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Pennsylvania Federal Court Pulls The Emergency Brake On Car Dealers’ COVID-19 Lawsuits (PA)

June 10, 2021

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<p style="text-align: justify;">In<em> <a href="https://www.wcmlaw.com/wp-content/uploads/2021/06/Star-Buick-et-al.-v.-Sentry-Ins.-Group.pdf">Star Buick, et al. v. Sentry Ins. Group</a></em>, the Eastern District of Pennsylvania on May 26, 2021 dismissed plaintiffs' Star Buick GMC, Star Buick GMC Cadillac, and Star Pre-Owned Bethlehem (collectively “Star Buick”) complaint seeking loss of business income pursuant to an all-risks business protection insurance policy. Star Buick filed an amended complaint seeking the loss of business income against its insurer, Sentry.</p>
<p style="text-align: justify;">Sentry filed a motion to dismiss on the pleadings on three separate grounds. First, Sentry argued that the insurance policy at issue only covers business income loss for direct physical loss of or damage to property. Second, Sentry argued that a civil authority endorsement was inapplicable as the same required physical damage off the premises that impeded access to Star Buick’s property. Finally, Sentry argued that a virus exclusion barred all coverage.</p>
<p style="text-align: justify;">The Court agreed that the COVID-19 pandemic did not cause a direct physical loss, holding that the modifier “direct” was essential, and that the “COVID-19 virus cannot be the basis for a physical loss.” The Court further determined that the civil authority endorsement was also inapplicable because the COVID-19 pandemic did not cause a physical loss to surrounding property that resulted in a government closure. Finally, the Court held that the virus exclusion plainly barred all coverage from COVID-19 losses, even if the previous two arguments were in Star Buick’s favor.</p>
<p style="text-align: justify;">This recent opinion continues to show how courts are ruling with respect to COVID-19 claims. As this area of law is continually developing, we will continue to keep you apprised as events progress.</p>
<p style="text-align: justify;">Thanks to Matt Care for his contribution to this post. If you have any questions or comments, please contact <a href="mailto:chayes@wcmlaw.com">Colleen Hayes</a>.</p>

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