PITTSBURGH – In concurring with other courts nationwide that found COVID-19 and mandatory shutdowns did not cause physical damage to commercial properties, a Pittsburgh federal judge threw out dozens of cases seeking coverage from Erie Insurance Group and other insurers for losses connected to the pandemic.
In an Oct. 14 opinion, U.S. District Court for the Western District of Pennsylvania Judge Mark R. Hornak rejected the businesses’ argument that the COVID-19 virus itself was found on surfaces in the early stage of the pandemic and thus, damaged their properties.
In many other cases, not being able to rise to the definition of loss or damage to property saw them be dismissed. Hornak agreed that this was the situation here.
“Even considering on their own and accepting as true plaintiffs’ allegations that the virus particles can become affixed to and remain stable on surfaces for 3 or 4 hours or for 1, 2, 3, 9 or 14 days, and in that way ‘change’ the surfaces, the natural plausible inference from those allegations is that the virus particles dissipate on their own, after those numbers of hours or days have passed, without any human intervention,” Hornak said.
“Based on those allegations, the impact that COVID-19 virus particles have on property on which it is present is wholly unlike the impact that, say, a fire that burns all or part of a structure has on property where a fire has occurred.”
Hornak’s ruling ended a multi-district litigation versus Erie Insurance Company, class action litigation against Cincinnati Insurance Company and lone businesses’ cases against Sentinel Insurance Company and Transportation Insurance Company, which all saw oral arguments take place in the U.S. District Court for the Western District of Pennsylvania this past May.
Plaintiffs in those cases were businesses throughout Pennsylvania, New York, Illinois, Tennessee, Virginia and West Virginia, locations where state and federal courts previously found in favor of insurers in similar legal actions, as Hornak pointed out.
“The near-uniform dismissal of claims like plaintiffs’ in the above-summarized cases applying the law of the jurisdictions involved in this MDL presents an uphill precedential path for plaintiffs,” Hornak added.
“There is not a persuasive basis advanced for this Court to conclude that the above-summarized cases were not soundly decided and are not reliable indicators of the path of the decisional law which this Court should follow as to how the highest courts of the jurisdictions whose law applies in this MDL would decide the issues raised in these actions – most importantly, the meaning of ‘direct physical loss of or damage to’ property and application of that phrase in the COVID-19 business interruption insurance litigation context.”
Hornak opined that at the start of the pandemic, though businesses like the plaintiffs had to scale back or shut down their normal operations, they were not uniquely affected in ways that “essential” businesses were not – and that the latter category were never labeled as unsafe for human occupancy.
“As the Court trusts that it conveyed to the parties at oral argument, it is self-evident that the COVID-19 pandemic has had detrimental consequences to people all over the world that cannot be overstated. However, it can also be accurate that the Erie policies to which the plaintiffs in this MDL were parties do not provide coverage for the additional consequences that plaintiffs assert that they as property and business owners suffered as a result of the pandemic and the associated government orders limiting how the properties could be used,” Hornak said.
“For the reasons explained above, the Court concludes that plaintiffs have not plausibly pleaded that they are entitled to coverage for their claimed losses under the Erie policies. The Court will therefore grant Erie’s motion to dismiss Counts One, Two, Three and Four of the consolidated amended complaint.”
MDL case 2969
U.S. District Court for the Western District of Pennsylvania case 1:21-mc-00001
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com