Amount in Controversy

Boomerjack’s Grill & Bar v. The Members of the Owners First Property Association, docket No.: 3:21-CV-01022-X (U.S. Dist. Ct., N.D. Tex. Feb. 3, 2022)

On February 3, 2022, Judge Brantley Starr of the U.S. District Court for the Northern District of Texas denied a renewed motion to remand filed by the plaintiff, Boomerjack’s Grill & Bar, ending Plaintiff’s prolonged attempt to avoid litigating this COVID-19 insurance coverage case in federal court. Shortly after the court rejected the remand motion, the Plaintiff voluntarily dismissed its lawsuit with prejudice.

Boomerjack’s operates a chain of 17 sports bars in the Dallas/Fort Worth area. It filed suit against its first-party property insurers in Texas state court on March 23, 2021 to recover for alleged lost revenues during the COVID-19 pandemic. Boomerjack’s contended that various COVID-related governmental orders had compelled it to reduce or eliminate its indoor dining, causing lost income that it contended should be covered under the subject policies. The insurers had denied Boomerjack’s claim, including on the basis that neither the governmental orders nor the alleged presence of the coronavirus at the restaurant locations represented “direct physical loss or damage” to Boomerjack’s property, as the policies required.

The insurers removed the case to federal court, which triggered a nine-month battle over where the case would be litigated. The importance of the forum became clear as the months went on, during which both the United States Court of Appeals for the Fifth Circuit, applying Texas law, and the Northern District of Texas consistently ruled in favor of insurers on these same issues, while the decisions of Texas’ state courts were mixed.

After its initial motion to remand the case to state court was denied without prejudice, Boomerjack’s filed a renewed remand motion on December 20, 2021. Boomerjack’s argued, among other things, that the insurers had not established the amount-in-controversy required for federal jurisdiction, and also that federal courts in Texas should abstain from ruling on COVID-19 insurance cases in deference to Texas’ state courts.

To resolve the amount-in-controversy issue, the Court needed to determine how much Boomerjack’s was claiming in damages. Because there was no dollar amount set forth in the petition, the Court looked to the limit of liability of the insurance policies at issue. Boomerjack’s argued that the policy limit for its claim was $5 million, but it had represented to the court in an earlier pleading that it was entitled to a policy limit of $500 million. Moreover, Boomerjack’s claimed that its losses were almost $1 million per week for at least a year. The Court therefore calculated the demand to be greater than $50 million. “No matter how you slice it,” the court concluded, the amount-in-controversy was greater than $75,000.

The Court also refused to abstain from deciding the case. The insurers had pointed out that more than a dozen federal appellate and district court decisions applying Texas law had been handed down on these same COVID-19 insurance issues. The Court concluded that none of the factors that would require abstention existed.

The motion to remand was denied by Order dated February 3, 2022; a few days later, Boomerjack’s voluntarily dismissed the action with prejudice.

The majority of the insurers were represented by Mound Cotton partner Wayne R. Glaubinger and of counsel Scott J. Sheldon.

The Order denying the motion to remand can be read here.

The Stipulation for Dismissal can be read here.

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