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State appeals court rules against policyholder in COVID BI suit


A Michigan appeals court has affirmed dismissal of COVID-19 business interruption litigation filed by a restaurant owner against his insurer, stating there is no evidence of direct physical loss or damage, as required by the policy.

“The word ‘physical’ necessarily requires the loss or damage to have some manner of tangible and measurable presence or effect in, on, or to the premises,” said the ruling issued by a three-judge panel of the Michigan Court of Appeals in Tuesday’s ruling in Gavrildes Management Co. LLC et al. v. Michigan Insurance Co., which affirmed a lower court decision. The case was filed by the owner of two restaurants in Lansing and Williamstown, Michigan.

Referring to the governor’s executive orders, the ruling said, “Plaintiffs’ restaurants were unambiguously closed by impersonal operation of a general law, not because anything about or inside the particular premises at issue had physically changed.”

The ruling also said the panel disagreed with the plaintiffs that a virus exclusion in the policy was vague.

Plaintiff attorney Matthew J. Heos, an attorney with The Nichols Law Firm PLLC in East Lansing, Michigan, said in a statement, “We are disappointed with the ruling, and will file an appeal with the Michigan Supreme Court.”

The insurer’s attorney did not respond to a request for comment.

In January, two state courts refused to dismiss COVID-19-related business interruption coverage litigation filed by a university against Factory Mutual Insurance Co.