HAIR STUDIO 1208, LLC, individually and on behalf of all others similarly situated, v. HARTFORD UNDERWRITERS INSURANCE CO.
Case 2:20-cv-02171-MSG; NO. 20-2171
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
May 14, 2021
CIVIL ACTION
MEMORANDUM OPINION
Governmentally-imposed shutdown orders and limitations on customer capacity to alleviate the spread of the COVID-19 virus have surely taken a toll on businesses across the United States. Many of these businesses have turned to their insurance companies for help, seeking coverage for their losses. In most cases, they have unfortunately been met with denials.
Plaintiff Hair Studio 1208, LLC is an indoor hair salon and personal care business that sought and was denied such insurance coverage from its insurer, Defendant Hartford Underwriters Insurance Company. Plaintiff sues for breach of contract and for a declaratory judgment on its own behalf and on behalf of other similarly-situated businesses. Defendants move for judgment on the pleadings pursuant to
I. FACTS IN THE AMENDED COMPLAINT
The following facts are set forth in the Amended Complaint:1
A. The Insurance Policies
Plaintiff operates an indoor hair salon whose services include hair styling, washing, and coloring. Plaintiff‘s business property
In the course of its business, Plaintiff obtained a Business Owner‘s Policy and related endorsements (the “Policy“) from Defendant, insuring Plaintiff‘s property and business practice, with effective dates of January 1, 2020 to January 2, 2021. The Policy is an “all-risk” policy that provides broad property and business interruption coverage except where excluded. The Policy also includes Business Income Coverage, Extra Expense Coverage, Extended Business Income Coverage, and Civil Authority Coverage. The Amended Complaint avers that the business interruption coverage is materially identical to an insurance industry standardized form that is used in all fifty states. (Id. ¶¶ 11, 13–16.)
Pursuant to the “Special Property Coverage Form,” the Policy covers “direct physical loss of or direct physical damage to Covered Property . . . caused by or resulting from a Covered Cause of Loss.” “Covered Cause of Loss” means “direct physical loss or direct physical damage unless the loss or damage is excluded or limited in this Coverage Part.” (Id., Ex. A, p. 18–19.) The Policy also includes an endorsement for “Business Income and Extra Expense” (the “Business Income endorsement“) and a Coverage Extension for “Civil Authority Actions” (the “Civil Authority endorsement“).
The Business Income endorsement specifically provides, in pertinent part:
We will pay for the actual loss of Business Income you sustain due to the necessary suspension of your “operations” during the “period of restoration“. The suspension must be caused by direct physical loss or direct physical damage to property at the “scheduled premises“, including personal property in the open (or in a vehicle) within 1,000 feet of the “scheduled premises“, caused by or resulting from a Covered Cause of Loss.
(Id., Ex. A., p. 61.)
The Civil Authority endorsement states, in pertinent part:
When a Covered Cause of Loss causes direct physical loss or direct physical damage to property other than at the “scheduled premises“, we will pay for the actual loss of Business Income you sustain and necessary Extra Expense you incur during the “civil authority period of restoration” caused by action of civil authority that prohibits access to the “scheduled premises” provided that both of the following apply:
(a) Access to the area immediately surrounding the damaged property is prohibited by civil authority as a result of the damage, and the “scheduled premises” are within that area but are not more than one mile from the damaged property; and
(b) The action of civil authority is taken in response to dangerous physical conditions resulting from the damage or continuation of the Covered Cause of Loss that caused the damage, or the action is taken to enable a civil authority to have unimpeded access to the damaged property.
(Id., Ex. A, p. 72.)
The Policy also excludes losses from “virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.” Specifically, this “Virus Exclusion” states:
We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or
in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area: . . .
Any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.
(Id., Ex. A, pp. 21, 23.)
B. The Losses
In January 2020, the United States of America saw its first cases of persons infected by COVID-19, the spread of which has since been designated a worldwide pandemic. Given the stable and transmittable nature of the virus, the Centers for Disease Control (“CDC“) recommended avoiding indoor activities. As such, on March 6, 2020, Pennsylvania Governor Tom Wolf, acting pursuant to
On March 19, 2020, Governor Wolf ordered the closure of all non-life-sustaining businesses, stating in pertinent part:
No person or entity shall operate a place of business in the Commonwealth that is not a life sustaining business regardless of whether the business is open to members of the public. This prohibition does not apply to virtual or telework operations (e.g., work from home), so long as social distancing and other mitigation measures are followed in such operations.
(Id. ¶ 23.)
On March 23, 2020, Governor Wolf issued a “Stay at Home” order that provided:
All individuals residing in Allegheny County, Bucks County, Chester County Delaware County, Monroe County, Montgomery County, and Philadelphia County are ordered to stay at home except as needed to access, support, or provide life sustaining business, emergency, or government services. For employees of life sustaining businesses that remain open, the following child care services may remain open: group and family child care providers in a residence; child care facilities operating under a waiver granted by the Department of Human Services Office of Child Development and Early Learning; and part-day school age programs operating under an exemption from the March 19, 2020 business closure Orders.
(Id. ¶ 26.) By way of order on April 20, 2020, this proclamation and order were extended through May 8, 2020. (Id. ¶ 28.)
On March 16, 2020, Plaintiff closed its business and stopped providing hair and personal care services as a result of the above proclamations and orders. Because Plaintiff was unable to use its property for its intended purpose, it sought coverage under its Policy with Defendant claiming business interruption, extra expense, interruption by civil authority, and other expenses. In a letter dated April 3, 2020, Defendant denied coverage for Plaintiff‘s losses, citing in part to the “Virus Exclusion.” (Id. ¶¶ 30–31, 33, 36.)
Plaintiff filed a Complaint on May 5, 2020, and an Amended Complaint on July 27, 2020, alleging breach of contract and seeking a declaratory judgment against Defendant. Plaintiff also brings its claims on behalf of other similarly-situated persons and entities.
II. STANDARD OF REVIEW
A motion for judgment on the pleadings, under
Under
The United States Court of Appeals for the Third Circuit has detailed a three-step process to determine whether a complaint meets the pleadings standard. Bistrian v. Levi, 696 F.3d 352 (3d Cir. 2014). First, the court outlines the elements a plaintiff must plead to state a claim for relief. Id. at 365. Next, the court must “peel away those allegations that are no more than conclusions and thus not entitled to the assumption of truth.” Id. Finally, the court “look[s] for well-pled factual allegations, assume[s] their veracity, and then ‘determine[s] whether they plausibly give rise to an entitlement to relief.‘” Id. (quoting Iqbal, 556 U.S. at 679). The last step is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. (quoting Iqbal, 556 U.S. at 679).
III. DISCUSSION
The questions at issue here involve the interpretation of the insurance contract between Plaintiff and Defendant. Under Pennsylvania law, the interpretation of an insurance contract is a question of law. 401 Fourth St., Inc. v. Investors Ins. Grp., 879 A.2d 166, 170 (Pa. 2005). The task of interpreting an insurance contract is generally performed by the court rather than a jury, and “[t]he purpose of that task is to ascertain the intent of the parties as manifested by the terms used in the written insurance policy.” Id. at 171. “[A]ll provisions of an insurance contract must be read together and construed according to the plain meaning of the words involved, so as to avoid ambiguity while at the same time giving effect to all of its provisions.” Post v. St. Paul Travelers Ins. Co., 691 F.3d 500, 517 (3d Cir. 2012) (quoting Masters v. Celina Mut. Ins. Co., 224 A.2d 774, 776 (Pa. Super. 1966)). Where no genuine issues of material fact exist and “[w]hen the language of the policy is clear and unambiguous, a court is required to give effect to that language.” 401 Fourth Street, 879 A.2d at 171.
The insured bears the initial burden of establishing coverage under the policy. State Farm Fire & Cas. Co. v. Estate of Mehlman, 589 F.3d 105, 111 (3d Cir. 2009) (citations omitted). If the insured meets that burden and the insurer relies on a policy exclusion as the basis for denying coverage, the insurer then has the burden of proving that the cited exclusion applies. Id.; Wolfe v. Ross, 115 A.3d 880, 884 (Pa. Super. Ct. 2015). Exclusions are strictly construed against the insurer. Selko v. Home Ins. Co., 139 F.3d 146, 152 n.3 (3d Cir. 1998). However, “[e]xclusions from coverage contained in an insurance policy will be effective against an insured if they are clearly worded and conspicuously displayed, irrespective of whether the insured read the limitations or understood their import.” Pacific Indem. Co. v. Linn, 766 F.2d 754, 761 (3d Cir. 1985).
Here, Defendant argues that Plaintiff has not plausibly alleged that it suffered covered losses under the Policy at issue, and, even if such losses are covered, they fall within the Virus Exclusion. Plaintiff responds that: (1) its losses are, in fact, covered losses with the Policy‘s terms, and (2) the Virus Exclusion does not apply.
A. Whether There Is a Covered Loss
As noted above, Plaintiff bears the burden of establishing that it suffered a covered loss under the Policy. In an effort to plead a covered loss, Plaintiff contends that insurance coverage for its COVID-19 related losses exists under either or both of the Business Income endorsement or the Civil Authority endorsement in the policies. Defendant challenges the existence of coverage under either endorsement.
1. Business Income Endorsement
Plaintiff first posits the policies at issue are “all-risk” policies, meaning that “policyholders do not have the burden to affirmatively demonstrate coverage, but rather, need only show that a loss has occurred.” (Pl.‘s Resp. 6.) It argues that as long as a reasonable person could conclude that the claimed loss is covered by language anywhere in the policy or the endorsements, the insured has carried its burden. Plaintiff presses that it sustained a direct physical loss of or damage to its property because it suffered an interruption to its use of and access to its premises for the purpose of operating its hair salon and providing hair salon services. Accordingly, Plaintiff contends that coverage exists under the Policy.
This argument improperly reverses the well-established burden of proof under Pennsylvania law. As noted above, an insured bears the initial burden of establishing coverage under the policy. Mehlman, 589 F.3d at 111. Plaintiff is correct that an “all-risk” policy is a special kind of insurance policy that “covers every kind of insurable loss except what is specifically excluded.” Betz v. Erie Ins. Exch., 957 A.2d 1244, 1255–56 (Pa. Super. Ct. 2008) (quoting Black‘s Law Dictionary 815 (8th
the coverage clause cannot be regarded as covered thereby merely because it is not within any of the specific exceptions . . . . “)).
Here, the coverage provisions of the Policy expressly provide that Defendant “will pay for direct physical loss of or direct physical damage to Covered Property at the premises described in the Declarations . . . caused by or resulting from a Covered Cause of Loss.” (Am. Compl., Ex. A., p. 19.) A “Covered Cause of Loss” means direct physical loss or direct physical damage unless the loss or damage is excluded or limited in this Coverage Part.” (Id. at p. 19.) The Business Income endorsement extends the available coverage by providing, in pertinent part:
We will pay for the actual loss of Business Income you sustain due to the necessary suspension of your “operations” during the “period of restoration“. The suspension must be caused by direct physical loss or direct physical damage to property at the “scheduled premises“, including personal property in the open (or in a vehicle) within 1,000 feet of the “scheduled premises“, caused by or resulting from a Covered Cause of Loss.
(Id. at p. 61.)
Thus, a plain reading of the unambiguous language of the Policy—and one that gives effect to all of the provisions therein—reveals that in order for a loss to be covered, there must be a “covered cause of loss,” which results in “direct physical loss or direct physical damage to property.” This phrase is crafted in the disjunctive, meaning there must either be “direct physical loss” or “direct physical damage to the property.” Frank Van‘s Auto Tag, LLC v. Selective Ins. Co., No. 20-cv-2740, 2021 WL 289547, at *4 (E.D. Pa. Jan. 28, 2021).
Direct physical damage is “a distinct, demonstrable, physical alteration of the property.” Newchops Restaurant Comcast LLC v. Admiral Indem. Co., Nos. 20-cv-1949, 20-cv-1869, 2020 WL 7395153, at *5 (E.D. Pa. 2020) (quoting 10A Couch on Ins. § 148.46 (3d ed.
The United States Court of Appeals for the Third Circuit has expanded on both of these definitions in several key cases. In Port Authority of New York and New Jersey v. Affiliated FM Insurance Co., supra, the Third Circuit considered an insurance claim for alleged losses due to the presence of asbestos. Interpreting an identical insurance provision under New Jersey and New York law, the Court remarked that allegations of physical damage to a building from “sources unnoticeable to the naked eye must meet a higher threshold.” Id. at 235. The Court concluded that the “mere presence of asbestos, or the general threat of future damage from that presence, lacks the distinct and demonstrable character necessary for first-party insurance coverage.”3 Id. at 236.
Subsequently, in the unpublished decision of Motorists Mutual Ins. Co. v. Hardinger, 131 F. App‘x 823, 826 (3d Cir. 2005), the Third Circuit extended the principles dictated in Port Authority to the meaning of “direct physical loss” under Pennsylvania law. Id. at 826. The insureds in that case sought insurance coverage due to the presence of bacteria in the home‘s well that caused them to become sick. Id. at 824. The Third Circuit reiterated the standard set forth in Port Authority and noted that, where the damage involves “sources unnoticeable to the naked eye,” “physical loss or damage” occurs where that source nearly eliminates or destroys the property, renders it “useless or uninhabitable,” or causes “loss of utility.” Id. at 826 (citing Port Authority). The Court found that summary judgment was inappropriate in that case because there was a genuine issue of fact as to whether the functionality of the insureds’ home was nearly eliminated or destroyed, or whether property was made useless or uninhabitable by the presence of bacteria in the home. Id. at 826–27.
Numerous decisions from within this Circuit are instructive on whether the threat of COVID-19 constitutes “direct physical loss or direct physical damage to property.” These decisions have almost uniformly concluded that such a threat does not trigger insurance coverage.4 See, e.g., Paul Glat MD, P.C. v. Nationwide Mut. Ins. Co., No. 20-cv-5271, 2021 WL 1210000, at *5–6 (E.D. Pa. Mar. 31, 2021); Eric R. Shantzer, DDS v. Travelers Cas. Ins. Co. of Am., No. 20-cv-2093, 2021 WL 1209845, at *4 (E.D. Pa. Mar. 31, 2021); Tria WS LLC v. Am. Auto. Ins. Co., No. 20-4159, 2021 WL 1193370, at *3–5 (E.D. Pa. Mar. 30, 2021); Chester Cty. Sports Arena v. The Cincinnati Specialty Underwriters Ins. Co., Nos. 20-cv-2021 et al., 2021 WL 1200444, at *7 (E.D. Pa. Mar. 30, 2021); Kahn v. Pa. Nat‘l Mut. Cas. Ins. Co., No. 20-cv-781, 2021 WL 422607, at *6–7 (E.D. Pa. Feb. 8, 2021); Frank Van‘s, 2021 WL 289547, at *6–7; 1 S.A.N.T., Inc. v. Berkshire Hathaway, Inc., No. 20-cv-862, 2021 WL 147139, at *6–7 (W.D. Pa. Jan. 15, 2021); Rest. Grp v. Certain Underwriters at Lloyd‘s, London, No. 20-cv-2365, 2021 WL 131339, at *5–6 (E.D. Pa. Jan. 14, 2021); Ultimate Hearing Solutions II, LLC v. Twin City Fire Ins. Co., No. 20-2401, 2021 WL 131556, at *6–7 (E.D. Pa. Jan. 14, 2021); Newchops, 2020 WL 7395153, at *5; Kessler Dental Assocs., P.C. v. Dentists’ Ins. Co., No. 20-cv-3376, 2020 WL 7181057, at *4 (E.D. Pa. Dec. 7, 2020); 4431, Inc. v. Cincinnati Ins. Cos., No. 20-cv-4396, 2020 WL 7075318, at *11–12 (E.D. Pa. Dec. 3, 2020); Toppers Salon & Health Spa, Inc. v. Travelers Prop. Cas. Co. of Am., No. 20-cv-3342, 2020 WL 7024287, at *3–4 (E.D. Pa. Nov. 30, 2020); Brian Handel D.M.D., P.C. v. Allstate Ins. Co., No. 20-3198, 2020 WL 6545893, at *3 (E.D. Pa. Nov. 6, 2020).5
Against this legal landscape, I find that “for Plaintiff[] to assert an economic loss resulting from their inability to operate their premises as intended within the coverage of the Policy‘s ‘physical loss’ provision, the loss and the bar to operation from which it results must bear a causal relationship to some physical condition of or on the premises and that the premises must be uninhabitable and unusable, or nearly as such.” Humans & Resources, LLC v. Firstline Nat‘l Ins. Co., No. 20-cv-2152, 2021 WL 75775, at *7 (E.D. Pa. Jan. 8, 2021). Plaintiff has not alleged
either physical loss or physical damage within the meaning of the Policy. Unlike in Motorist‘s Mutual, where there were specific allegations of bacteria in the insured property, Plaintiff does not assert the presence of COVID-19 on its property. Indeed, the Amended Complaint does not allege any facts regarding the physical integrity or use of the Covered Property. Rather, Plaintiff contends that it closed its business due to Governor Wolf‘s Closure Orders. (Am. Compl. ¶ 29–32.) Thus, contrary to the cases on which Plaintiff relies,6 there was no physical source or threatened
In pressing for coverage, Plaintiff alleges alternatively that the “covered cause of loss” is not the threat of COVID-19 itself but the Closure Orders that have caused physical loss including “access to its hair salon for its intended and insured purpose and function, as well as access to chairs, sinks, blow dryers and other equipment, which Plaintiff cannot use for hair styling, washing, and coloring.” (Am. Compl. ¶¶ 31, 32.) In support of this argument, Plaintiff cites to North State Deli, LLC v. Cincinnati Ins. Co., 20-v-2569, 2020 WL 6281507, at *3 (N.C. Super.
Ct. Oct. 9, 2020). Relying on dictionary definitions of the words “direct,” “physical,” and “loss,” the North Carolina Superior Court held that these terms “includes the inability to utilize or possess something in the real, material, or bodily world, resulting from a given cause without the intervention of other conditions.” Id. at *3. Noting that “direct physical loss” included “loss of use or access to covered property even where that property has not been structurally altered,” the North Carolina court, with little additional analysis, found that government orders prohibiting plaintiffs from using their business due to the threat of COVID-19 were, in fact, covered losses. Id. at *3–4.
I find North State Deli‘s interpretation contrary to the language of the Policy as construed under the dictates of Pennsylvania law.7 As noted above, the Policy term at issue is “direct physical damage or direct physical loss.” The Closure Orders, however, have no impact on the physical condition of the insured premises and do not physically make the premises either uninhabitable or unusable for their intended purpose. As such, to read the insurance policies as covering losses from the Closure Orders would render the Policy‘s use of the word “physical” meaningless or superfluous. See Pac. Employers Ins. Co. v. Global Reinsurance Corp. of Am., 693 F.3d 417, 428 (3d Cir. 2012) (holding that an insurance contract should not be interpreted so as to render certain words superfluous). Mere loss of use of property without any physical change to that property cannot constitute direct physical loss or damage to the property.8 See T & E
Chicago LLC v. Cincinnati Ins. Co., No. 20-cv-4001,2020 WL 6801845, at *5 (N.D. Ill. Nov. 19, 2020) (noting that policy‘s
This interpretation is amplified by the language in the business income endorsement that the covered loss of business income is that sustained “due to the necessary suspension of your ‘operations’ during the ‘period of restoration‘.” The Policy defines “period of restoration” as beginning after the “direct physical loss or direct physical damage” and ending on the earlier of “[t]he date when the property at the ‘scheduled premises’ should be repaired, rebuilt or replaced with reasonable speed and similar quality” or “the date when [the] business is resumed at a new, permanent location.” (Am. Compl., Ex. A, p. 35.) In other words, the Policy provides coverage during a “period of restoration” requiring some correction of a physical condition at the property. “If there is no requirement that physical loss of or physical damage to the property be involved, the definition of the time for paying the claim makes no sense.” Real Hospitality LLC v. Travelers Cas. Ins. Co. of Am., No. 20-cv-0087, 2020 WL 6503405, at *6 (S.D. Miss. Nov. 4, 2020).
In short, nothing in the Amended Complaint suggests that Plaintiff‘s Property needs to be repaired, rebuilt, replaced, or moved to a new location. Rather, Plaintiff‘s ability to operate fully depends solely on whether the Closure Orders are in effect at any particular time. Should the Closure Orders be lifted, Plaintiff may immediately reopen its business without any “period of restoration.” Accordingly, I do not find that the Closure Orders themselves resulted in either physical damage or physical loss.9
Absent some sort of direct physical loss or direct physical damage to Plaintiff‘s Property, Plaintiff has not met its burden of proof of showing a covered loss under the Policy.
2. Coverage Under the Civil Authority Endorsement
Plaintiffs next contend that even if coverage did not exist under the Business Income endorsement of the policy, coverage was extended to this particular situation under the Civil Authority endorsement. This endorsement states, in pertinent part:
When a Covered Cause of Loss causes direct physical loss or direct physical damage to property other than at the “scheduled premises“, we will pay for the actual loss of Business Income you sustain and necessary Extra Expense you incur during the “civil authority period of restoration” caused by action of civil authority that prohibits access to the “scheduled premises” provided that both of the following apply:
(a) Access to the area immediately surrounding the damaged property is prohibited by civil authority as a result of the damage, and the “scheduled premises” are within that area but are not more than one mile from the damaged property; and
(b) The action of civil authority is taken in response to dangerous physical conditions
resulting from the damage or continuation of the Covered Cause of Loss that caused the damage, or the action is taken to enable a civil authority to have unimpeded access to the damaged property.
(Am. Compl., Ex. A., p. 72.)
Plaintiff argues that each of Civil Authority endorsement‘s “prongs” is adequately pled: (1) property “within one mile” of the insured premises experienced “direct physical loss or direct physical damage,” (2) which caused an “action of civil authority” to “prohibit[] access” to the insured premises, and (3) “[t]he action of civil authority is taken in response to dangerous physical conditions resulting from the damage or continuation of the Covered Cause of Loss that caused the damage. Plaintiff contends that “[t]he pandemic in the Commonwealth created a disaster emergency affecting both people and property and resulting in direct physical loss or damage to property within one mile of Plaintiff‘s premises, and the Governor‘s orders were issued in response to that physical loss or damage.” (Pl.‘s Resp. 20.) Plaintiff goes on to posit that pandemic-related property damage has spread throughout Pennsylvania, including locations within one mile of Plaintiff‘s property.
“[A] plain reading of the Civil Authority coverage provision unambiguously requires an allegation that another property, besides the insured premises, suffered some ‘physical loss’ or ‘damage.‘” Kahn, 2021 WL 422607, at *8. The Amended Complaint here, however, is devoid of any allegation that any property “within one mile” of the insured premises experienced any “direct physical loss or direct physical damage.” The absence of any such allegation is fatal to Plaintiff‘s claim10. See Frank Van‘s, 2021 WL 289547, at *7 (holding that failure to allege that other properties sustained damage is fatal to coverage under a Civil Authority provision); see also Toppers, 2020 WL 7024287, at *4 (“Toppers [Salon and Health Spa] did not close because of damage to a nearby premise or because there was some dangerous physical condition at another nearby premise. It closed because the Shutdown Orders applied to its own operations. Its shutdown and resulting losses fall outside the scope of the Civil Authority coverage.“).
Moreover, the relevant Closure Orders were not issued in response to “dangerous physical conditions resulting from the damage or continuation of the Covered Cause of Loss.” Rather, the Closure Orders were issued to prevent the spread of the COVID-19 virus to any of these properties. That fact brings this claim outside the coverage of the Civil Authority endorsement. See Frank Van‘s, 2021 WL 289547, at *7 (“[T]he orders enforced the stated need for social distancing to prevent future viral transmission. . . . But the fear of the virus in nearby properties does not establish physical damage.“); Newchops, 2020 WL 7395153, at *6 (noting that “[t]he shutdown orders and accompanying proclamations were in response to the COVID-19
Finally, I note that Plaintiff has not alleged that the Closure Orders “prohibit[ed] access to the ‘scheduled premises‘” as required by the Civil Authority endorsement. Brian Handel, D.M.D., 2020 WL 6545893, at *3 (finding no coverage under Civil Authority endorsement because “[p]laintiff‘s property remained inhabitable and usable, albeit in limited ways“). Rather, Plaintiff contends that it lost access to its hair salon for its intended purpose, including hair styling, washing, and coloring. (Am. Compl. ¶ 32.) Such an allegation is insufficient to meet the Civil Authority endorsement. See Pappy‘s Barber Shops, Inc. v. Farmers Grp., No. 20-cv-907, 2020 WL 5500221, at *6 (S.D. Cal. Sept. 11, 2020) (“The Policy insures property, in this case Plaintiff‘s property and physical places of business, and not Plaintiff‘s business itself. To that end, the civil authority coverage provision only provides coverage to the extent that access to Plaintiff‘s physical premises is prohibited, and not if Plaintiffs are simply prohibited from operating their business. The government orders alleged in the complaint prohibit the operation of Plaintiff‘s business; they do not prohibit access to Plaintiffs’ place of business.“).11
Accordingly, I find that the Amended Complaint fails to plausibly allege coverage under the Civil Authority endorsement.
3. Virus Exclusion
In an alternative basis for its Motion to Dismiss, Defendant argues that even assuming Plaintiff could establish a covered loss under the policies, Plaintiff‘s claims are expressly barred by the “Virus Exclusion.” As noted above, the Virus Exclusion states, in pertinent part:
We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area:
. . .
Any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.
(Am. Compl., Ex. A, pp. 21, 23.) Defendant contends that Plaintiff‘s alleged losses fall squarely within the exclusion as COVID-19 is a “virus” that is “capable of inducing physical distress, illness or disease.”
Under Pennsylvania law, the insurer has the burden of showing that policy exclusions preclude coverage. Miller v. Boston Ins. Co., 218 A.2d 275, 277 (Pa. 1966);
Am. States Ins. Co. v. Maryland Cas. Co., 628 A.2d 880, 887 (Pa. Super. 1993). Numerous courts, applying Pennsylvania law, have thoroughly addressed arguments regarding the Virus Exclusion‘s applicability to insurance claims based on COVID-19 shutdowns. These cases have almost unanimously concluded
I decline to weigh in on the impact of this exclusion given the plethora of jurisprudence that has opined on it to date. Having already found that Plaintiff has not plausibly pled coverage under the Policy, I will dismiss its claims without independently addressing the applicability of the Virus Exclusion here.12
IV. CONCLUSION
I recognize the horrific economic impact the COVID-19 pandemic has had on small businesses in this country. Certainly, no one could have reasonably foreseen this pandemic let alone confirmed that they had insurance coverage for such an occurrence. Nonetheless, the fact remains that the Policy here, as written, does not provide coverage for the loss of business income
Plaintiff has suffered. Accordingly, I will grant the Motion for Judgment on the Pleadings and dismiss the Amended Complaint in its entirety.