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A Pennsylvania state court has refused to dismiss a COVID-19-related business interruption suit filed by the New York Yankees’ Triple-A baseball team against CNA Financial Corp.
Citing previous federal and state court rulings in Pennsylvania, the Court of Common Pleas of Lackawanna County in Scranton ruled in favor of the owner of the Scranton/Wilkes-Barre RailRiders in litigation filed against CNA, according to Wednesday’s ruling in SWB Yankees, LLC v. CNA Financial Corp. et al.
The team had paid $61,900 for a “CNA Property Policy” that provided $51,970,220 in limits with a policy period of November 2019 through November 2020, according to the ruling.
The policy did not include a virus exclusion, the court said in holding that the case should not be dismissed on the basis there was no physical loss or damage.
“Long before the COVID-19 pandemic, federal and state courts in Pennsylvania established a ‘reasonable and realistic standard for identifying physical loss or damage’ to property in cases ‘where sources unnoticeable to the naked eye’ substantially reduce the use of covered property,” the decision said.
“During the COVID-19 pandemic, better-reasoned decisions across the country have applied the ‘physical contamination’ theory in finding business interruption coverage applicable if the insured asserts that the coronavirus was actually present on the covered property, and that its presence caused the premises to become uninhabitable, unusable, inaccessible, or unduly dangerous,” it said.
“Therefore, the insurers have not established their right to judgment in their favor based upon the ‘direct physical loss of or damage to’ property requirement,” said the court, which also refused to dismiss the team’s bad faith claims.
The court did agree to dismiss the charge that coverage should be granted on the basis that a civil authority had denied the baseball team access to the property.
A Sompo International Holdings Ltd. unit inappropriately tied its denial of a hotel investment trust’s COVID-19 business interruption claim to a separate cleanup provision in its environmental policy, a federal district court ruled.