Judge rules against Crack'd Egg, health department case can proceed

A federal judge ruled Thursday that Allegheny County may proceed with legal action against a Brentwood restaurant defying covid-19 mitigation orders despite a pending bankruptcy action.

The county health department ordered the Crack’d Egg to close in August for failing to follow universal masking and social distancing measures. However, restaurant owner Kimberly Waigand flouted the order and continued to operate.

In September, attorneys for Allegheny County filed an action against the restaurant for the ongoing violations, but it was automatically stayed when Waigand filed for Chapter 11 bankruptcy protection in October.

During a hearing on the matter on Tuesday before U.S. Bankruptcy Judge Jeffery A. Deller, the restaurant’s attorney James Cooney argued that the governor had no authority to issue the mitigation orders, and that the owners were not required to follow them.

On Thursday, Deller said the restaurant was “essentially” asking him declare the covid-19 mitigation orders unconstitutional.

“The court, however, declines to accept the debtor’s invitation to insert itself into the fray,” Deller wrote.

Instead, he said that the Crack’d Egg can raise those defenses itself in the Common Pleas Court proceedings.

That action was automatically stayed by the bankruptcy filing, but Allegheny County asked that it be allowed to proceed under an exception to the law that applies to an agency exercising police powers — such as by enforcing safety measures to protect patrons from a pandemic.

Deller agreed the exception applied, writing that the automatic stay “is designed to afford the honest but unfortunate debtor with respite from creditor collection activities.”

“The mere fact that a debtor has filed for bankruptcy protection does not obviate the requirement that a debtor abide by applicable law,” he wrote. “The court also observes that the automatic stay in bankruptcy is a shield and not a sword designed to afford a party with a litigation advantage.”

Congress did not write the provision into the law, he continued, to “provide a debtor in bankruptcy with a carte blanche excuse to avoid health and safety regulations.”

In his 14-page opinion, Deller, who previously made clear he would not tolerate covid-19 denialism, provided specific details about the speed with which the novel coronavirus spreads, as well as the toll it has taken nationally and locally.

“[I]n rendering this decision, the court is sympathetic to the fact that the debtor’s business (like lots of businesses throughout the United States) has suffered because of the pandemic,” Deller wrote.

Cooney said he doesn’t agree with the court’s decision, but called it well-reasoned. He appreciated that the judge took the time to write an opinion.

“He recognized we raised valid constitutional issues,” Cooney said. “We’re definitely going to raise those issues in state court.”