314 A.3d 954
R.I.2024Background
- Josephson, LLC ("Moinian"), a major real estate investment company, purchased an all-risk commercial property insurance policy from Affiliated FM Insurance Company ("AFM") in September 2019, covering losses due to physical damage and business interruption.
- During the COVID-19 pandemic, Moinian claimed millions in losses stemming from reduced bookings, unpaid rent, and lost rental opportunities at insured properties nationwide.
- Moinian submitted a claim to AFM, seeking coverage not only under the policy’s "Communicable Disease" enhancements but also for broader business losses under the main provisions.
- AFM denied coverage for general business losses, citing a policy exclusion for "contamination" (which included viruses), and stated only the Communicable Disease coverages might be triggered.
- Moinian sued for breach of contract and sought declaratory relief. The Superior Court granted summary judgment in favor of AFM on Count I, holding that the contamination exclusion barred coverage for losses arising from COVID-19, and Moinian appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether presence of COVID-19 at insured property is "physical loss or damage" | Presence of virus constituted "physical loss or damage" triggering coverage | Virus does not cause "physical loss or damage" under the policy | Court assumed (without deciding) in plaintiff's favor |
| Whether Contamination Exclusion bars coverage | Exclusion applies only to "costs" to remediate, not business "losses" | Exclusion applies broadly to all costs and losses due to contamination | Exclusion unambiguously bars all related coverage |
| Policy interpretation/ambiguity | Different terms (“costs” vs. “losses”) indicate exclusion is not absolute | Exclusion covers all contamination-related losses, no ambiguity | No ambiguity; exclusion is clear and applies |
| Summary judgment—properly decided | Further factual discovery needed on "physical loss or damage" | No material facts in dispute; issue is resolved by policy language | No error in granting summary judgment |
Key Cases Cited
- Allstate Ins. Co. v. Ahlquist, 59 A.3d 95 (R.I. 2013) (summary judgment standard and contract interpretation)
- Koziol v. Peerless Ins. Co., 41 A.3d 647 (R.I. 2012) (insurance policy construction rules and ambiguity analysis)
- Ajax Constr. Co., Inc. v. Liberty Mut. Ins. Co., 154 A.3d 913 (R.I. 2017) (insurance contract interpretation principles)
- Bliss Mine Road Condo. Ass’n v. Nationwide Prop. & Cas. Ins. Co., 11 A.3d 1078 (R.I. 2010) (policy ambiguity resolved against insurer)
- Textron, Inc. v. Aetna Cas. & Surety Co., 638 A.2d 537 (R.I. 1994) (ambiguities in insurance contracts construed against insurer)