Restaurants have been purchasing comprehensive business insurance from Erie for many years; the provisional premiums paid for the applicable Erie policies are: $17,200.00 for the Tosca policy, $14,322.00 for the San Lorenzo policy and $5,276.00 for the Stellina policy.

5. This arbitrary and wrongful denial of insurance benefits leaves the Plaintiff

Restaurants financially insecure and threatens their ongoing survival.

6. Plaintiffs thus bring this action seeking declaratory relief and damages.

PARTIES

7. Plaintiff Tosca LLC, doing business as Ristorante Tosca is a limited liability company organized under the laws of the District of Columbia, with its principal place of business at 1112 F Street NW Washington, DC. 20004.

8. Plaintiff SL DC, LLC, doing business as San Lorenzo is a limited liability company organized under the laws of the District of Columbia, with its principal place of business at 1316 9th Street NW Washington D.C. 20001.

9. Plaintiff Italiana LLC, doing business as Stellina Pizzeria, is a limited liability company organized under the laws of the District of Columbia, with its principal place of 4

Case ID: 200701865 business at 399 Morse Street NE, Washington D.C. 20002.

10. Defendant Erie Insurance Group is a corporation organized under laws of

Pennsylvania with its principal place of business in Erie, Pennsylvania. At all relevant times,

Erie operated and regularly conducted business in Allegheny County, Pennsylvania.

JURISDICTION AND VENUE

11. This Court has subject matter jurisdiction over this action under 42 P.C.S.A. §

931(a), which states “the courts of common pleas shall have unlimited original jurisdiction of all actions and proceedings, including all actions and proceedings heretofore cognizable by law or usage in the courts of common pleas.”

12. This Court has personal jurisdiction over Defendant pursuant to 42 P.S.C.A. §

5301. Defendant is incorporated under the laws of the Commonwealth of Pennsylvania and carries on a continuous and systematic part of its general business within the Commonwealth.

13. Venue is appropriate under Rule 2179. Defendant regularly conducts business in

Philadelphia.

FACTUAL BACKGROUND

A. The Onset of the COVID-19 Pandemic

14. In January 2020 early media reports documented an outbreak of a novel strain of coronavirus – COVID-19 – in Wuhan, China. By late January, it was generally understood in the scientific and public health communities that COVID-19 was spreading through human-to- human transmission and could be transmitted by asymptomatic carriers.

15. On January 30, 2020, reports of the spread of COVID-19 outside China prompted the World Health Organization to declare the COVID-19 outbreak a “Public Health Emergency of International Concern.”

16. On March 11, the World Health Organization declared COVID-19 a global health 5

Case ID: 200701865 pandemic based on existing and projected infection and death rates, as well as concerns about the speed of transmission and ultimate reach of this virus.

17. Public health officials have recognized for decades that non-pharmaceutical interventions (NPIs) can slow and stop the transmission of certain diseases. Among these are screening and testing of potentially infected persons; contact tracing and quarantining infected persons; personal protection and prevention; and social distancing. Social distancing is the maintenance of physical space between people. Social distancing can be limited – e.g., reducing certain types of conduct or activities like hand-shaking – or large-scale – e.g., restricting the movements of the total population.

18. A lack of central planning, shortages of key medical supplies and equipment, and the unfortunate spread of misinformation and disinformation about the risks of COVID-19 has led to widespread confusion, unrest, and uncertainty regarding the likely trajectory of this pandemic and the appropriate counter-measures necessary to mitigate the damage it could potentially cause.

19. Beginning in late February, public health officials began advising various governments around the world that one of the most disruptive NPIs – population-wide social distancing – was needed to stop the transmission of COVID-19. Suddenly densely occupied spaces, heavily traveled spaces, and frequently visited spaces such as schools, offices, public transit, restaurants, and shops were likely to become hot-spots for local transmission of COVID-

19. By mid-March, the public health officials’ advice was being implemented by state and local governments. These governments issued a series of orders (“Public Health Orders”) placing significant limitations on public activities and private gatherings to limit the spread of COVID-

19.

Case ID: 200701865 20. These Public Health Orders were not implemented to prevent the contamination of TFG’s covered premises with coronavirus. They were implemented to lessen the burden on health care services and critical infrastructure in the states, counties and municipalities that implemented them so that these systems would not be overwhelmed. By mid-March, experts and commentators had concluded that, “our hope of stopping the disease in its tracks has ended. Our main goal now is to prevent a huge spike in cases, or ‘flatten the curve.’”1 “Flattening the curve” was a strategy implemented not in response to the virus itself, but rather in response to the limits of the health care system. As explained in an Order issued by Mayor Bowser of Washington, DC when the time Public Health Orders were first issued:

In epidemiology, the concept of slowing a virus’s spread so that fewer people need to seek treatment at any given time is known as “flattening the curve.” The faster and the more sharply the infection curve rises, the more quickly Washington, DC’s health care system will be stressed, to the point that it may become overloaded beyond its capacity to treat severely sick patients. “Flattening the curve” is not expected to greatly reduce the total number of people that will become infected with COVID-19, but those infections will take place over a longer period of time, which will result in a less stressed health care system, and in turn, better patient outcomes. Mayor’s Order 2020-053 at 22 (Mar. 24, 2020) (emphasis added).

B. Public Health Orders Affecting Plaintiffs’ Restaurants

21. The Plaintiff Restaurants operate in the District of Columbia. Beginning in March

2020, the District of Columbia, through the Office of the Mayor Muriel Bowser, issued a series of Public Health Orders. In order to comply with the Public Health Orders, many D. C. businesses, including the Plaintiff Restaurants and the surrounding businesses, were forced to abandon their property and suspend ordinary business activity.

1 Sean Illing, How Bad Could the Coronavirus Get in the US? I Asked an Expert, Vox (Mar. 12, 2020), https://www.vox.com/2020/3/12/21171505/coronavirus-covid-19-outbreak-containment. 2 https://tinyurl.com/yy7v2zky. 7

Case ID: 200701865 22. On March 11, 2020, the District of Columbia, through the Office of the Mayor

Muriel Bowser, issued Orders 2020-045 and 2020-046, which declared a public emergency and a public health emergency in the District of Columbia. These Orders went into effect immediately and were to remain in effect until at least March 26.

23. On March 16, 2020, the District of Columbia, through the Office of the Mayor

Muriel Bowser, issued Order 2020-048. The Order prohibited gatherings of more than fifty people. It also prohibited table seating at any restaurant in the District of Columbia beginning at

10:00 p.m. that night until April 1, 2020 at 6:00 a.m. Order 2020-048 stated that violators would be subject to criminal, civil, and administrative penalties, including summary suspension of licensure. The Order went into effect immediately and was to remain in effect at least through

March 31, 2020.

24. On March 20, 2020, the District of Columbia, through the Office of the Mayor

Muriel Bowser, issued Order 2020-051, which extended the specific prohibition of gatherings of more than fifty persons and on table seating at restaurants and, in addition, specifically prohibited service to standing customers. Order 2020-051 stated that violators would be subject to criminal, civil, and administrative penalties, including summary suspension of licensure. This

Order went into effect immediately and was to remain in effect at least through April 24, 2020.

25. On March 24, 2020, the District of Columbia, through the Office of the Mayor

Muriel Bowser, issued Order 2020-053, which prohibited large gatherings of ten or more people, mandated closure of all on-site operations of non-essential businesses, and specifically limited restaurants to delivery, carry out, and “grab and go” service only. Order 2020-053 stated that violators would be subject to criminal, civil, and administrative penalties, including summary suspension or revocation of licensure. This Order went into effect at 10:00 p.m. on March 25,

Case ID: 200701865 2020 and was set to remain in effect at least through April 24, 2020.

26. On March 30, 2020, the District of Columbia, through the Office of the Mayor

Muriel Bowser, issued Order 2020-054, a Stay-At-Home Order, ordering all individuals living in

Washington, DC, to stay at their place of residence, except to obtain food and essential household goods or to engage in Essential Business Activities. The Stay-At-Home Order stated that violators would be subject to criminal, civil, and administrative penalties, including summary suspension or revocation of licensure. This Order went into effect at 12:01 a.m. on

April 1, 2020 and was set to remain in effect through at least April 24, 2020.

27. On April 8, 2020, the District of Columbia, through the Office of the Mayor

Muriel Bowser, issued Order 2020-058, which mandated that all restaurants mark six foot distances outside and within their location to manage lines of customers and adopt social distancing requirements similar to those imposed on grocery stores and other retail food sellers, such as maintaining a minimum distance of six feet from each person who is not part of the same household. This Order went into effect at 12:01 a.m. on April 9, 2020 and was set to remain in effect at least through April 24, 2020.

28. On April 15, 2020, the District of Columbia, through the Office of the Mayor

Muriel Bowser, issued Order 2020-063, which extended Order 2020-053 and the Stay-At-Home

Order (Order 2020-054) until May 15, 2020. Order 2020-063 also extended the public emergency and public health emergency in the District of Columbia until May 15, 2020. Order

2020-063 stated that violators would be subject to criminal, civil, and administrative penalties, including summary suspension or revocation of licensure, and specified that individuals “should call 311 to report any suspected violations of this or other Mayor’s Orders related to the COVID-

19 public health emergency.” This Order went into effect at 12:01 a.m. on April 17, 2020 and

Case ID: 200701865 was set to remain in effect at least through May 15, 2020.

29. On May 13, 2020, the District of Columbia, through the Office of the Mayor

Muriel Bowser, issued Order 2020-066, which extended the public emergency and public health emergency (declared by Orders 2020-045 and 2020-046, respectively) and all previous COVID-

19-related orders through June 8, 2020. This Order also required masks to be worn by employees, independent contractors, customers, and visitors of essential businesses and others, and it continued to prohibit large gatherings of more than ten individuals. Order 2020-066 stated that violators would be subject to criminal, civil, and administrative penalties, including summary suspension or revocation of licensure, and instructed individuals to call 311 to report violations. This Order went into effect at 12:01 a.m. on May 16, 2020 and was set to remain in effect at least through June 8, 2020.

30. On May 27, 2020, the District of Columbia, through the Office of the Mayor

Muriel Bowser, issued Order 2020-067, which declared the District to be in Phase One of reopening and lifted the Stay-At-Home Order (Order 2020-054). The Order continued to require mask wearing and social distancing and to prohibit large gatherings of more than ten individuals.

It allowed restaurants and other licensed food establishments to open for outdoor dining, subject to conditions including that tables seat no more than six individuals and that tables be at least six feet apart. Order 2020-067 extended the public emergency and public health emergency

(declared by Orders 2020-045 and 2020-046, respectively) through July 24, 2020, and extended all previous COVID-19-related orders unless otherwise modified or superseded. The Order stated that violators would be subject to criminal, civil, and administrative penalties, including summary suspension or revocation of licensure, and instructed individuals to call 311 to report violations. This Order went into effect at 12:01 a.m. on May 29, 2020.

Case ID: 200701865 31. On June 19, 2020, the District of Columbia, through the Office of the Mayor

Muriel Bowser, issued Order 2020-075, which declared the District to be in Phase Two of reopening. The Order continued to require mask wearing and social distancing. It replaced the prohibition on large gatherings of more than ten individuals with a prohibition on large gatherings of more than fifty individuals. The Order permitted licensed food establishments to open for indoor dining, subject to conditions including that the establishment remain at or below

50% of occupancy, that tables seat no more than six individuals or allow for six feet between groups, that tables be at least six feet apart, that bar seating be prohibited if a bartender is working there, that indoor queuing is not allowed, and that patrons queuing outdoors be separated by at least six feet. Order 2020-075 stated that violators would be subject to criminal, civil, and administrative penalties, including summary suspension or revocation of licensure, and instructed individuals to call 311 to report violations. This Order went into effect at 12:01 a.m. on June 22, 2020 and remains effective for the duration of public health emergency.

C. Plaintiffs’ Experiences

32. Plaintiff Tosca LLC operates Ristorante Tosca, which is located at 1112 F Street

NW in Washington, DC.

33. Ristorante Tosca is a Northern-Italian-inspired restaurant in the Penn Quarter neighborhood of Washington. Its Executive Chef Riccardo Rinaldi takes inspiration from his native city of Montecatini Terme in Tuscany, Italy. Chef Rinaldi joined Tosca as a line cook in

2005 and worked his way through every station in the restaurant until being named Executive

Chef. He briefly left Tosca in 2015 to work at the two-Michelin star restaurant Minibar as a sous chef, where he mastered modern culinary techniques and developed strong relationships with some of the best local farmers in the region. Chef Rinaldi returned to Tosca in 2017 as the

Case ID: 200701865 Executive Chef.

34. Tosca has been incredibly successful. It has been recognized by the Michelin

Guide, ranked the #7 restaurant in the city by Zagat, and called “virtually unchallenged as the premier destination for Northern Italian refinement” by Washingtonian magazine. It has been named to Gayot’s Best Chef's Tables in Washington DC Area and to Gayot’s Best Italian

Restaurants in Washington DC Area.

35. Plaintiff SL DC LLC operates San Lorenzo, which is located at 1316 9th Street

NW.

36. San Lorenzo is an Italian restaurant specializing in fresh ingredients from the

Tuscan region, where the owner and Executive Chef Massimo Fabbri grew up. The restaurant pays homage to Massimo’s hometown of Monsummano Terme, 30 miles northwest of Florence,

Italy. Open since 2018, San Lorenzo was named to the 2019 and 2020 Washingtonian’s list of

100 Very Best Restaurants as well as the 2020 Michelin Guide’s Best Italian Restaurants in

Washington, D.C.

37. Italiana, LLC operates Stellina Pizzeria, which is located at 399 Morse Street NE.

38. Stellina is an Italian restaurant and pizzeria that fuses southern Italian tradition with modern, urban style. It is owned and operated by longtime friends, restaurateurs, and native

Italians Antonio Matarazzo and chef Matteo Venini, and only opened its doors in 2019. Since then, it has received numerous accolades, including being named to the Washingtonian’s 2020 list of the 100 Very Best Restaurants, the Washington Post’s D.C. Area’s 10 Best Pizza List, the

Washington Post’s list of 10 Best Casual Dining Restaurants for 2019, Thrillist’s list of D.C.’s

Best New Restaurants of 2019 and was awarded the 2020 Michelin Guide’s Bib Gourmand award for restaurants serving “exceptionally good food at moderate prices,” just to name a few.

Case ID: 200701865 39. All three Plaintiff Restaurants are covered under substantially similar Erie

Ultrapack Plus insurance policies.

40. The Plaintiff Restaurants were subject to the Public Health Orders reproduced above, and Plaintiffs have complied with all of the Public Health Orders. As a result of these

Public Health Orders, the Plaintiff Restaurants were forced to either close or seriously curtail their operations. Tosca remains closed, while San Lorenzo and Stellina are open for limited hours serving takeout and delivery.

41. These business interruptions have caused direct loss of the Plaintiffs’ insured property in that the restaurants and their equipment, furnishings, and other business personal property have been made unavailable, inoperable, useless and uninhabitable, and their functionality has been severely reduced if not eliminated. The impact of the Public Health Orders is felt not simply in their direct application to the Plaintiffs’ operations, but also in their application to the businesses and properties surrounding the Plaintiff Restaurants in the District of Columbia. As a result of these losses, business income for San Lorenzo and Stellina has also plummeted, and for Tosca has been entirely eliminated.

42. Although Tosca is still closed and generating no business income, it has kept its

51 furloughed employees on payroll, and plans to continue the furlough until at least September.

Tosca has done this despite being denied the benefit of insurance coverage it had purchased to cover things like payroll and rent in just such a circumstance.

43. San Lorenzo employed around 27 people who live in D.C., Maryland and

Virginia, just before the Public Health Orders resulted in its closure. Almost all of these employees had to be laid off initially, and although San Lorenzo desperately wants to hire everyone that was laid off back to work at the restaurant, it is currently is only able to conduct

Case ID: 200701865 enough business to support 12 employees. The income protection coverage San Lorenzo purchased from Erie covers normal payroll expenses and tips. It also covers San Lorenzo’s monthly rent.

44. Stellina employed around 25 people who live in D.C., Maryland and Virgina, just before the Public Health Orders resulted in its closure. Almost all of these employees had to be laid off initially, and although Stellina desperately wants to hire everyone that was laid off back to work at the restaurant, is currently is only able to conduct enough business to support 15 employees. The income protection coverage Stellina purchased from Erie covers normal payroll expenses and tips. It also covers Stellina’s monthly rent.

45. Even as some jurisdictions have begun to rescind or revise their Public Health

Orders to allow for more business to be conducted, Plaintiffs are likely to experience residual effects, given that the pandemic spread still remains uncontrolled and densely occupied public spaces remain unsafe as places where the risk of transmission remains high.

46. Tosca purchased a written comprehensive business insurance policy called an

“Ultrapack Plus” from Erie, with a policy period of August 9, 2019 to August 9, 2020, attached to this Complaint as Exhibit A (the “Tosca Policy”).

47. San Lorenzo purchased a written comprehensive business insurance policy called an “Ultrapack Plus” from Erie, with a policy period of December 1, 2019 to December 1, 2020, attached to this Complaint as Exhibit B (the “San Lorenzo Policy”).

48. Stellina purchased a written comprehensive business insurance policy called an

“Ultrapack Plus” from Erie, with a policy period of February 20, 2020 to February 20, 2021, attached to this Complaint as Exhibit C (the “Stellina Policy”).

49. The Plaintiffs purchased these insurance policies (collectively, the policies

Case ID: 200701865 descried in paragraphs 45 to 47 are the “Erie Policies”) to protect themselves against all risks that they might face, including those risks that might cause interruptions to the covered restaurant businesses and resulting lost business income.

50. The owners and operators of the Plaintiff Restaurants are comprised of food and beverage professionals who excel at operating restaurants; they are not risk assessment professionals aware of every possible catastrophe that might occur which could cause their restaurants to close. In their dealings with Erie, the Plaintiff Restaurants were consumers, and what they cared about was being covered by insurance under any circumstances that might cause their restaurants to close. Erie, on the other hand, is in the business of predicting catastrophes and has been aware of the potential for a COVID-19-type pandemic for at least a decade, if not longer.

51. There are many extensions of coverage in the Erie Policies, including income protection and extra expense coverage, as well as coverage for contingent business interruption.

52. Once triggered, the Erie Policies pay actual losses sustained for the income protection and extra expense coverage up to eighteen (18) months, with no dollar limit. The Erie

Policies also provide “civil authority” coverage if all qualifying conditions are met.

53. The Erie Policies were not individually negotiated. The Policies’ substantive terms were set unilaterally by Defendant, were not subject to individual negotiation by the

Plaintiffs, and were presented to the Plaintiffs on a “take it or leave it” basis, despite the hefty premiums charged. Subsequent amendments to the original terms – called endorsements – were also unilaterally imposed on the Plaintiffs.

54. The Plaintiffs were never informed by Defendant that for the income protection and extra expense coverage to apply, there would need to be visible physical damage to the

Case ID: 200701865 insured property. The Erie Policies also do not say this anywhere.

55. To date, Plaintiffs have paid all of the premiums required by Defendant to keep the Erie Policies in full force, and have met all applicable conditions precedent in order to receive payment under the Erie Policies and to recover the lost business income and extra expenses that have resulted from the Public Health Orders closing and/or severely restricting the

Plaintiff Restaurants.

56. On April 10, 2020, a representative of Tosca reported a loss of business income under the Tosca Policy.

57. On April 13, 2020, a representative of Tosca and Erie had a telephone conversation during which Tosca explained that it was closed due to the Public Health Orders.

58. One week after the claim was reported, on April 17, 2020, Erie sent a letter to

Tosca denying its claim for coverage. The letter stated that “Income Protection does not apply because there was no partial or total ‘interruption of business’ due to direct physical ‘loss’ or damage to Covered Property on the premises from a peril insured against.” It also stated that

“Civil Authority coverage does not apply because a Civil Authority did not order that the business be closed due to damage to property within one mile of the premises described in the

‘Declarations,’ caused by a peril insured against.” The letter also listed six (6) exclusions that

“apply to [the reported] loss”: (1) increase of loss caused by ordinance or law (2) consequential damages (3) Delay/loss of market (4) “extra expense” caused by the lapse of license, lease or contract beyond the “interruption of business” (5) increase of loss resulting from ordinance or law regulating environmental damage and (6) income protection specifically insured in whole or in part by this or any other insurance.

59. On April 23, 2020, a representative of San Lorenzo reported a loss of business

Case ID: 200701865 income under the San Lorenzo Policy.

60. On April 24, 2020, a representative of San Lorenzo and Erie had a telephone conversation during which San Lorenzo explained that it was closed due to the Public Health

Orders.

61. Less than one week after the claim was reported, on April 29, 2020, Erie sent a letter to San Lorenzo denying its claim for coverage. The letter stated that “Income Protection does not apply because there was no partial or total ‘interruption of business’ due to direct physical ‘loss’ or damage to Covered Property on the premises from a peril insured against.” It also stated that “Civil Authority coverage does not apply because a Civil Authority did not order that the business be closed due to damage to property within one mile of the premises described in the ‘Declarations,’ caused by a peril insured against.” The letter also listed six (6) exclusions that “apply to [the reported] loss”: (1) increase of loss caused by ordinance or law (2) consequential damages (3) Delay/loss of market (4) “extra expense” caused by the lapse of license, lease or contract beyond the “interruption of business” (5) increase of loss resulting from ordinance or law regulating environmental damage and (6) income protection specifically insured in whole or in part by this or any other insurance.

62. On May 21, 2020, a representative of Stellina reported a loss of business income under the Stellina Policy.

63. On May 27, 2020, a representative of Stellina and Erie had a telephone conversation during which Stellina explained that it was closed due to the Public Health Orders.

64. Shortly after the phone conversation, on June 8, 2020, Erie sent a letter to Stellina denying its claim for coverage. The letter stated that “Income Protection does not apply because there was no partial or total ‘interruption of business’ due to direct physical ‘loss’ or damage to

Case ID: 200701865 Covered Property on the premises from a peril insured against.” It also stated that “Civil

Authority coverage does not apply because a Civil Authority did not order that the business be closed due to damage to property within one mile of the premises described in the ‘Declarations,’ caused by a peril insured against.” The letter also listed six (6) exclusions that “apply to [the reported] loss”: (1) increase of loss caused by ordinance or law (2) consequential damages (3)

Delay/loss of market (4) “extra expense” caused by the lapse of license, lease or contract beyond the “interruption of business” (5) increase of loss resulting from ordinance or law regulating environmental damage and (6) income protection specifically insured in whole or in part by this or any other insurance. Erie’s denial letters are form letters sent in response to income protection claims arising from Public Health Orders.

65. Erie’s denials are contrary to the terms and conditions of the Erie Policies and applicable law, which give effect to plain language, construe ambiguity in favor of coverage, and narrowly construe exclusions, the applicability of which insurers have the burden of proving.

66. The Plaintiff Restaurants wwere ordered to suspend/severely curtail business due to the various Public Health Orders, which are covered causes of loss as defined in the Erie

Policies. As a result of the suspensions, Plaintiffs have suffered the direct physical loss of the insured real and personal property. As such, the Erie Policies’ income protection coverage for losses to business income and extra expenses are triggered. The Erie Policies coverages for contingent business income and civil authority are also likely triggered.

67. Plaintiffs have suffered and will continue to suffer damages due to Erie’s wrongful denial of insurance coverage, which Plaintiffs acquired to sustain the Plaintiff

Restaurants and protect their continued viability in circumstances such as these.

Case ID: 200701865 CAUSES OF ACTION

Count I: Declaratory Judgment

68. Plaintiffs re-alleges the paragraphs above as if fully set forth herein.

69. Plaintiffs purchased the Erie Policies which provides comprehensive business insurance from Defendant.

70. Plaintiffs met all or substantially all of their contractual obligations, including paying all the premiums required by Defendant.

71. The Erie Policies includes provisions that provide coverage for the direct physical loss of use of the insured premises and equipment as well as income protection coverage for the actual loss of business income and extra expenses sustained during the suspension of operations as a result of direct physical loss, including loss of use.

72. Beginning in March 2020, state and local governments issued a series of Public

Health Orders that severely restricted access to the Plaintiffs’ business premises.

73. As a result of these Public Health Orders, Plaintiffs lost the use of their business property and lost substantial business income as a result of the loss of the use of its business property.

74. These losses are insured losses under several provisions of the Erie Policies, including provisions covering direct loss of property, income protection for lost business income and extra expense, and the coverage extensions for contingent business income and civil authority.

75. There are no applicable, enforceable exclusions or definitions in the Erie Policies that preclude coverage for the Plaintiffs’ losses.

76. Wherefore, Plaintiffs seek a declaration that its business income losses are covered under the income protection coverage of the Erie Policies and are not precluded by 19

Case ID: 200701865 exclusions or other limitations in the Erie Policies.

Count II: Breach of Contract

77. Plaintiffs re-alleges the paragraphs above as if fully set forth herein.

78. Plaintiffs purchased the Erie Policies from Defendant to ensure against all risks

(unless specifically excluded) the restaurant businesses might face. The Erie Policies are binding contracts that are supposed to provide the Plaintiffs with comprehensive business insurance under its terms and conditions.

79. Plaintiffs met all or substantially all of their contractual obligations, including by paying all the premiums required by Defendant.

80. Beginning in March 2020, state and local governments issued a series of Public

Health Orders that severely restricted access to the Plaintiffs’ business premises.

81. As a result of these Public Health Orders, Plaintiffs lost the use of their business property and lost substantial business income as a result of the loss of the use of its business property.

82. These losses are insured losses under several provisions of the Plaintiffs’ Erie

Policies, including provisions covering direct loss of property, income protection for lost business income and extra expense, and the coverage extensions for contingent business income and civil authority. There are no applicable, enforceable exclusions in the Erie Policies that preclude coverage for the Plaintiffs’ losses.

83. Defendant breached the contracts by denying comprehensive business insurance coverage to Plaintiffs.

84. As a direct and proximate result of Erie’s denial of comprehensive business insurance coverage under the Erie Policies, the Plaintiffs suffered damages.

Case ID: 200701865 85. Wherefore, Plaintiffs seek a judgment that Defendant has breached its contract with Plaintiffs and corresponding damages for that breach.

Count III: Breach of the Implied Covenant of Good Faith and Fair Dealing

86. Plaintiffs re-alleges the paragraphs above as if fully set forth herein.

87. Plaintiffs contracted with Defendant to provide them with Erie Policies containing comprehensive business insurance to ensure against all risks (unless specifically excluded) a business might face.

88. The contracts were subject to implied covenants of good faith and fair dealing that all parties would act in good faith and with reasonable efforts to perform their contractual duties

– both explicit and fairly implied – and not to impair the rights of other parties to receive the rights, benefits, and reasonable expectations under the contract. These included the covenants that Erie would act fairly and in good faith in carrying out its contractual obligations to provide the Plaintiffs with comprehensive business insurance.

89. Defendant breached the implied covenant of good faith and fair dealing by:

a. selling the Plaintiffs policies that appears to provide liberal coverage for

loss of property and lost business income, knowing that it would interpret

poorly defined terms, undefined terms, and ambiguously written

exclusions to deny coverage under circumstances foreseen by Defendant

but not Plaintiffs;

b. denying coverage for loss of property and income protection by invoking

undefined, ambiguous, and contradictory terms that are inconsistent with

the plain terms and purpose of the Erie Policies; and

c. denying Plaintiffs’ claims without adequate investigation or inquiry,

Case ID: 200701865 arbitrarily and capriciously, and/or with knowledge that the denials were

unreasonable under the Erie Policies.

90. Plaintiffs met all or substantially all of their contractual obligations, including by paying all the premiums required by Defendant.

91. Defendant’s failure to act in good faith in providing comprehensive business insurance coverage to Plaintiffs denied the Plaintiffs the full benefit of the bargain each made with Erie.

92. Accordingly, Plaintiffs have been injured as a result of Defendant’s breach of the covenant of good faith and fair dealing and are entitled to damages in an amount to be proven at trial.

93. Wherefore, Plaintiffs seek a judgment that Defendant has breached its covenant of good faith and fair dealing implied in its contracts with Plaintiffs and corresponding damages for that breach.

PRAYER FOR RELIEF

Plaintiffs requests the following relief:

a. A declaration that Plaintiffs’ losses are covered under Defendant’s comprehensive

business insurance policies;

b. Damages;

c. Attorneys’ fees and costs; and

d. Such other relief as this Court deems just and proper.

JURY TRIAL DEMAND

Pursuant to Rule 1007.1, Plaintiff demands a trial by jury on all issues so triable.

Case ID: 200701865 Dated: July 30, 2020 Respectfully submitted,

/s/ Casey M. Preston Casey M. Preston (Bar No. 86508) COHEN MILSTEIN SELLERS & TOLL PLLC 3 Logan Square 1717 Arch Street, No. 3610 Philadelphia, PA 19103 Telephone: (267) 479-5700 Facsimile: (267) 479-5701 [email protected] Andrew N. Friedman (pro hac vice forthcoming) Geoffrey Graber (pro hac vice forthcoming) Victoria S. Nugent (pro hac vice forthcoming) Julie Selesnick (pro hac vice forthcoming) Karina G. Puttieva (pro hac vice forthcoming) Paul Stephan (pro hac vice forthcoming) COHEN MILSTEIN SELLERS & TOLL PLLC 1100 New York Ave. NW, Fifth Floor Washington, DC 20005 Telephone: (202) 408-4600 Facsimile: (202) 408-4699 [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

Eric Kafka (pro hac vice forthcoming) COHEN MILSTEIN SELLERS & TOLL PLLC 88 Pine Street, Fourteenth Floor New York, NY 10005 Telephone: (212) 838-7797 Facsimile: (212) 838-7745 [email protected]

Eric H. Gibbs (pro hac vice forthcoming) GIBBS LAW GROUP LLP 505 14th Street, Suite 1110 Oakland, CA 94612 Telephone: (510) 350-9700 Facsimile: (510) 350-9701 [email protected] Attorneys for Plaintiff

Case ID: 200701865 VERIFICATION

I, the undersigned, state that the facts set forth in the Complaint are true and correct to the best of my knowledge, information and belief. I understand that the statements are made subject to the penalties of 18 Pa.C.S.A. § 4904 relating to unsworn falsification to authorities.

/s/ Mark B. Sandground, Jr. Mark B. Sandground, Jr. Tosca LLC D/B/A Ristorante Tosca

/s/ Massimo Fabri Massimo Fabri SL DC, LLC D/B/A San Lorenzo

/s/ Matteo Venini Matteo Venini Italiana LLC D/B/A Stellina Pizzeria

Case ID: 200701865 CERTIFICATE OF SERVICE

I hereby certify that on July 30, 2020, I caused the foregoing document, with all exhibits, to be served on Defendant Erie Insurance Group by mail at the following addresses:

Erie Insurance Group 100 Erie Insurance Place, PO Box 1699 Erie, PA 16530

Erie Insurance Group 18544 Breeze Hill Drive Hagerstown, MD 21741

Erie Insurance Group 1400 North Providence Road Suite #216 Rose Tree Corporate Center Media, PA 19063-2094

Dated: July 30, 2020 /s/ Casey M. Preston Casey M. Preston (Bar No. 86508) COHEN MILSTEIN SELLERS & TOLL PLLC 3 Logan Square 1717 Arch Street, No. 3610 Philadelphia, PA 19103 Telephone: (267) 479-5700 Facsimile: (267) 479-5701 [email protected]

Attorney for Plaintiff

Case ID: 200701865