588 F.Supp.3d 266
D. Conn.2022Background
- Plaintiff Dr. Jeffrey Milton, DDS, Inc. (Olentangy Pediatric Dentistry) insured its Ohio dental practice under a Hartford policy that includes Business Income, Extra Expense, and Civil Authority coverages.
- Policy includes a "Limited Fungi, Bacteria or Virus Coverage" endorsement that expressly excludes loss "caused directly or indirectly by ... virus."
- Ohio COVID-19 orders in March 2020 required cancellation of elective procedures and closure/restrictions for non‑essential businesses; plaintiff curtailed or closed operations and alleged COVID‑19 presence on premises.
- Plaintiff submitted a claim for business interruption, extra expense, and civil authority losses; Hartford denied coverage and moved to dismiss the amended complaint under Rule 12(b)(6).
- Court applied Connecticut law (no conflict with Ohio law) and found the virus exclusion unambiguous, held plaintiff failed to plead "direct physical loss or physical damage," and concluded civil authority coverage did not trigger.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of Virus Exclusion | Exclusion should not bar coverage for COVID‑19 losses; ejusdem generis or ISO 2006 endorsement differences create ambiguity | Virus exclusion unambiguously bars losses "caused directly or indirectly by ... virus," and COVID‑19 is a virus | Exclusion is unambiguous; COVID‑19 losses are excluded |
| Limited 30‑day Time‑Element/Subsection B.1.f. | Subsection B.1.f. provides limited coverage (30 days) independent of main exclusion | B.1.f must be read in context; it applies only where a covered cause (specified per policy) caused the fungi/bacteria/virus or where loss resulted in the organism | B.1.f does not provide standalone coverage for COVID‑19 losses; plaintiff fails to show required triggering specified cause |
| Direct physical loss or damage (Business Income/Extra Expense) | COVID‑19 presence and loss of use, plus physical changes (HEPA, barriers, signage), suffice as "direct physical loss or damage" | Policy requires tangible physical alteration or damage to property; mere presence or loss of use is insufficient | Allegations of viral presence and mitigation/reconfiguration do not show direct physical loss/damage; coverage not triggered |
| Civil Authority coverage | Closure orders prohibited use and thus trigger civil authority coverage | Civil Authority requires access be "specifically prohibited by order" as direct result of a Covered Cause of Loss to property in the immediate area; orders addressed human health and not property damage | Orders did not prohibit access (dental offices excepted) and, in any event, were not issued because of property damage; civil authority coverage fails |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard for plausibility)
- Lexington Ins. Co. v. Lexington Healthcare Grp., Inc., 84 A.3d 1167 (Conn. 2014) (insurer‑policy interpretation principles)
- 10012 Holdings, Inc. v. Sentinel Ins. Co., Ltd., 21 F.4th 216 (2d Cir. 2021) (closure orders due to COVID‑19 do not show risk of physical loss to property for civil authority coverage)
- Santo’s Italian Café LLC v. Acuity Ins. Co., 15 F.4th 398 (6th Cir. 2021) (COVID‑19 presence and shutdowns do not constitute direct physical loss or tangible destruction)
- Capstone Bldg. Corp. v. Am. Motorists Ins. Co., 67 A.3d 961 (Conn. 2013) (escape of a harmful substance that affects health, without more, is not property damage)
- Mastellone v. Lightning Rod Mut. Ins. Co., 884 N.E.2d 1130 (Ohio Ct. App. 2008) (surface mold not physical damage absent alteration of structural integrity)
- CSX Transp., Inc. v. Alabama Dep’t of Revenue, 562 U.S. 277 (2011) (use of ejusdem generis and canon limits)