Dianoias Eatery LLC v. Motorists Mutual Insurance Co

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________

No. 20-2954

_____________

DIANOIA’S EATERY, LLC, doing business as DIANOIA’S
and PIZZERIA DAVIDE

v.

MOTORISTS MUTUAL INSURANCE COMPANY,
Appellant
_______________

On Appeal from the United States District Court
for the Western District of Pennsylvania
No. 2:20-cv-00787
District Judge: Hon. Nora B. Fischer
_______________

No. 20-2958
_____________

UMAMI PITTSBURGH, LLC d/b/a Umami

v.
MOTORISTS COMMERCIAL MUTUAL INSURANCE
COMPANY,
Appellant
_______________

On Appeal from the United States District Court
for the Western District of Pennsylvania
No. 2:20-cv-00999
District Judge: Hon. David S. Cercone
_____________

No. 20-3122
_____________

MARK DANIEL HOSPITALITY LLC, doing business as
INC

v.

AMGUARD INSURANCE COMPANY,
Appellant
_______________

On Appeal from the United States District Court
for the District of New Jersey
No. 3:20-cv-06772
District Judge: Hon. Freda L. Wolfson
_______________

Argued April 28, 2021

Before: SMITH, Chief Judge, PHIPPS, and ROTH,
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 Circuit Judges.

(Filed: August 18, 2021)
_______________

Timothy A. Carroll
CLYDE & CO US LLP
2000 Campus Drive
Suite 300
Florham Park, NJ 07932

John R. Gerstein [ARGUED]
Patrick F. Hofer
CLYDE & CO US LLP
1775 Pennsylvania Avenue NW
Suite 400
Washington, DC 20006

Robert E. Dapper, Jr.
Matthew A. Meyers
Taylor M. Davis
BURNS WHITE
48 26th Street
Burns White Center
Pittsburgh, PA 15222
Counsel for Appellants Motorists Mutual Insurance
Company, Motorists Commercial Mutual Insurance
Company

Daniel B. Feder [ARGUED]
Bryce L. Friedman
Michael J. Garvey
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SIMPSON THACHER & BARTLETT LLP
425 Lexington Avenue
New York, NY 10017

Susan M. Leming
BROWN & CONNERY, LLP
360 Haddon Avenue
P.O. Box 539
Westmont, NJ 08108
Counsel for Appellant AmGUARD Insurance Company

Scott B. Cooper
SCHMIDT KRAMER, P.C.
209 State Street
Harrisburg, PA 17101

John P. Goodrich
JACK GOODRICH & ASSOCIATES, PC
429 Fourth Avenue
Suite 900
Pittsburgh, PA 15219

James C. Haggerty [ARGUED]
HAGGERTY, GOLDBERG, SCHLEIFER, & KUPERSMITH, P.C.
1835 Market Street
Suite 2700
Philadelphia, PA 19103

Jonathan Shub
SHUB LAW FIRM, LLC
134 Kings Highway East
2nd Floor
-4-
Haddonfield, NJ 08033
Counsel for Appellees DiAnoia’s Eatery, LLC, Umami
Pittsburgh, LLC

Ralph P. Ferrara [ARGUED]
Kevin J. Kotch
FERRARA LAW GROUP, P.C.
1 Holtec Drive
Suite G102
Marlton, NJ 07728
Counsel for Appellee Mark Daniel Hospitality LLC
_______________

OPINION OF THE COURT
_______________

SMITH, Chief Judge.

The COVID-19 pandemic has had a devastating impact on
the restaurant industry. Since at least March 2020, the risk of
virus transmission has discouraged a significant number of
customers from patronizing restaurants. And in response to the
pandemic, state and local government officials have issued
public health orders restricting how restaurants operate by,
among other things, restricting their hours of operation,
imposing strict occupancy limits, and even prohibiting in-
person dining. Consequently, many restaurants have suffered
a substantial decrease in business with resulting lost income.

The three Restaurants in these consolidated appeals each
brought its own action in state court seeking a declaration that
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its respective Insurer was obligated to provide coverage for
COVID-19-related losses under an insurance policy. Each
Insurer removed its case to federal court invoking diversity
jurisdiction. Then, each District Court exercised its discretion
under the Declaratory Judgment Act (“DJA”), 28 U.S.C.
§§ 2201–02, to abstain from hearing the case and ordered the
matter be remanded to state court. It is these exercises of
discretion under the DJA that lie at the heart of the three
appeals.

We conclude that the District Courts erred in weighing
factors relevant to the exercise of discretion under the DJA, and
therefore will vacate the removal orders and remand for
renewed consideration of all relevant factors.

I. LEGAL BACKGROUND

Generally, “federal courts have a strict duty to exercise the
jurisdiction that is conferred upon them by Congress.”
Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996);
see also Colo. River Water Conservation Dist. v. United States,
424 U.S. 800, 817 (1976) (federal courts have “virtually
unflagging obligation . . . to exercise the jurisdiction given
them”). Declaratory judgment actions implicate an exception
to this rule. See Reifer v. Westport Ins. Corp., 751 F.3d 129,
134–35 (3d Cir. 2014). The DJA provides that “[i]n a case of
actual controversy within its jurisdiction, . . . any court of the
United States, . . . may declare the rights and other legal
relations of any interested party seeking such declaration,
whether or not further relief is or could be sought.” 28 U.S.C.
§ 2201(a) (emphasis added). The Supreme Court has long held
that the DJA’s “textual commitment to discretion”—i.e.,
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“may”—“confer[s] . . . unique and substantial discretion” upon
district courts to decide whether to exercise jurisdiction in
declaratory judgment actions. Wilton v. Seven Falls Co., 515
U.S. 277, 286–87 (1995); see also Reifer, 751 F.3d at 139. In
other words, a district court may abstain from hearing a
declaratory judgment action that is properly within the court’s
subject matter jurisdiction.

However, a district court’s discretion under the DJA is not
absolute. It is “bounded and reviewable.” Reifer, 751 F.3d at
140 (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491
(1942); Wilton, 515 U.S. 277)). Over the years, we have
articulated several factors that district courts should consider
when exercising discretion under the DJA. Id. In our most
comprehensive discussion of these factors, Reifer, we began by
noting that the “existence or non-existence of pending parallel
state proceedings [to the declaratory judgment action],” while
not dispositive, is a factor that “militates significantly” in favor
of either declining or exercising jurisdiction, respectively. Id.
at 144–45. We then enumerated eight factors that a district
court should consider “to the extent they are relevant”:

(1) the likelihood that a federal court declaration
will resolve the uncertainty of obligation which
gave rise to the controversy;

(2) the convenience of the parties;

(3) the public interest in settlement of the
uncertainty of obligation;

(4) the availability and relative convenience of
other remedies;
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 (5) a general policy of restraint when the same
issues are pending in a state court;

(6) avoidance of duplicative litigation;

(7) prevention of the use of the declaratory action
as a method of procedural fencing or as a means
to provide another forum in a race for res
judicata; and

(8) (in the insurance context), an inherent
conflict of interest between an insurer’s duty to
defend in a state court and its attempt to
characterize that suit in federal court as falling
within the scope of a policy exclusion.

Id. at 146.

The eight Reifer factors are not exhaustive. Id. We have
also pointed to “additional guidance” from State Auto
Insurance Cos. v. Summy, 234 F.3d 131 (3d Cir. 2000), as
amended (Jan. 30, 2001), as applicable in the insurance
context. Reifer, 751 F.3d at 146–47. Summy’s additional
guidance includes the recommendation that “when applicable
state law is ‘uncertain or undetermined, district courts should
be particularly reluctant’ to exercise DJA jurisdiction.” Id. at
141 (quoting Summy, 234 F.3d at 135). Further, “[t]he fact
that district courts are limited to predicting—rather than
establishing—state law requires ‘serious consideration’ and is
‘especially important in insurance coverage cases.’” Id. at 148
(quoting Summy, 234 F.3d at 135). Yet, we have cautioned that
there can be no per se dismissal of insurance declaratory
judgment actions, in part because “[f]ederal and state courts are
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equally capable of applying settled state law to a difficult set
of facts.” Id. at 147 (alteration in original) (quoting Heritage
Farms Inc. v. Solebury Twp., 671 F.2d 743, 747 (3d Cir.
1982)).

In weighing these factors, “district courts declining
jurisdiction should be rigorous in ensuring themselves that the
lack of pending parallel state proceedings is outweighed by
opposing factors.” Id. at 144. With respect to state law claims,
district courts should “squarely address” the alleged novelty or
undetermined nature of state law issues. Id. at 149. Finally,
“[t]he weighing of these factors should be articulated in a
record sufficient to enable our abuse of discretion review.” Id.
at 147.

With that background, we turn to the cases before us.

II. PROCEDURAL HISTORY

These three appeals follow a pattern. Each Restaurant had
purchased an insurance policy that provided coverage for
commercial property. Each policy was an “all risks” policy—
meaning it covered losses unless specifically excluded—and
contained a virus exclusion. Each Restaurant filed a complaint,
styled as a declaratory judgment action, in state court that
sought a declaration that its Insurer was obligated to cover
losses arising from the COVID-19 pandemic and the
associated government orders (or, in one case, solely because
of the government orders). Each Insurer removed the case to
federal district court. Finally, each District Court, in an order
on appeal before us, declined to exercise jurisdiction under the
DJA and granted each Restaurant’s motion to remand the case

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to state court.

Below, we focus on the unique aspects of the three
complaints and summarize each District Court’s stated reasons
for declining to exercise jurisdiction under the DJA.

A. Umami

1. Complaint

In June 2020, Umami Pittsburgh, LLC filed a complaint
against Motorists Commercial Mutual Insurance Company1 in
the Court of Common Pleas of Allegheny County,
Pennsylvania. The central allegations of the complaint, as
described in the portion summarizing Umami’s “Claim for
Recovery,” is that Umami made an insurance claim upon
Motorists for losses and “damages” caused by the COVID-19
pandemic and the associated public health orders issued by the
Governor of Pennsylvania, and that Motorists wrongfully
denied the claim. Motorists App’x2 591 (Compl. ¶¶ 30–32).

Umami’s insurance policy, attached to its complaint,
provides that coverage was in effect until October 2020. The
policy contains a virus exclusion which states that Motorists

1
We refer to Motorists Commercial Mutual Insurance
Company and Motorists Mutual Insurance Company both
individually and collectively as “Motorists.”
2
“Motorists App’x” refers to the appendix filed in consolidated
appeals 20-2954 (DiAnoia’s) and 20-2958 (Umami).
“AmGUARD App’x” refers to the appendix filed in appeal 20-
3122 (INC).
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“will not pay for loss or damages caused directly or indirectly
by . . . [a]ny virus, . . . capable of inducing physical . . . illness
or disease.” Motorists App’x 633, 636. And the virus
exclusion further provides that “[s]uch loss or damage is
excluded regardless of any other cause or event that contributes
concurrently or in any sequence to the loss.” Id. at 633.

Umami’s complaint is styled as a “Civil Action –
Complaint Seeking Declaratory Relief.” Id. at 587. The
complaint’s sole count is for “Declaratory Relief – Individual
Claims.” Id. at 592. The count re-alleges that Motorists
“wrongfully refused to provide coverage” to Umami and that
this refusal “is a material breach of [the insurance] policy.” Id.
at 592 (Compl. ¶¶ 39–40). The count states that Umami is
entitled to a declaration that it is covered under the policy and
asserts that “[a] judgment of this court will determine,
terminate and afford relief from the uncertainty and
controversy giving rise to this action.” Id. at 592–93 (Compl.
¶¶ 42, 47). As for the relief requested, Umami seeks only an
order declaring that it is entitled to coverage under the policy
and “such other relief as the court deems appropriate.” Id. at
593.

On July 3, 2020, Motorists removed the case to the United
States District Court for the Western District of Pennsylvania
on the basis of diversity jurisdiction. On July 29, 2020, Umami
moved to remand the case back to Common Pleas, arguing that
because the case was only for declaratory relief and only
involved an issue of state law, the District Court should decline

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to hear the case.3

2. Remand

In August 2020, the District Court granted Umami’s motion
to remand. The Court first rejected Motorists’s argument that,
because the complaint “expressly alleges a breach of contract
claim,” the District Court had no discretion under the DJA to
decline to hear the case. Umami Pittsburgh, LLC v. Motorists
Comm. Mut. Ins. Co., 2020 WL 9209275, at *1 n.1 (W.D. Pa.
Aug. 26, 2020) (quotations omitted). “Having read the
Complaint and Amended Complaint, the Court f[ou]nd[] that
Plaintiff seeks solely declaratory relief.” Id.

The Court then turned to the question of discretion under
the DJA. In its summary of the potentially relevant factors, the
District Court quoted heavily from Summy and Reifer but failed
to discuss the importance of the existence or non-existence of
parallel state proceedings. Id. at *1–2. In a footnote, the Court
correctly stated that there was no parallel state proceeding. Id.
at *2 n.2. After listing the eight factors articulated in Reifer,
the Court concluded that the first factor was “relevant and
determinative” and that it weighed in favor of abstention
because the COVID-19 pandemic raised “novel business
insurance coverage issues under Pennsylvania law,” and a
federal court “would be predicting how Pennsylvania courts
would decide the COVID-19 coverage issues with little or no

3
The same day it filed its motion to remand, Umami also filed
an amended complaint in federal court. The amended
complaint is nearly identical to the original. None of the
differences between the complaints is material to our decision.
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persuasive authority from the Pennsylvania state courts.” Id.
at *2.

Motorists appealed the remand order.4

B. DiAnoia’s

1. Complaint

In April 2020, DiAnoia’s Eatery, LLC filed a complaint
against Motorists Mutual Insurance Company in the Court of
Common Pleas of Allegheny County, Pennsylvania. The
complaint is nearly identical to Umami’s complaint, with only
the name of the restaurant and details of the insurance policy
changed.5 The policy between Motorists and DiAnoia’s was
to remain in effect until June 2020. The policy’s virus
exclusion provides that Motorists “will not pay for loss or
damage caused by or resulting from any virus, bacterium or
other microorganism that induces or is capable of inducing
physical distress, illness or disease.” Motorists App’x 306.

On May 29, 2020, Motorists removed the case to the United
States District Court for the Western District of Pennsylvania
on the basis of diversity jurisdiction.6 On June 16, 2020,

4
The remand order was subsequently amended so that the
District Court would not be divested of jurisdiction during the
pendency of the appeal.
5
Umami and DiAnoia’s were represented by the same counsel
before the trial courts and before this Court.
6
Motorists had previously attempted to remove the case on
May 14, 2020. The District Court remanded sua sponte for
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DiAnoia’s moved to remand the case back to the Court of
Common Pleas.

2. Remand

In August 2020, the District Court granted the motion to
remand. The Court, like the court in Umami, rejected at the
outset Motorists’s argument that the complaint stated a breach
of contract claim outside the scope of the DJA. After
reiterating that the only relief sought in the complaint was for
a declaration, the Court reasoned that “Plaintiff is the master of
its complaint and certainly could have, but chose not to, pursue
theories for legal relief” and that the mere possibility of
additional claims “does not negate the Court’s discretion under
the DJA.” DiAnoia’s Eatery, LLC v. Motorists Mut. Ins. Co.,
2020 WL 5051459, at *2–3 (W.D. Pa. Aug. 27, 2020) (citing
Greg Prosmushkin, P.C. v. Hanover Ins. Grp., 479 F. Supp. 3d
143, 149 (W.D. Pa. 2020); Umami, 2020 WL 9209275, at *1).

While noting that there was no parallel state proceeding, the
Court concluded that the first, third, fourth, and fifth Reifer
factors weighed in favor of remand. Id. at *1, *3–4. The
Court’s principal reason for remand was that “Plaintiff’s
Complaint raises novel insurance coverage issues under
Pennsylvania law, (i.e., business interruption, civil authority,
extra expense, contamination, as well as pertinent exclusions

lack of subject matter jurisdiction because Motorists had not
averred diversity of citizenship under the correct citizenship
standard for limited liability companies. In the alternative, the
Court stated it would decline to exercise jurisdiction under the
DJA.
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raised by the defense), which are best reserved for the state
court to resolve in the first instance.” Id. at *3. Additionally,
the Court noted that insurance is a “highly regulated industry,”
“with policy language and premium rates being approved by
the Pennsylvania Insurance Department,” and that the public
health restrictions impacting DiAnoia’s “were issued by state
and local authorities.” Id. at *4.

With respect to other Reifer factors, the District Court
excerpted the reasoning of the district courts in Umami and
Greg Prosmushkin. Id. at *3. These excerpts included the
observation that “[i]nsurance liability related to the COVID-19
pandemic is likely to be the subject of a significant number of
cases in Pennsylvania state court.” Id. at *4 (quoting Greg
Prosmushkin, 479 F. Supp. 3d at 151). The Court did not
specify how “the availability and relative convenience of other
remedies,” Reifer’s fourth factor, weighed in favor of remand.

Motorists appealed the remand order.7

C. INC

1. Complaint

In May 2020, Mark Daniel Hospitality LLC d/b/a INC

7
Motorists also moved for reconsideration to request that the
District Court retain jurisdiction during this appeal. The Court
denied the motion as moot because it had instructed the Clerk
of Court to not immediately transmit the remand order to the
Prothonotary of the Court of Common Pleas of Allegheny
County.
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(short for Ingredients-n-Craft) filed a complaint against
AmGUARD Insurance Company in the Superior Court of New
Jersey, Law Division, Mercer County. Unlike Umami and
DiAnoia’s, INC does not allege in its complaint that it has
made a claim for COVID-19-related losses and that its insurer
has denied the claim. Rather, INC alleges that insurers like
AmGUARD have routinely denied coverage for similar
business interruption losses. Also unlike Umami and
DiAnoia’s, INC alleges that it is the government orders that
“physically impact[]” its business, not the virus that causes
COVID-19. AmGUARD App’x 24 (Compl. ¶ 21); see also id.
(¶ 20) (“These limitations and closures of Plaintiff’s business
are the result of the Orders. To Plaintiff’s knowledge, at no
time has any employee or patron of Plaintiff been diagnosed
with COVID-19.”).

INC’s policy was effective through November 2020. The
language of the virus exclusion in INC’s policy—“We will not
pay for loss or damage caused directly or indirectly by any
[virus] . . . . regardless of any other cause or event that
contributes concurrently or in any sequence to the loss”—is
identical to the exclusion in Umami’s policy with Motorists.

INC’s complaint is styled as a “Complaint for Declaratory
Relief” and contains one count titled “Declaratory Judgment.”
AmGUARD App’x 21, 24. INC seeks a declaration that
“AmGUARD is obligated to provide coverage to Plaintiff for
business interruption and extra expense losses from the closure
of its business as a result of the Orders.” Id. at 26 (wherefore
cl.). INC explicitly disclaims that it seeks “a determination of
whether the Coronavirus was present in its business, the
amount of Plaintiff’s damages or any remedy other than the
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requested declaratory relief.” Id. at 25 (Compl. ¶ 28). As part
of this requested relief, INC seeks a declaration that
“[a]pplication of the virus exclusion in the Policy to Plaintiff’s
losses is void as against public policy.” Id. at 26 (wherefore
cl., para. g.)

In June 2020, AmGUARD removed the case to the United
States District Court for the District of New Jersey on the basis
of diversity jurisdiction. INC moved to remand the case to the
Superior Court on two grounds: 1) that AmGUARD had failed
to establish that the amount in controversy exceeded $75,000,
see 28 U.S.C. § 1332(a), and 2) that the District Court “should
exercise its discretion to not hear this declaratory judgment
action involving solely undecided state law insurance issues.”
AmGUARD App’x 42 (INC Motion to Remand).

2. Remand

In October 2020, the District Court granted INC’s motion
and remanded the case to state court. See Mark Daniel
Hospitality, LLC v. AmGUARD Ins. Co. (INC), 495 F. Supp.
3d 328 (D.N.J. 2020). The Court did not decide the amount-
in-controversy issue, explicitly noting that it was instead
remanding because it declined to exercise jurisdiction under
the DJA. Id. at 332 n.4. It also prefaced its analysis of the
discretionary DJA factors by noting that “[i]mportantly, it is
undisputed, here, that Plaintiff seeks only declaratory relief
under the DJA and asserts no other independent legal claims in
its Complaint.” Id. at 333.

The District Court determined that the third and fifth Reifer
factors outweighed the lack of parallel state proceedings. Id.

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at 334. As to the third factor—public interest—INC’s
complaint “present[ed] novel and important issues of state
insurance law,” including whether the virus exclusion would
apply to the asserted losses and whether the virus exclusion
was void as against public policy. Id. at 335. “As such, one of
the key issues in this case is whether . . . . a state government
order, which required partial closure of businesses, constitutes
‘loss or damage caused directly or indirectly’ by a virus.” Id.
The Court reasoned that an answer to that question would
require “circumstance-specific determinations that would be
made with relatively undetermined state law and implications
of important state public policy.” Id. at 335–36 (cleaned up)
(quoting Venezie Sporting Goods, LLC v. Allied Ins. Co. of
Am., No. 2:20-cv-01066, 2020 WL 5651598, at *4 (W.D. Pa.
Sept. 23, 2020)).

As to the fifth factor—“a general policy of restraint when
the same issues are pending in state court”—the District Court
noted that “[a] significant number of cases related to insurance
coverage for business interruption based on COVID-19
closures are pending across the country, including in the New
Jersey state courts.” Id. at 336. Furthermore, “the law on this
issue remain[ed] unsettled” because “as one New Jersey state
court judge recently observed in denying a motion to dismiss a
similar state court action, ‘there is limited legal authority in the
State of New Jersey addressing this issue.’” Id. (quoting
Optical Servs. USA/JCI v. Franklin Mut. Ins. Co., No. BER-L-
3681-20, 2020 N.J. Super. Unpub. LEXIS 1782, at *24 (N.J.
Super. Ct. Law Div. Aug. 13, 2020) (oral order)).

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 AmGUARD appealed the remand order.8

III. JURISDICTION

“Although courts often refer to a court’s ‘jurisdiction’
under the DJA, the statute is not a jurisdictional grant.” Kelly
v. Maxum Specialty Ins. Grp., 868 F.3d 274, 281 n.4 (3d Cir.
2017). Here, Insurers invoked diversity of citizenship
jurisdiction as the basis for removal pursuant to 28 U.S.C.
§§ 1332(a) and 1441(a). “A district court’s discretionary
remand in a declaratory judgment action is a final decision that
is appealable under 28 U.S.C. § 1291.” Kelly, 868 F.3d at 280
(citing Reifer, 751 F.3d at 133).

IV. ANALYSIS

Insurers raise two arguments. First, Insurers argue that the
District Courts did not have discretion under the DJA to
decline to exercise jurisdiction because Restaurants’
complaints are for legal relief that is merely “masquerading”
as declaratory relief. We review de novo the District Courts’
determination that the DJA applied. See Reifer, 751 F.3d at
134 n.3 (citing Lazorko v. Pa. Hosp., 237 F.3d 242, 247 (3d
Cir. 2000)). Second, Insurers argue that the District Courts
erred by declining to exercise jurisdiction. We review such
decisions for abuse of discretion. Id. at 137–39.

We will address each argument in turn. We agree with
Restaurants that the DJA applies and that the District Courts

8
The remand order was subsequently amended so that the
District Court would not be divested of jurisdiction during the
pendency of the appeal.
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did have discretion to abstain. However, we ultimately
conclude that each of the District Courts either misinterpreted
some of the non-exhaustive factors that our own Court has
stated should be considered, did not squarely address the
alleged novelty of state law issues, or did not create a record
sufficient to permit thoughtful abuse of discretion review.

A. Applicability of the DJA

Insurers contend that the District Courts had no discretion
under the DJA to abstain because the complaints, styled as
declaratory judgment actions, did not really seek declaratory
relief. The primary difficulty with this argument is that
Insurers are unable to identify a case—nor have we found
one—in which our Court determined that a self-styled
declaratory judgment action was something other than a
genuine declaratory judgment action for purposes of the DJA.
Insurers instead rely heavily upon one line in our Reifer
opinion in which we suggested that “[i]t may, in some
circumstances, be possible for a party’s claim for legal relief to
masquerade as a declaratory judgment, improperly activating
discretionary jurisdiction.” 751 F.3d at 137. But in Reifer we
held the DJA did apply, and we affirmed the district court’s
order declining to exercise jurisdiction. Id. at 150. Thus
Insurers, while relying on Reifer’s “masquerade” phrase,
attempt to distinguish the instant complaints from the one at
issue in Reifer. A brief summary of that case will help illustrate
how Insurers’ distinctions are immaterial.

Reifer involved a client who was grievously ill-served by
her Pennsylvania attorney. 751 F.3d at 132. The attorney, as
required by the Rules of Professional Conduct promulgated by
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the Pennsylvania Supreme Court, carried “claims-made” legal
malpractice insurance. Id. But when the client initiated a legal
malpractice proceeding against the attorney in state court, the
attorney failed to timely inform his insurer of the action. Id.
The insurer, predictably, declined to defend or indemnify the
attorney. Id. A jury awarded the client over $4 million in
damages in a suit against her attorney, at which point the
attorney assigned any rights he had against his insurer to the
client. Id. The client then filed a declaratory judgment action
in state court seeking a declaration that the insurer “must pay”
the earlier judgment because “under Pennsylvania case law and
Pennsylvania Rule of Professional Conduct 1.4(c), [insurer]
was required to show it was prejudiced by [attorney]’s failure
to notify it of her claim.” Id. The insurer removed the case to
federal court, but the district court declined to exercise
jurisdiction under the DJA. Id. at 132–33.

Our Court affirmed the district court’s order declining to
exercise jurisdiction. Id. at 150. In so doing, we rejected the
insurer’s argument that “although [client]’s claim was couched
in terms of a declaratory judgment, it was in reality a suit which
sought a judgment compelling [insurer] to pay money
damages.” Id. at 135. The insurer had emphasized that
“[b]ecause [attorney]’s liability had already been established,
the declaratory judgment action was not prospective” and
suggested that there “is no meaningful difference between a
complaint seeking a declaration that a defendant ‘must pay’
damages and a complaint seeking to recover damages.” Id. In
rejecting that argument, we concluded that the words “must
pay” did not change the fact that the requested relief was a
declaration and the district court “was not being asked to award
damages; both parties well knew that damages had already
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been awarded in state court.” Id. at 136. “Moreover,” we held,
the fact that “additional recovery would likely flow to [client]
as a result of a declaration in her favor does not preclude
applicability of the DJA” because the text of the statute makes
clear that a court “‘may’ grant declaratory judgments ‘whether
or not further relief is or could be sought.’” Id. (quoting 28
U.S.C. § 2201(a)).

Turning back to the instant appeals, Motorists suggests that
Umami and DiAnoia’s both “stated a breach-of-contract claim
under Pennsylvania law” by alleging that “they were entitled
to ‘coverage’ — i.e., money — for their ‘losses, damages, and
expenses,’ and ‘entitled to recover’ those expenses from
Motorists.” Motorists Br. 17, 19 (quoting Motorists App’x 59–
60 (DiAnoia’s Compl. ¶ 38, wherefore cl.)). These isolated
phrases are as inconsequential as the phrase “must pay” in
Reifer. The Restaurants explicitly seek only an order entering
a declaration. Their requested relief does not include damages
or anything other than a declaration, and any statements that
Restaurants incurred “damages” from COVID-19 do not
change that fact. Putting a finer point on it, nowhere does any
Restaurant request that a Court issue a monetary judgment or
injunction that would be enforceable by attachment, lien, or
threat of contempt if an Insurer disobeys. Restaurants seek
only a declaration from the Courts of what their legal rights are
under the policies.9

9
In rejecting the argument that Restaurants’ complaints seek
only legal relief, we also reject Motorists’s argument in the
alternative that Restaurants seek both declaratory relief and
legal relief.
-22-
 AmGUARD takes a slightly different tack from Motorists
by arguing that, first, INC could have brought a breach of
contract claim instead of a declaratory judgment claim, and,
second, INC’s decision to instead bring a declaratory judgment
action is artful pleading to avoid federal jurisdiction that should
not be countenanced by a federal court. One problem for
AmGUARD’s argument is that there is nothing in the record
evidencing that AmGUARD disclaimed coverage under its
policy with INC, which would be a prerequisite for INC’s
bringing a breach of contract claim in the first place.10

The more fundamental flaw, however, is that, in
determining whether the DJA applies, it is irrelevant whether a
plaintiff could have sought legal relief as well. Declaratory
relief is often not the sole relief available. The DJA explicitly
accounts for the possibility of related non-declaratory relief by
authorizing federal courts to grant declaratory relief “whether
or not further relief is or could be sought.” 28 U.S.C.
§ 2201(a). Furthermore, unlike other actions, a plaintiff
seeking only a declaratory judgment is not forced to bring
every claim arising out of the same circumstances or risk
having those claims foreclosed in future actions. The normal
anti-claim-splitting rules of merger and bar do not apply to
declaratory judgment actions. See Restatement (Second) of

10
Another problem for AmGUARD is that it might have
forfeited this argument by not raising it in the District Court.
INC, 495 F. Supp. 3d at 333 (“Importantly, it is undisputed,
here, that Plaintiff seeks only declaratory relief under the
DJA.”). Because we conclude that INC’s complaint is not
“masquerading,” we need not resolve the effect of
AmGUARD’s failure to preserve this argument.
-23-
Judgments § 33 cmt. c (1982) (“The effect of such a
declaration, . . . is not to merge a claim in the judgment or to
bar it. Accordingly, regardless of outcome, the plaintiff or
defendant may pursue further declaratory or coercive relief in
a subsequent action. . . . [I]f the claim has already accrued,
refusal of bar or merger effects permits a claim to be split.”);
Alexander & Alexander, Inc. v. Van Impe, 787 F.2d 163, 166
(3d Cir. 1986), as amended (May 20, 1986) (“The language of
the Declaratory Judgment Act itself indicates that a declaration
as to the rights and obligations of the parties is not res judicata
of a subsequent action for damages.” (citing 28 U.S.C.
§ 2202)).

The possibility that a plaintiff could seek other, non-
declaratory forms of relief remains irrelevant to the
applicability of the DJA regardless of the plaintiff’s motive for
choosing to bring a declaratory judgment action. Here,
Restaurants want to remain in state court11 (and eventually
recover money from their Insurers) and Insurers want to be in
federal court (and do not want to pay out). It is certainly
plausible that Restaurants brought declaratory judgment

11
At oral argument, counsel for INC began by expressing
ambivalence as to the outcome of AmGUARD’s appeal, i.e.,
whether INC’s declaratory judgment action is heard in state
court or federal court. See Oral Arg. Recording at 26:58–27:33
(“Sometimes I wonder when I’m preparing for this argument
whether I want to win or I want to lose. Judge [Douglas H.]
Hurd in Mercer County has literally granted each and every
motion to dismiss. . . . So why [counsel for Insurers] want to
be in the Third Circuit, I have no idea.”). This was a
remarkably candid admission.
-24-
actions instead of breach of contract claims solely to avoid
falling within a district court’s “virtually unflagging”
obligation to exercise diversity jurisdiction. But if so, what
difference?

Insurers analogize this tactic to a plaintiff’s attempt to
fraudulently join a forum defendant in order to avoid diversity
jurisdiction under 28 U.S.C. § 1332. See generally Miss. ex
rel. Hood v. AU Optronics Corp., 571 U.S. 161, 174 (2014); In
re Briscoe, 448 F.3d 201, 215–16 (3d Cir. 2006). But unlike a
plaintiff’s inclusion of a defendant whom the plaintiff has no
true desire to proceed against, there is nothing remotely
fraudulent here. The plaintiff, as master of the complaint, may
make a genuine choice to limit the relief sought. A more apt
analogy would be a plaintiff who decides to limit his or her
damages claim to an amount below the amount-in-controversy
threshold in order to avoid removal based on diversity
jurisdiction—a long-accepted practice. See, e.g., St. Paul
Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 294 (1938)
(“If [the plaintiff] does not desire to try his case in the federal
court he may resort to the expedient of suing for less than the
jurisdictional amount, and though he would be justly entitled
to more, the defendant cannot remove.”); Morgan v. Gay, 471
F.3d 469, 474–75 (3d Cir. 2006) (applying same principle to
removal under Class Action Fairness Act).

Lastly, Insurers suggest that Restaurants’ sought-after
declaratory relief is simply a masquerade because such relief
would not be used to guide future conduct—it would only
establish liability for past coverage denials. This argument
also fails. For one thing, at the time each complaint was filed
and at the time of each notice of removal, the policies of all
-25-
three restaurants were still in effect. For another, we held in
Reifer that the DJA applied to the plaintiff’s declaratory
judgment action notwithstanding the insurer’s argument that
“the declaratory judgment action was not prospective.” 751
F.3d at 135.

Once again (or thrice), we reject an insurer’s argument that
the DJA does not apply to a declaratory judgment action.
Because we cannot prove a negative, we cannot completely
foreclose the possibility that “[i]t may, in some circumstances,
be possible for a party’s claim for legal relief to masquerade as
a declaratory judgment, improperly activating discretionary
jurisdiction.” Reifer, 751 F.3d at 137. But, for the reasons
stated above, we discern no such circumstances here.

B. Discretion to Abstain Under the DJA

All three district courts declined to exercise jurisdiction
under the DJA because each determined that one or more of
the factors enumerated in Reifer outweighed the absence of
parallel state proceedings. The District Courts also considered
Summy’s additional guidance regarding the unsettled nature of
state law, but did so under the label of the third Reifer factor
and its reference to “the public interest.” Cf. Kelly, 868 F.3d
at 288 n.13 (noting that district court considered state interest
in interpreting unsettled state law in relation to third factor).
Because the Courts’ analyses of the Reifer factors overlap
significantly, our discussion below will be grouped by Reifer
factor rather than set forth by individual appeal. We will
similarly address the unsettled nature of state law under the
umbrella of the third Reifer factor, but will do so later in this
opinion.
-26-
 1. First factor: “likelihood that a federal court declaration
will resolve the uncertainty of obligation which gave
rise to the controversy”

The Umami and DiAnoia’s District Courts both concluded
that the first Reifer factor weighed in favor of remand. The
Courts reasoned that any declaration by a federal court would
not “resolve the uncertainty of obligation” because federal
courts are limited to predicting state law and certain insurance
issues “have not been addressed by the Commonwealth’s
highest court.” Umami, 2020 WL 9209275, at *2; DiAnoia’s,
2020 WL 5051459, at *3 (quoting analysis from Umami). That
is a misreading of the first Reifer factor.

The first Reifer factor is not intended to be a vehicle for
considering the effect of a declaratory judgment on the
development of state law. Indeed, the earliest formulation of
the factor drew upon an analysis of relevant considerations
under state declaratory judgment statutes and was not specific
to “federal court” declarations. Compare Bituminous Coal
Operators’ Ass’n v. Int’l Union, United Mine Workers of Am.,
585 F.2d 586, 596–97 & n.20 (3d Cir. 1978) (citing Note,
Developments in the Law: Declaratory Judgments — 1941–
1949, 62 Harv. L. Rev. 787, 805–17 (1949)), with United
States v. Pa., Dep’t of Env’t Res., 923 F.2d 1071, 1075 (3d Cir.
1991) (inserting “federal court” before “declaration”). Instead,
the first Reifer factor captures whether a declaration would
bring about a “complete termination of the controversy”
between the parties and thereby avoid duplicative, piecemeal
litigation. Note, supra, at 805 (cleaned up). “There are two
general types of situations which may make it unlikely that a
declaration will prevent further litigation: (1) when one or
-27-
more persons have not been joined, but have an interest in the
outcome of the action, and (2) when one or more issues have
not been raised, but are a part of the controversy or
uncertainty.” Id. at 806.

Here, the declaratory judgment actions would bring about
a complete termination of the parties’ disputes without
piecemeal litigation. See Kelly, 868 F.3d at 288 (“Declaratory
relief by the District Court would unquestionably clarify and
settle the dispute regarding [insurer]’s obligations under the
insurance policy.”). Restaurants admit as much by asserting,
in their complaints, that a declaratory judgment will be
sufficient to afford relief and settle their respective
controversies. We see no mention of any interested party that
has not been joined, nor any predicate issue that would
undermine the usefulness of a judgment interpreting the
parties’ obligations under their respective insurance policies.

The District Courts’ alternative understanding of the first
Reifer factor would place a thumb on the scale in favor of
abstention in the many diversity jurisdiction cases raising
issues which have not been resolved by the relevant state’s
highest court. Yet even without a decision of a state’s highest
court, it is well-established that “we can ‘garner assistance
from the decisions of the state’s intermediate appellate courts
in predicting how the state’s highest court would rule.’”
Maynard v. Rivera, 675 F.3d 225, 230 (3d Cir. 2012) (quoting
Mosley v. Wilson, 102 F.3d 85, 92 (3d Cir. 1996)). To the
extent that the District Courts’ treatment of the first Reifer
factor resulted from such a paucity of authority from any
Pennsylvania court so that predicting state law would be
impossible, we conclude for the reasons stated infra Section
-28-
IV.B.3 that a remand is still warranted.

The Umami and DiAnoia’s Courts erred in concluding that
the first Reifer factor weighed in favor of remand because they
labored under an incorrect understanding of the factor. The
Umami Court’s total reliance on the first factor in declining to
exercise jurisdiction fell well short of a “rigorous” weighing of
factors “articulated in a record sufficient to enable our abuse of
discretion review.” Reifer, 751 F.3d at 144, 146 n.22. So we
will vacate the order in Umami and remand for further
proceedings.

2. Fifth factor: “general policy of restraint when the same
issues are pending in a state court”

The DiAnoia’s and INC Courts concluded that the fifth
Reifer factor weighed in favor of abstention because “[a]
significant number of cases related to insurance coverage for
business interruption based on COVID-19 closures are pending
. . . in . . . state courts.” INC, 495 F. Supp. 3d at 336; see
DiAnoia’s, 2020 WL 5051459, at *4 (“Insurance liability
related to the COVID-19 pandemic is likely to be the subject
of a significant number of cases in Pennsylvania state court.”
(quoting Greg Prosmushkin, 479 F. Supp. 3d at 151)). This
conclusion reflects another misunderstanding of the meaning
of one of the Reifer factors. The fifth factor’s “policy of
restraint” is applicable only when the “same issues” are
pending in state court between the same parties, not when the
“same issues” are merely the same legal questions pending in
any state proceeding. See Kelly, 868 F.3d at 289 (holding fifth
factor inapplicable where “issue of [insurer’s] obligations
under its insurance policy with [insured] is not pending in a
-29-
state court” and “[insurer] is not even a party in the pending
state court action and the insurance coverage dispute cannot be
fully resolved without [insurer]”); see also Brillhart, 316 U.S.
at 495 (“Ordinarily it would be uneconomical as well as
vexatious for a federal court to proceed in a declaratory
judgment suit where another suit is pending in a state court
presenting the same issues, not governed by federal law,
between the same parties.” (emphasis added)), cited by Terra
Nova Ins. Co. v. 900 Bar, Inc., 887 F.2d 1213, 1217, 1224 (3d
Cir. 1989) (original formulation of fifth Reifer factor in this
Court).

Because the Reifer factors are non-exhaustive, a district
court may still consider, when relevant, whether the same legal
question at issue in a declaratory judgment action is at issue in
state court proceedings between different parties. Yet we
question how this fact would ever militate against exercising
jurisdiction. At any given time, there are countless insurance
cases pending in state courts which implicate some common
application of state law. Once again, “[f]ederal and state courts
are equally capable of applying settled state law to a difficult
set of facts.” Reifer, 751 F.3d at 147. Furthermore, it would
undercut the policy and purpose of diversity jurisdiction—
“prevent[ion of] apprehended discrimination in state courts
against those not citizens of the State,” Erie R.R. v. Tompkins,
304 U.S. 64, 74 (1938)—if a party were unable to seek a
declaratory judgment in federal court because that declaration
would require the unbiased application of a settled question of
state law.

To the extent the District Courts’ weighing of this factor
depended on the state law question at issue being both common
-30-
and novel, we turn then to novelty.

3. Summy and third factor: “the public interest in
settlement of the uncertainty of obligation”

Restaurants contend that the third Reifer factor weighs in
favor of abstention because “there is no federal interest” in
their claims and “[t]he decisions on insurance coverage would
involve not only an interpretation of novel issues of state
insurance law but also on [sic] the legal impact of
unprecedented orders of New Jersey state officials.” INC Br.
21 (emphasis added). As an initial matter, federal courts sitting
in diversity have “the usual interest in the fair adjudication of
legal disputes.” Kelly, 868 F.3d at 288. While we have
suggested that district courts should be reluctant to exercise
DJA jurisdiction “[w]here state law is uncertain or
undetermined,” we have instructed district courts exercising
discretion under the DJA to “squarely address the alleged
novelty of . . . state law claims.” Reifer, 751 F.3d at 148–49.

The DiAnoia’s Court stated that the complaint presented
“novel insurance coverage issues under Pennsylvania law” for
which “there is not yet a body of caselaw developed by
Pennsylvania courts due to the relative recency of the COVID-
19 pandemic.” 2020 WL 5051459, at *3. However, instead of
addressing what precise “novel insurance coverage issues”
were presented, the Court simply listed insurance policy
provisions raised in the parties’ briefing without further
explanation: “business interruption, civil authority, extra
expense, contamination, as well as pertinent exclusions raised
by the defense.” Id. Because this mere iteration fails to
“squarely address the alleged novelty” of DiAnoia’s claims, we
-31-
will vacate the DiAnoia’s Court’s order declining to exercise
jurisdiction and remand for renewed consideration of all
relevant factors.

The INC Court did address novelty more squarely. After
stating that the complaint presents “novel and important issues
of state insurance law,” the Court identified novel issues of 1)
whether the virus exclusion applied to INC’s asserted losses,
2) whether the application of the virus exclusion is void as
against public policy, 3) whether INC suffered any physical
loss or damage from a government order, and 4) whether INC
met the requirements for civil authority coverage under the
policy. 495 F. Supp. 3d at 335. To the District Court, this
meant that one of the “key” questions was “whether Plaintiff’s
business losses were caused by the presence of the COVID-19
virus or, rather, caused by the Executive Orders which
prompted the closure of Plaintiff’s restaurant.” Id. The Court
continued to explain that “[i]n other words, resolution of
Plaintiff's claim requires consideration of whether a state
government order, which required partial closure of
businesses, constitutes ‘loss or damage caused directly or
indirectly’ by a virus.” Id. Ultimately, the Court concluded
that “the public interest in resolving the uncertainty of
obligation is best served by remand as it allows the New Jersey
courts the opportunity to determine the impact of [government
orders] on insurance coverage in the State of New Jersey.” Id.
at 336.

Taking the four issues in turn, the District Court overstated
the novelty of the first issue regarding the applicability of the
virus exclusion. Whichever court eventually resolves INC’s
claims on the merits will not be “determin[ing] the impact of
-32-
[government orders] on insurance coverage in the State of New
Jersey.” Id. Rather, that court will be determining whether
INC’s virus exclusion, as interpreted under principles of New
Jersey insurance law, applies to INC’s claim of lost revenue
due to government orders. No party has suggested that the
principles of insurance law that would need to be employed in
such an interpretation are unsettled. Indeed, the relevant
principles of New Jersey insurance law are easily summarized
and are likely familiar in every state:

 “An insurance policy is a contract.” Villa v. Short,
947 A.2d 1217, 1222 (N.J. 2008)
 “When interpreting an insurance policy, courts
should give the policy’s words ‘their plain,
ordinary meaning.’” President v. Jenkins, 853
A.2d 247, 254 (N.J. 2004) (quoting Zacarias v.
Allstate Ins. Co., 775 A.2d 1262, 1264 (N.J. 2001))
 “If the policy terms are clear, we interpret the
policy as written and avoid writing a better
insurance policy than the one purchased.” Passaic
Valley Sewerage Comm’rs v. St. Paul Fire &
Marine Ins. Co., 21 A.3d 1151, 1157 (N.J. 2011)
(citing Villa, 947 A.2d at 1222)
 “However, if the language of the policy will
support more than one meaning, ‘courts [should]
interpret the contract to comport with the
reasonable expectations of the insured.’” Sahli v.
Woodbine Bd. of Educ., 938 A.2d 923, 930 (N.J.
2008) (alteration in original) (quoting Zacarias,
775 A.2d at 1264))

This is not to suggest that there can be no novel issue of
-33-
policy interpretation under New Jersey law. But save for the
word “virus,” even the language of the policy’s virus exclusion
was not new to New Jersey insurance law. Recall that the virus
exclusion in INC’s policy provides that “[AmGUARD] will
not pay for loss or damages caused directly or indirectly by . .
. [a]ny virus” and that “[s]uch loss or damage is excluded
regardless of any other cause or event that contributes
concurrently or in any sequence to the loss.”

That last sentence of the exclusion is an “anti-concurrent
causation” clause that has been interpreted by New Jersey
courts in the context of other policy exclusions, like flooding.
See, e.g., Maritime Park, LLC v. Nova Cas. Co., No. A-3554-
17T2, 2019 WL 1422918, at *5–6 (N.J. Super. Ct. App. Div.
Mar. 29, 2019) (unpublished) (collecting cases; affirming order
applying anti-concurrent causation clause to exclude insured
restaurant’s claim for lost revenue due to government order
closing park containing restaurant because government closure
order was partially motivated by park flooding and flood
damage was an exclusion in restaurant’s policy). The law on
such “anti-concurrent causation” language was thus not novel,
even if its application to a virus would have been. Contra
Venezie Sporting Goods, 2020 WL 5651598, at *4 n.3 (“The
[concurrent cause] cases offered by Defendants, however, are
federal court cases applying Pennsylvania law in water or flood
exclusion contexts, which is a body of case law far more
developed than the [virus] situation presented here.”). Thus,
the purported novelty of the first issue does not support a
conclusion that the third Reifer factor weighs in favor of

-34-
abstention.12

Nor does INC’s request that the policy’s virus exclusion be

12
Without ruling on the merits of INC’s claim, the existence
of the anti-concurrent causation clause would suggest that the
“key” question identified by the District Court—“whether
Plaintiff’s business losses were caused by the presence of the
COVID-19 virus or, rather, caused by the Executive Orders
which prompted the closure of Plaintiff’s restaurant”—is not
so important in light of the virus exclusion. The anti-
concurrent causation language turns the exclusion inquiry into
a question of whether the government orders themselves were
caused by the COVID-19 virus, not whether the orders were
the superseding cause of any loss. See Mac Prop. Grp. LLC v.
Selective Fire & Cas. Ins. Co., No. CAM L 002629-20, 2020
WL 7422374, at *8 (N.J. Super. Ct. Law Div. Nov. 5, 2020)
(granting motion to dismiss; holding that because of anti-
concurrent causation provision, “[i]t therefore does not matter
whether the closure of plaintiff’s business as a result of
governmental orders to prevent the spread of the coronavirus
constitutes direct physical damage to covered property, nor
whether civil authority coverage can be triggered, since the
reason for the exercise of that civil authority was the virus”);
cf. Atwells Realty Corp. v. Scottsdale Ins. Co., C.A. No. PC-
2020-04607, 2021 R.I. Super. LEXIS 49, at *33–34 (June 4,
2021) (denying in part motion to dismiss and applying Rhode
Island law; holding that virus exclusion that lacked anti-
concurrent causation language—while other exclusions in
policy used such language—did not foreclose plaintiff at
motion-to-dismiss stage from making claim that government
orders, and not virus, was cause of lost income).
-35-
declared void as against public policy weigh in favor of
abstention. It is, generally, of no moment that a federal court
is being asked to apply state public policy. Indeed, “[t]he
essence of diversity jurisdiction is that a federal court enforces
State law and State policy.” Beneficial Indus. Loan Corp. v.
Smith., 170 F.2d 44, 53 (3d Cir. 1948) (quoting Angel v.
Bullington, 330 U.S. 183, 191 (1947)). As we stated in Reifer,
“[f]ederal courts are, of course, perfectly capable of applying
state law, even where nonfrivolous arguments are raised to
change it.” 751 F.3d at 149. INC does not suggest that federal
courts are incapable of declaring an insurance provision void
as against New Jersey public policy or that they are somehow
unequipped to properly consider arguments for or against
recognizing a provision as such.

It is true that in Reifer we affirmed a district court’s
abstention under the DJA because the plaintiff in her state-
court complaint had made an argument, based at least in part
on public policy, for “carving an exception to governing
Pennsylvania law.” Id. at 148–49. In concluding that her
argument was “best decided in the state court system” we
deemed it “important[]” that the plaintiff’s argument
“implicate[d] the policies underlying Pennsylvania’s rules
governing attorney conduct, which are promulgated by the
Pennsylvania Supreme Court.” Id. at 149. “[B]ecause [her
argument] directly raise[d] a matter peculiarly within the
purview of [Pennsylvania’s] highest court,” we thought it was
“best decided in the Pennsylvania court system.” Id. (emphasis
added).

Although INC has not articulated what public policy
argument it would make in favor of voiding its policy’s virus
-36-
exclusion clause, any argument INC might posit would not be
peculiarly within the purview of New Jersey’s court system.
The highest courts of New Jersey and Pennsylvania both have
“exclusive” authority to regulate the bar in their respective
jurisdictions, but they do not have the same regulatory
authority over public health, or insurance generally. See, e.g.,
GE Cap. Mortg. Servs., Inc. v. N.J. Title Ins. Co., 754 A.2d
558, 560 (N.J. Super. Ct. App. Div. 2000) (“Under our State
Constitution, the Supreme Court is vested with exclusive
authority over the regulation of the Bar.” (citing N.J. Const. art.
VI, § 2, ¶ 3)); Beyers v. Richmond, 937 A.2d 1082, 1090 (Pa.
2007) (citing Pa. Const. art. V, § 10(c)).

It is of no significance to this case “that insurance coverage
is a creation of state law, with policy language and premium
rates being approved” by a state’s insurance regulator.
DiAnoia’s, 2020 WL 5051459, at *4. After parties enter into
an insurance policy with language approved by a state’s
regulator, it is unclear what special call that regulator or that
state’s court system has to weigh any public policy arguments
implicated by disputes over that policy’s terms.13 “An
insurance policy is a contract” interpreted by courts, Villa, 947
A.2d at 1222, and sister-state courts and federal courts are
equally capable of applying state contract law. That includes
state contract law on public policy exceptions. If New Jersey’s

13
Any argument that New Jersey’s courts or its insurance
regulator have a special connection to disputes over policy
language is especially weak in this case. The virus exclusion
in INC’s policy with AmGUARD (under New Jersey law) is
identical to the one contained in Umami’s policy with
Motorists (under Pennsylvania law).
-37-
courts were also tasked with issuing public health orders that
are implicated by virus exclusion clauses, like the
Pennsylvania Supreme Court and its exclusive authority over
the Rules of Professional Conduct in Reifer, then that could be
considered by a federal court when declining to exercise
jurisdiction over an insurance dispute. Given the lack of any
such public health authority, the issue of a virus exclusion
being void as against public policy is not “peculiarly within the
purview” of the state courts so as to weigh in favor of
abstention.

Aside from the two virus exclusion issues, the INC Court
identified two other issues as unsettled under state law:
whether INC suffered any physical loss or damage from a
government order, and whether INC met the requirements for
civil authority coverage under the policy. It is possible that one
or both of these issues were unsettled at the time of remand.14

14
In analyzing the fifth Reifer factor, the District Court stated
that “the law on this issue remains unsettled.” INC, 495 F.
Supp. 3d at 336. It did not identify the state law issue to which
it referred. Yet, the Court went on to quote a hearing at which
a New Jersey state court judge, in denying an insurer’s motion
to dismiss, determined that “there is limited legal authority in
the State of New Jersey addressing this issue.” Id. (citing
Optical Servs., 2020 N.J. Super. Unpub. LEXIS 1782, at *24).
As the New Jersey court used the term, “this issue” was
whether “plaintiffs’ loss of use of their respective properties
[by operation of the Governor’s executive order] . . .
constitute[s] a [‘]direct physical loss[’]” under the policy.
Optical Servs., 2020 N.J. Super. Unpub. LEXIS 1782, at *23–
24. The New Jersey court in that case did not interpret any
-38-
However, because the District Court concluded that the third
Reifer factor weighed in favor of abstention, in part, because
of the virus exclusion issues, we will vacate the Court’s order
in INC and remand for further proceedings. On remand, the
Court should give renewed and rigorous consideration to all
relevant factors15 to determine whether they outweigh the lack
of parallel state proceedings and continue to squarely address
any alleged novelty of state law issues.

V. CONCLUSION

The District Courts all correctly rejected Insurers’

virus exclusion because the parties agreed that the relevant
policy’s virus contamination exclusion did not apply. Id. at
*7–8.
15
The metaphorical “forest” in these COVID times, Diss. Op.
at 3, 6, consists of similarly metaphorical “trees”—cases filed
in the district courts of the Third Circuit—which cannot make
their way to trial because of the pandemic. We judicially note
that all vicinages within our circuit have been unable to
conduct more than the occasional trial since March of 2020.
And when pandemic and related conditions actually permit a
trial to go forward, the district court clerk’s office can
administratively support only one or two trials at a time, no
matter how many judges are stationed in a particular
courthouse. So what judges have been doing is conscientiously
deciding motions—which is what they have done here. We are
confident that the District Judges proceeding in these matters
we now consider will take on the issues remanded to them with
the same dedication they have demonstrated throughout the
pandemic.
-39-
contention that Restaurants’ complaints here were for legal
relief “masquerading” as declaratory relief. But in weighing
factors relevant to the exercise of discretion under the DJA, the
Courts either misinterpreted certain Reifer factors, failed to
squarely address the alleged novelty of state law issues, or did
not create a record sufficient to enable us to effectively conduct
abuse of discretion review. We will vacate the orders on appeal
and remand for renewed consideration under the DJA and the
Reifer factors as clarified by this opinion.

-40-
 DiAnoia’s Eatery, LLC, v. Motorists Insurance Company;
Umami Pittsburgh, LLC, v. Motorists Insurance Company;
Mark Daniel Hospitality LLC, d/b/a INC v. AmGuard
Insurance Company

Nos. 20-2954; 20-2958; 20-3122
_________________________________________________
_______________________

ROTH, Circuit Judge, dissenting:

The COVID-19 global pandemic and resulting
government stay-at-home orders have presented significant
economic impacts on state institutions nationwide. Businesses
across the nation were not able to access and use their premises
for over a year and have sustained substantial income losses as a
result. The District Courts found that these cases, which
resulted from the pandemic, raised novel and important public
policy issues that uniquely affect the states and, for these
reasons, concluded that these cases should be decided in the
first instance by the Commonwealth of Pennsylvania and the
State of New Jersey through their own courts. I agree.

However, the Majority has determined that the District
Courts erred because they did not sufficiently consider the
relevant Reifer factors. But Reifer is not exhaustive.
Therefore, even if the District Courts’ analysis of some Reifer
factors was deficient, there is no need for renewed
consideration of those factors in view of alternative
considerations that justify the District Courts’ decisions to
decline jurisdiction under the Declaratory Judgment Act
(DJA).

1
 Moreover, these issues need to be decided. Sending
these cases back to the District Courts for further investigation
of the Reifer factors will have the unfortunate result of delaying
for months, if not for years, decisions on this important issue
of insurance law. I believe that it is vital in these cases to
obtain, as soon as we can, court decisions on the validity of
these insurance policy exclusions.

Accordingly, I respectfully dissent.

I.

Our Circuit divides declaratory judgment cases into two
categories: those with independent legal claims, and those
without.1 Cases that only involve declaratory claims confer
broader discretion on district courts to decline hearing those
claims.2 As the Majority correctly concludes, the cases here
involve only declaratory claims. In this category of cases, our
precedents “counsel hesitation by federal courts in exercising
jurisdiction [] where the state law involved is close or
unsettled.”3 Yet the Majority wants to restrict the District
Courts’ broad discretion to abstain in these kinds of cases by
requiring an overly technical application of this Court’s
decision in Reifer v. Westport Ins. Corp.,4 that overrides other
relevant considerations.

1
See Rarick v. Federated Serv. Ins. Co., 852 F. 3d 223, 229 (3d Cir.
2017) (defining independent legal claims); State Auto Ins. Cos. v.
Summy, 234 F. 3d 131, 134 (3d Cir. 2000) (distinguishing cases
without independent legal claims).
2
Summy, 234 F. 3d at 134.
3
Id. at 135.
4
751 F. 3d 129, 141 (3d Cir. 2014).

2
 In Reifer, our Court instructed district courts to give
“meaningful consideration to the following factors to the
extent they are relevant”:

(1) the likelihood that a federal court
declaration will resolve the uncertainty of
obligation which gave rise to the
controversy;
(2) the convenience of the parties;
(3) the public interest in settlement of the
uncertainty of obligation;
(4) the availability and relative
convenience of other remedies;
(5) a general policy of restraint when the
same issues are pending in a state court;
(6) avoidance of duplicative litigation;
(7) prevention of the use of the
declaratory action as a method of
procedural fencing or as a means to
provide another forum in a race for res
judicata; and
(8) (in the insurance context), an inherent
conflict of interest between an insurer's
duty to defend in a state court and its
attempt to characterize that suit in federal
court as falling within the scope of a
policy exclusion.5

That said, Reifer emphasized that these factors “are non-
exhaustive, and [sometimes] district courts must consult and

5
Reifer, 751 F.3d at 146.

3
address other relevant caselaw or considerations.”6
Nevertheless, the Majority’s decision here treats the Reifer
factors like they are exhaustive and override any other relevant
considerations. The result is that the Majority’s opinion misses
the forest for the trees.

In concluding that the District Courts erred in weighing
the third Reifer factor, the Majority finds that the states’
interests in making their own policy decisions are “of no
moment” because it is not within the purview of state courts to
determine public health policy. Yet this finding ignores the
Supreme Court’s holding that, even in cases involving
independent claims over which federal courts have a virtually
unflagging obligation to exercise jurisdiction, remand under
the DJA is appropriate “where there have been presented
difficult questions of state law bearing on policy problems of
substantial public import whose importance transcends the
case then at bar.”7 The Court has further noted that “the state
question itself need not be determinative of state policy. It is
enough that exercise of federal review of the question in a case
and in similar cases would be disruptive of state efforts to
establish a coherent policy with respect to a matter of
substantial public concern.”8

The legal issues presented here implicate difficult
questions bearing on state policy problems that are of
substantial public import. The unguided declarations of federal
courts are likely to disrupt each state’s development of a
coherent policy governing its economic recovery from the
6
Id.
7
Colo. River Water Conservation Dist. v. U.S., 424 U.S. 800, 814
(1976) (emphasis added).
8
Id.

4
pandemic. At least one of these Plaintiffs has specifically
alleged that the application of virus-related provisions in their
insurance contracts are void as against New Jersey public
policy.9 That difficult issue implicates both moral and
economic decisions about how each state wants to treat
thousands of businesses operating in their borders.

What is more, any decision in these cases will likely yield
sweeping consequences for each state’s economy. On one hand,
a decision favoring the insurers will be catastrophic for many
businesses in the hospitality and entertainment industries that
were forced to shut down. The fallout to follow from the
closure of these businesses is likely to wreak havoc on each
state’s economy; for example, business closures will likely
raise the state’s unemployment rates, increasing the strain on
each state’s budget as a result of an accompanying rise in
unemployment claims. On the other hand, a decision favoring
the insureds places the insurance industry in a position to
provide coverage for unimaginable losses caused by a global
pandemic that could force these companies into bankruptcy,
creating ripple effects for other insureds seeking coverage from
these insurance companies for unrelated losses.

Regardless of the actual outcome in these cases, the
consequences for the states are sweeping and there is an
obvious need for each state to step in and develop a coherent
policy to manage its own economic recovery from the COVID-
19 pandemic and potential fallout. Yet, in the face of these
sweeping consequences and unique set of circumstances, the
Majority employs a hyper-technical interpretation of the third
Reifer factor to conclude that the District Courts erred.

9
AmGuard’s Appx. 25.

5
Although our decision in Reifer found remand particularly
appropriate because Reifer raised non-frivolous policy
arguments involving Pennsylvania’s rules governing attorney
conduct that were “peculiarly within the purview of that state’s
highest court,”10 that is not the only circumstance in which
remand based on public policy is appropriate. The Supreme
Court has made this clear.11

Next, the Majority finds that the fifth Reifer factor only
applies when the issues pending in state court involve the same
parties. The Majority raises a concern that the District Courts
had found that “there are countless insurance cases pending in
state courts which implicate some common application of state
law.”12 The Majority also finds that the “District Courts’
alternative understanding of the first Reifer factor would place
a thumb on the scale in favor of abstention in the many
diversity jurisdiction cases raising issues which have not been
resolved by the relevant state’s highest court.”13 These
conclusions also miss the forest for the trees.

First, these cases do not involve “application of a settled
question of state law.” These cases are deeply tied to state
public policy and the application of COVID-specific public
policy issues relating to insurance contract interpretation.
Again, those issues are novel and involve some of the most
substantial policy questions of the last century.

10
Reifer, 751 F.3d at 149.
11
Colo. River Water Conservation Dist., 424 U.S. at 814.
12
Maj. at 32.
13
Maj. at 30.

6
 Second, we have never held that parallel state
proceedings are irrelevant just because they involve different
parties. It is true, as the Majority states, that the presence of
state proceedings involving similar issues among different
parties normally would not militate against exercising federal
jurisdiction in insurance coverage cases. Certainly, federal
courts should not abstain just because there is unrelated state-
court litigation involving an insurance provision similar to the
provision being litigated in federal court. But these are not the
run-of-the-mill insurance coverage cases involving merely
similar contract provisions to those being litigated in state
courts: They involve the application of those contract
provisions to claims for direct and indirect losses caused by a
global pandemic that implicate novel and significant state
policies. As explained above, there is undoubtedly a public
interest in deciding whether the application of virus exclusion
provisions to losses arising from the COVID-19 pandemic are
void as against state public policy governing the economic
recovery from the pandemic; these are questions that should be
left to the states to decide in the first instance.

Finally, our Court has held that “we can garner
assistance from the decisions of the state’s intermediate
appellate courts in predicting how the state’s highest court
would rule.”14 But in the absence of guidance from any
intermediate state court that can help predict how they would
address difficult questions of state law bearing on a novel and
important public policy problem, federal courts ought to

14
Maynard v. Rivera, 675 F.3d 225, 230 (3d Cir. 2012) (quoting
Mosley v. Wilson, 102 F.3d 85, 92 (3d Cir. 1996)).

7
abstain from making an Erie guess.15 That is exactly what the
District Courts correctly did here.

We lack any guidance to predict how each state’s
highest court would rule.16 Therefore, cases among similarly
situated parties pending in the state system will likely supply
the necessary guidance for federal courts in resolving these
issues. Indeed, the cases pending in state courts involve
substantially similar, difficult issues of state law “bearing on
policy problems of substantial public import whose importance
transcends” that of the cases at bar.17 Although an Erie guess
in these cases might resolve the uncertainty in the obligations
of those at bar, it will undoubtedly create additional uncertainty
for parties that are similarly situated by potentially upending
the uniformity of outcomes between state and federal courts.
Such a result flies in the face of the Supreme Court’s
instruction to federal courts on how to proceed when asked to
resolve novel or difficult questions of state law that involve
public policy problems of substantial public import, policies

15
Summy, 234 F.3d at 135 (“[I]t is counterproductive for a district
court to entertain jurisdiction over a declaratory judgment action
that implicates unsettled questions of state law, questions which
might otherwise be candidates for certification to the state's highest
court. Such matters should proceed in normal fashion through the
state court system.”).
16
The Courts could not find any cases from intermediate state
courts involving a similar set of circumstances that could guide
their resolutions of the issues at bar. See Motorists’ Appx. 6, 19
(emphasizing the lack of guidance from state courts in resolving
these issues); AmGuard’s Appx. 12 (same).
17
Prosmushkin, P.C. v. Hanover Insurance Group, 479 F.Supp.3d
143, 150 (E.D. Pa. Aug. 14, 2020)(quoting Colo. River Water
Conservation Dist., 424 U.S. at 814).

8
that transcend the importance of the cases at bar.18 It would
also be an incentive for forum shopping between state and
federal courts -- precisely what Reifer aimed to prevent.

Ultimately, it is the decisions issued by state courts that
will determine other litigants’ rights and obligations regarding
insurance coverage claims arising from the COVID-19
pandemic, not the speculative declarations of federal courts
predicting difficult questions of state law. There is no reason
why these litigants should be left in the lurch and not benefit
from those courts’ authoritative determinations of state public
policy. The paucity of state court authority and the existence
of forthcoming state-court decisions addressing these policy
matters thus further militates against federal jurisdiction.
Federal courts “do not establish state law, [they] are limited to
predicting it.”19 Absent guidance from state courts on how to
resolve these questions and given the sweeping economic
consequences that a decision will have on the rights and
obligations of the parties and of those similarly situated, it is
more prudent and efficient for federal courts to abstain.20 No
more need be said.

II.

In short, the District Courts sufficiently addressed the
factors relevant to their decisions to abstain from exercising
jurisdiction under the DJA. These Courts had sufficient facts

18
Colo. River Water Conservation Dist., 424 U.S. at 814.
19
Summy, 234 F.3d at 135.
20
“It is not our function to find our way through a maze of local
statutes and decisions on so technical and specialized a subject
[matter] . . . . For one thing, it is too easy to lose our way.” Brillhart
v. Excess Ins. Co. of America, 316 U.S. 491, 497 (1942).

9
on the record to support their conclusion that the matters before
them implicate substantial questions of public policy whose
import transcends the cases at bar. Absent guidance from state
courts, these questions ought to be resolved by state courts in
the first instance and they should be decided without undue
delay. Even if their consideration of the Reifer factors was
deficient—which I believe it was not—that deficiency does not
warrant the delay for a renewed consideration of those factors
in light of the alternative considerations that support their
exercise of discretion.

For these reasons, I would affirm the judgments of the
District Courts.

10