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University of Colorado’s COVID suit can proceed

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U. of Colorado

For the second time this week, a state court has refused to dismiss COVID-19-related business interruption coverage litigation filed by a university against Factory Mutual Insurance Co.

The district court in Boulder, Colorado, rejected a motion by Factory Mutual for partial judgment in the case, which is scheduled for a 10-day trial beginning June 6, according to court papers in The Regents of the University of Colorado v. Factory Mutual Insurance Co.

 The insurer had argued that neither COVID-19’s presence nor the loss of the property’s use constitutes physical damage and that a contamination exclusion in the coverage applies. 

The court ruled that the phrase “physical loss or damage” is susceptible to more than one reasonable interpretation, citing a 1968 Colorado Supreme Court ruling, which held that the accumulation of gasoline around and under a church building constituted direct physical loss “when the premises became so infiltrated and saturated as to be uninhabitable.” 

When paired with the university’s allegation that the virus was found on numerous structures, it is “at least plausible to conclude that a property could become so saturated with contaminated objects, aerosols, and droplets, that its buildings were uninhabitable,” said the ruling, which also held that the coverage’s contamination exclusion “does not unambiguously foreclose coverage.”

Last week, the court denied Factory Mutual’s motion to delay discovery in the case.

On Monday, a New Jersey state court refused to dismiss a COVID-19 business interruption case filed by Rowan University against Factory Mutual.