Wade Clark Mulcahy LLP

<p style="text-align: justify;">A Philadelphia insurer has asked a Philadelphia County judge to stay several cases it is facing from preschool franchisees, which claim they were improperly denied coverage for pandemic-related losses suffered after being forced to shut down. The insurer, pointing to a pending appeal in the Superior Court, argued that the holding would “likely be substantially controlling with respect to liability issues” in the pending actions. The pending appeal is a case out of Lackawanna County involving a local social club wherein the policyholder’s claim for COVID related business interruption coverage was rejected.</p>
<p style="text-align: justify;">Attorneys for the schools argued that there were key differences between the Philadelphia cases and the Lackawanna case, stating that the Philadelphia cases involved actual infections at the school locations whereas the Lackawanna case did not involve allegations of confirmed coronavirus cases at the social club. Accordingly, the schools argued that the Philadelphia cases triggered policy language covering losses due to viruses and other communicable diseases, while the Lackawanna case does not address the communicable disease rider and would offer little guidance for the court in the Philadelphia matters.</p>
<p style="text-align: justify;">Judge Glazer ultimately agreed and decided not to wait for the appeals court decision before moving forward with the schools’ claims. The judge denied the insurer’s motion citing the differences between the insurer, policy terms, and allegations set forth in the Philadelphia cases and the Lackawanna case.</p>
<p style="text-align: justify;">Accordingly, this ruling shows, if possible, courts may to try to distinguish COVID related coverage loss cases from each other, as to allow these cases to move forward. As COVID coverage cases continue to be an evolving area of law, we will continue to keep you posted as events progress.</p>
<p style="text-align: justify;">Thanks to Chelsea Rendelman for her contribution to this post. If you have any questions or comments, please contact <a href="mailto:chayes@wcmlaw.com">Colleen Hayes</a>.</p>