Allegheny County argues Crack'd Egg can't hide from covid restrictions under bankruptcy filing

A federal judge must decide if a bankruptcy case filed in his court can stop the Allegheny County Health Department from pursuing action against the Crack’d Egg, a Brentwood restaurant that has continued to operate despite an order in August shutting it down for violating state-mandated covid-19 mitigation orders.

The Crack’d Egg filed for Chapter 11 bankruptcy protection on Oct. 9 — just a few weeks after it filed a federal lawsuit against the county alleging civil rights violations. That section of the bankruptcy code allows a business to reorganize its debt while it continues to operate.

Typically, once bankruptcy proceedings begin, other court cases a business is involved in are automatically stayed. In this case, that would include the Common Pleas Court action filed by the health department against Crack’d Egg, which opened on Brownsville Road in 2015.

Attorneys for the county filed a motion with U.S. Bankruptcy Court Judge Jeffery A. Deller arguing that their action against Crack’d Egg should be an exception to the automatic stay. Deller said he would issue a decision on the matter shortly. However, he made clear his feelings about covid during an online hearing Tuesday morning.

“What is not unsettled is we have a pandemic. It is real. [Twenty million] people have been infected. 350,000 people have died. People have lost their jobs. People are in food lines,” Deller said. “It is real all the way around.”

The owner of the Crack’d Egg, Kimberly Waigand, has been public about her feelings and actions throughout the pandemic — claiming that she is standing against tyranny and protecting individual freedoms by remaining open and not requiring masks of employees or customers.

That flouting of the state’s mitigation orders is what led the county to issue a closure order against the restaurant in August. In their brief relative to the automatic stay, the county argued that their case falls under the “police power exception,” which allows it to proceed if they are promoting “public safety and welfare.”

Attorney Vijya Patel, who represents the county, argued during an online hearing with Deller Tuesday morning that the health department is simply trying to enforce the governor’s mask order to protect public health and safety.

Patel told the court that Crack’d Egg has continued to operate at 100% capacity since late August — despite the earlier closure orders and a recent order by Gov. Tom Wolf closing all indoor dining at the end of December to try to slow the spread of the covid. More than 1,000 people in Allegheny County have died from the novel coronavirus.

Patel said the county is asking that Crack’d Egg be closed until they provide and follow a covid-19 compliance plan.

Attorney James R. Cooney, who represents Crack’d Egg, said the governor’s orders are not valid. Because of that, he told the judge, the automatic stay should not be lifted because it is not a proper exercise of the exception’s police power.

Cooney said that Wolf’s universal mask mandate was “ruling by executive fiat,” and that he does not have the authority to issue such an order.

“Isn’t that putting the cart before the horse?” Deller asked. “That’s really a defense to whether a violation can be enforced, not whether the governmental agency is looking to implement regulations to impact health and safety.

“We have no statute here. We have no rules or regulations. We have a declaration by the governor that he can enact mitigation strategies that have no power in law.”

Deller asked whether the restaurant can make its argument over the mask mandate separately in the county court action. Patel said it could, but Cooney said then it will be too late.

“It will be the end of our business, your honor,” he said. “It will put us out of business.”

Deller, said, however, that the restaurant is asking him to “ignore the plain language of the bankruptcy code.”

But Cooney countered that the judge can decide if the police power exception to the stay applies.

Patel told Deller that it is the Crack’d Egg’s decision whether to follow the mask mandate and operate at 50% — rather than being forced to close.

Cooney responded, “All we have is a declaration by Gov. Wolf — ‘we are in a pandemic, and I can do whatever I want.’ It’s violative of my client’s civil rights.”