COVID-19 Pandemic Claim For Damages Dismissed With Prejudice As Plaintiff Attempts To Flee To State Court (PA)
In the Eastern District of Pennsylvania case, Round Guys Brewing Company v. Cincinnati Insurance Company, Round Guys sought coverage for losses stemming from the omnipresent COVID-19 pandemic. Additionally, Round Guys attempted to remand the case back to Montgomery County, Pennsylvania, by arguing the case concerned matters of state law yet to be settled.
In the next round, Chief Judge Sánchez addressed the merits of Plaintiff’s claims as compared to Defendant’s Motion to Dismiss. The court stated that the insurance policy was unambiguous in that it only covered valid claims with respect to “loss” as defined by the policy. Under Round Guys’ policy, a covered loss required an element of physical damage or loss. As numerous courts have held, government orders do not create a sufficient event that bypasses what is first necessary, nor does an order from the Governor suffice as physical damage. Chief Judge Sánchez also observed that the commonly absent “virus exclusion” in business interruption insurance contracts was an equally unappealing argument as it too would require a showing of direct physical loss to Plaintiff’s property.
In the end, Defendant’s Motion to Dismiss was granted with prejudice, reinforcing the Eastern District as a favorable space for insurance companies to litigate when compared to the Pennsylvania Court of Common Pleas.
Thanks to Richard Dunne for his contribution to this post. If you have any questions, please email Matthew Care.