Private preschools operator loses COVID appeal

In yet another appellate court ruling in favor of an insurer in a COVID-19 case, the 6th U.S. Circuit Court of Appeals on Friday held a group of private preschools is not entitled to business interruption coverage.

The Cincinnati-based appellate court ruled against Grove City, Ohio-based Dakota Girls LLC and 16 co-appellants in its ruling in favor of a Tokio Marine Holdings Inc. unit in Dakota Girls, LLC et. al. v. Philadelphia Indemnity Insurance Co. It was the latest of several appellate court rulings that have been issued against policyholders in COVID-19 business interruption cases.

In its original complaint, Dakota Girls argued it was entitled to coverage based on four policy provisions: business and personal property; business income; civil authority orders; and communicable disease and water-borne pathogens, according to the ruling.

In March, the U.S. District Court in Columbus, Ohio, granted Tokio Marine unit Philadelphia Indemnity’s motion to dismiss the case.

Based on the 6th Circuit’s earlier ruling in favor of the insurer in Santo’s Italian Café LLC v. Acuity Insurance Co., the preschool focused its appeal on just the communicable disease and water-borne pathogens claim.

This claim was rejected by a unanimous three-judge appeals court panel.

Dakota Girls never alleged “that someone in the schools actually had COVID-19” nor “that the Ohio statewide shutdown order arose ‘directly’ (or even indirectly) from an illness at the premises,” the ruling said.

”As we have just shown, the policy has a definite legal meaning – that coverage is triggered only by a shutdown order that stemmed from an actual illness caused by a communicable disease at the preschools. “

“That meaning precludes Dakota Girls’ bid for coverage under the communicable disease provision,” the panel said in affirming the lower court’s ruling dismissing the case.

Attorneys in the case didn’t respond to requests for comment.