J-E01002-22
2022 PA Super 204
TIMOTHY A. UNGAREAN, DMD D/B/A IN THE SUPERIOR COURT
SMILE SAVERS DENTISTRY, PC, OF PENNSYLVANIA
INDIVIDUALLY AND ON BEHALF OF A
CLASS OF SIMILARLY SITUATED
PERSONS
Appellee
v.
CNA AND VALLEY FORGE INSURANCE
COMPANY
Appellants No. 490 WDA 2021
Appeal from the Order Entered March 26, 2021
In the Court of Common Pleas of Allegheny County
Civil Division at No: GD-20-006544
TIMOTHY A. UNGAREAN, DMD D/B/A IN THE SUPERIOR COURT
SMILE SAVERS DENTISTRY, PC, OF
INDIVIDUALLY AND ON BEHALF OF A PENNSYLVANIA
CLASS OF SIMILARLY SITUATED
PERSONS
Appellee
v.
CNA AND VALLEY FORGE INSURANCE
COMPANY
Appellants No. 948 WDA 2021
Appeal from the Order Entered March 26, 2021
In the Court of Common Pleas of Allegheny County
Civil Division at No: GD-20-006544
BEFORE: PANELLA, P.J., BENDER, P.J.E., BOWES, J., LAZARUS, J., STABILE,
J., KUNSELMAN, J., NICHOLS, J., McLAUGHLIN, J., and KING, J.
J-E01002-22
DISSENTING OPINION BY STABILE, J.: FILED: NOVEMBER 30, 2022
I respectfully dissent. In affirming the trial court, the Majority endorses
a strained construct of the Policy1 that parses individual words under
dictionary meanings to arrive at a disjointed and unreasonable interpretation
of the operative phrase at issue - “direct physical loss or damage to property”.
In doing so, the Majority violates rules relating to contract interpretation that
do not allow individual terms and provisions to be read in isolation. Individual
terms must be considered under the policy as a whole. The Majority decision
now places Pennsylvania as an outlier from the near unanimous conclusions
reached by all state and federal courts to have considered the meaning of
substantially similar language. I would accordingly reverse the trial court and
grant summary judgment in favor of the Appellants, CNA and Valley Forge
Insurance Company, and against the Appellee, Timothy A. Ungarean.
As the Majority explains, the operative facts are straightforward and not
substantially in dispute. Appellants sold Ungarean an insurance Policy
covering, among other things, “direct physical loss of or damage to Covered
Property”—that Property being buildings in Aliquippa, Pennsylvania, and
Pittsburgh, Pennsylvania, in which Ungarean operates his dentistry practice.
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1 Reference to the “Policy” herein is to the “Businessowners Special Property
Coverage Form” and the “Business Expense and Extra Expense” endorsement
purchased by Ungarean for his business. The Policy appears in the certified
record as Exhibit “B” to Ungarean’s June 5, 2020 complaint and Exhibit “A” to
Appellants’ July 30, 2020 answer and new matter.
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Policy, Businessowners Special Property Coverage Form, at ¶ A. On March 6,
2020, in response to the spread of the Covid-19 virus, Governor Tom Wolf
issued a Proclamation of Disaster Emergency. Subsequent executive orders
followed, resulting in the temporary closure of many non-essential businesses.
Ungarean’s dental practice was designated a life-sustaining business, thus
permitting him to continue to use his business premises for emergency
procedures only. Nonetheless, like so many similarly situated parties,
Ungarean suffered a significant disruption of his business activity during the
Covid-19 pandemic. And like many similarly situated parties, Ungarean
believed his economic losses due to the loss of use of his business premises
were covered under his commercial property insurance. Ungarean filed a claim
under the Policy seeking coverage for the economic losses he sustained from
the inability to provide non-emergency dental care on his business premises.
Appellants, like many other insurers who have issued polices with
substantially similar terms, denied the claim because Ungarean’s commercial
property did not suffer any physical damage. This issue has made its way
through many of our nation’s federal and state courts, but it is an issue of first
impression in Pennsylvania. Contrary to the Majority, I would reach the same
result as the almost unanimous majority of jurisdictions to have addressed
this issue: the Policy does not cover mere loss of use of commercial property
unaccompanied by physical alteration or other condition present in the
property that renders the property itself unusable or uninhabitable.
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The parties dispute whether the Policy covers Ungarean’s claim and, if
so, whether any of the Policy’s exclusions applies. I conclude that no coverage
exists and would reverse and remand for an order entering summary
judgment2 in favor of Appellants.
Under Ungarean’s Policy, CNA agreed to pay for “direct physical loss or
damage to Covered Property at the premises … caused by or resulting from a
Covered Cause of Loss.” Coverage Form, at A., p.1. (Emphasis added).
Covered Property includes Buildings and Business Personal Property as defined
in the Policy. Id. at A.1. “Covered Causes of Loss” are “Risks of Direct
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2 Summary judgment is appropriate where there is no genuine issue of fact
as to the matter in controversy and the moving party is entitled to judgment
as a matter of law. Pa.R.Civ.P. 1035.2(1); Summers v. Certainteed Corp.,
997 A.2d 1152, 1159 (Pa. 2010). The appeal before us presents a question
of law; our standard of review is de novo and our scope of review is plenary.
Summers, 997 A.2d at 1159-60.
An insured may invoke the Declaratory Judgments Act, 42 Pa.C.S.A. § 7531,
et seq., to determine whether an insurance contract covers an asserted claim.
Genaeya Corp. v. Harco Nat’l Ins. Co., 991 A.2d 342, 346 (Pa. Super.
2010). Where the language of the policy is clear, this Court must give it effect.
Indalex Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 83 A.3d 418,
420 (Pa. Super. 2013), appeal denied, 99 A.3d 926 (Pa. 2014). “Also, we
do not treat the words in the policy as mere surplusage and, if at all possible
we construe the policy in a manner that gives effect to all of the policy's
language.” Id. at 421. We will construe any ambiguity in favor of the insured.
Id. at 420-21. “Contract language is ambiguous if it is reasonably susceptible
to more than one construction and meaning.” Pennsylvania Nat’l Mut. Cas.
Ins. Co. v. St. John, 106 A.3d 1, 24 (Pa. 2014). The insured bears the initial
burden of establishing that the asserted claim is covered. Erie Ins. Grp. v.
Catania, 95 A.3d 320, 322–23 (Pa. Super. 2014). If the insured is successful,
the insurer bears the burden of establishing the applicability of an exclusion.
Id.
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Physical Loss”, unless the loss is excluded under section B, Exclusions, the
loss is limited under paragraph A.4, Limitations, or otherwise excluded
elsewhere under the Policy. Id. at A.3.
The additional coverage purchased by Ungarean in the form of a
“Business Income and Extra Expense” endorsement, the text of which forms
the dispositive issue in this appeal, provides in pertinent part:
1. Business Income
b. 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 of
or damage to property at the described premises. The
loss or damage must be caused by or result from a
Covered Cause of Loss. ….
***
2. Extra Expense
a. means reasonable and necessary expenses you incur
during the “period of restoration” that you would not
have incurred if there had been no direct physical loss
of or damage to property caused by or resulting from
a Covered Cause of Loss.
b. We will pay Extra Expense (other than the expense to
repair or replace property) to:
1. Avoid or minimize the “suspension” of business and
to continue “operations at the described premises or
at replacement premises or temporary locations,
including relocation expenses and costs to equip and
operate the replacement premises or temporary
locations; or
2. Minimize the suspension of business if you cannot
continue operations.
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CNA Policy, Business Income and Extra Expense Endorsement, at 1.b., 2a, 2b.
(Emphasis added).
A “suspension” occurs under the Policy when the insured suffers the
“partial or complete cessation of […] business activities.” Policy, Business
Owners Special Property Coverage Form, ¶ G.29.
The Policy defines “period of restoration” in relevant part as a period of
time that:
a. Begins with the date of direct physical loss or damage
caused by or resulting from any Covered Cause of
Loss at the described premises; and
b. Ends on the earlier of:
1. The date when the property at the
described premises should be repaired,
rebuilt, or replaced with reasonable speed
and similar quality; or
2. The date when business is resumed at a new,
permanent location.
Id. at ¶ G.20. (Emphasis added).
When the Policy is read as a whole, as it must be, it is clear that a claim
for lost business income and extra expenses only will be covered if the
property sustains a tangible loss or damage that causes a suspension of
business activities. If these conditions are satisfied, then coverage is
provided, but only for the period of restoration during which the property has
to be rebuilt, repaired, or replaced. When the term “direct physical loss or
damage to property” is read within the context of the entire Policy, the
conclusion is inescapable that coverage is not provided for purely economic
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loss. The Policy unambiguously ties coverage for insured business income and
extra expense losses to occurrences where there is some tangible damage to
or tangible loss of the property for coverage to apply—a “direct physical loss
of or damage to property”. As will be explained, this is the only reasonable
interpretation of this policy provision. Construing the reference to “direct
physical loss or damage to property” to pertain to purely economic loss
without property damage, as the Majority concludes, results only from a
strained interpretation of the Policy and does so without giving full effect to
all the Policy provisions.
Words of common usage in an insurance policy are to be construed in
their natural, plain, and ordinary sense. Madison Const. v. Harleysville
Mut. Ins., 735 A. 2d 100 (Pa. 1999). Language in a policy is ambiguous if it
is susceptible to more than one reasonable interpretation. Kurach v. Truck
Ins. Exch., 235 A.3d 1106, 1116 (Pa. 2020). A word is not ambiguous,
however, simply because it is undefined. Gemini Ins. Co. v. Meyer Jabara
Hotels LLC, 231 A.3d 839, 849 (Pa. Super. 2020). Instead, courts must read
a policy as a whole and construe its meaning according to its plain language.
Madison, 735 A.2d at 108. Individual terms and provisions cannot be read in
isolation; a policy must be considered as a whole. Pennsylvania Nat. Mut.
Cas. Ins. Co.v. St. John, 106 A.3d 1, 14 (Pa. 2014). Courts cannot distort
the meaning of language or resort to a strained contrivance in order to find
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an ambiguity. Madison, 735 A.2d at 106 (citing Steuart v. McChesney,
444 A.2d 659, 663 (Pa. 1982)).
The trial court, construing the phrase “direct physical loss of or damage
to…”, reasoned that the disjunctive “or” between “direct physical loss of” and
“damage to” supports a reasonable reading of the Policy whereby a “direct
physical loss” need not necessarily result from physical or structural damage:
The spread of COVID-19, and a desired limitation of the
same, had a close logical, causal, and/or consequential
relationship to the ways in which [Ungarean] materially used its
property and physical space. Indeed, the spread of COVID-19 and
social distancing measures (with or without the Governor’s orders)
caused [Ungarean], and many other businesses, to physically limit
the use of property and the number of people that could inhabit
physical buildings at any given time, if at all. Thus, the spread of
Covid-19 did not, as [Appellants contend], merely impose
economic limitations. Any economic losses were secondary to the
businesses’ physical losses.
Trial Court Opinion, 6/1/21, at 16-17 (emphasis in original; citation omitted).
Regarding the “period of restoration” provisions, the trial court reasoned that
they “merely impose[] a time limit on available coverage, which ends
whenever any [repairs], if undertaken, would have been completed with
reasonable speed and similar quality.” Id. at 19. Because it merely imposes
a time limit, the trial court found that the amount of insurance provision did
not alter its interpretation of “physical loss or damage.” Id. The Majority
finds itself in full agreement with the trial court’s reasoning and conclusions,
and affirms the decision below based primarily on the trial court’s opinion.
Majority Opinion, at 2.
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I disagree, and conclude that economic loss unaccompanied by a
physical alteration to the property does not trigger coverage under this
commercial property insurance policy—a result that is overwhelmingly and
persuasively supported by decisions from across the country. In Delaware
Valley Mgmt., LLC v. Continental Cas. Co., 572 F.Supp.3d 119 (E.D.Pa.
2021), for example, the plaintiff medical providers were prohibited to offer
elective surgeries due to the Covid-19 pandemic. They alleged that their
properties became contamination zones and that their ability to conduct
business was significantly limited. Id. at 125. Plaintiffs argued, as Ungarean
did here, that “physical loss of or damage to property” was reasonably
susceptible of more than one meaning and therefore ambiguous. The Federal
District Court disagreed:
Here, not only was there no physical alteration to the
Covered Properties, but there was also no loss of utility of the
buildings. Indeed, Plaintiffs admit that they “could remain open,
but only for essential surgeries, not elective.” (Am. Compl. at ¶
77.) And Plaintiffs’ loss of their ability to perform elective surgeries
does not render the building “uninhabitable.” Rather, their ability
to conduct business was limited, which resulted in purely
economic losses.
Id. at 129. Likewise, damage to property exists where there is “actual
structural damage” or where damage “unnoticeable to the naked eye
render[s] the property entirely useless and uninhabitable.” Id. at 130. The
Delaware Valley Court noted that the amount of insurance was tied to the
period of physical restoration, and that the period of restoration portion of the
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policy made no sense unless the damage in question was physical damage.
Id. at 130-31.
Similarly, the Third Circuit Court of Appeals, applying the law of New
York and New Jersey, held that the presence of asbestos does not constitute
“physical loss or damage” unless it is present in the air in quantities sufficient
to render the building “uninhabitable and unusable.” Port Authority of New
York and New Jersey v. Affiliated FM Ins. Co., 311 F.3d 226, 232, 236
(3d Cir. 2002); see also, Round Guys Brewing Co. v. Cincinnati Ins. Co.
2021 LW 4306027 (E.D.Pa. September 22, 2021) (holding that a loss of
business due to governmental orders, unaccompanied by physical property
damage, does not trigger coverage).
Likewise in Spector Gadon Rosen Vinci P.C. v. Valley Forge Ins.
Co., 2021 Phila. Ct. Com. Pl. LEXIS 16 (June 16, 2021), the trial court found
that the plaintiff law firm’s loss of use of its office space pursuant to Governor
Wolf’s orders did not trigger coverage under a policy covering direct physical
loss of or damage to its commercial property. Applying Port Authority, the
trial court found that physical damage to the insured property is necessary,
especially in light of language in the policy contemplating a period of
restoration during which physical repairs take place. Id. at *10.
Throughout the country, courts considering similar policy language in
similar circumstances have found no coverage. In Terry Black’s Barbecue,
L.L.C. v. State Auto. Mut. Ins. Co., 22 F.4th 450 (5th Cir. 2022) the Court
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held that the plaintiff’s inability to provide dine-in services was an economic
loss unrelated to the insured’s property:
TBB has failed to allege any tangible alteration or
deprivation of its property. Nothing physical or tangible happened
to TBB’s restaurants at all. In fact, TBB had ownership of, access
to, and ability to use all physical parts of its restaurants at all
times. And importantly, the prohibition on dine-in services did
nothing to physically deprive TBB of any property at its
restaurants.
Id. at 456; see also, Santo’s Italian Café LLC v. Acuity Ins. Co., 15 F.4th
398, 402 (6th Cr. 2021) (noting that direct physical loss and direct physical
damage are the “North Star of this property insurance policy from start to
finish”); Real Hosp., LLC v. Travelers Cas. Ins. Co. of Am., 499 F. Supp.3d
288 (S.D. Miss.2020) (holding that insurance against physical loss of or
damage to property covers damage to the insured’s building and personal
property but not the operations).3
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3 For representative federal cases holding that a physical alteration to the
property is necessary to trigger coverage, See, e.g., 10012 Holdings, Inc.
v. Sentinel Ins., 21 F.4th 216 (2d Cir. 2021); Crescent Plaza Hotel Owner,
L.P. v. Zurich Am. Ins. Co., 20 F.4th 303 (7th Cir. 2021); Sandy Point
Dental, P.C. v. Cincinnati Ins. Co., 20 F.4th 327 (7th Cir. 2021); Oral
Surgeons, P.C. v. Cincinnati Ins. Co., 2 F.4th 1141 (8th Cir. 2021);
Mudpie, Inc. v. Travelers Cas. Ins. Co. of Am., 15 F. 4th 885 (9th Cir.
2021); Goodwill Indus. of Cent. Okla., 21 F.4th 704 (10th Cir. 2021).
For representative state court cases, See, e.g., Inns by the Sea v.
California Mut. Ins. Co., 71 Cal.App.5th 688 (Cal. Ct. App. 2021); Indiana
Repertory Theatre v. Cincinnati Cas. Co., 180 N.E.3d 403 (Ind. Ct. App.
2022); Wakonda Club v. Selective Ins. Co. of Am., 973 N.W.2d 545 (Iowa
2022); Verveine Co. v. Strathmore Ins. Co., 184 N.E.3d 1266 (Mass.
2022); Gavrilides Mgmt. Co., LLC v. Michigan Ins. Co., ___ N.W. ___
(Footnote Continued Next Page)
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Instantly, the trial court relied on In re Soc’y Ins. Co. Covid-19 Bus.
Interruption Prot. Ins. Litig., 521 F.Supp.3d 729 (N.D. Ill. 2021). There,
the Federal District Court found a factual issue as to whether the insured
restaurant and hospitality businesses suffered a direct physical loss of their
property as a result of the loss of in-person dining during the Covid-19
pandemic. The insureds argued that the presence of Covid-19 on their
premises was physical damage that created the loss. Id. at 732. The District
Court reasoned that the policy in question did not contain a virus exclusion.
Id. at 735. Also, like the Majority and trial court instantly, the Northern
District of Illinois relied on the disjunctive “or” in “direct physical loss of or
damage to …” supported an interpretation of the policy language whereby
physical loss meant something different from physical damage. Id. at 741.
In any event, the weight of authority is to the contrary and the Seventh
Circuit has implicitly overruled In re Soc’y, concluding that commercial
property policies do not provide coverage for business interruptions due to
Covid-19. Sandy Point Dental, 20 F.4th 327 (7th Cir. 2021). Likewise, in
Hair Studio 1208, LLC v. Hartford Underwriter’s Ins. Co., 539 F.Supp.3d
409 (E.D.Pa. 2021), the Federal District Court cited Port Authority for the
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2022 WL 301555 (Mich. Ct. App. Feb. 1, 2022); MAC Prop. Grp. v. Selective
Fire and Cas. Ins. Co., ___ A.3d ___ (N.J. App. Div. June 20, 2022); Nail
Nook, Inc. v. Hiscox Ins. Co. Inc., 182 N.E.3d 356 (Ohio Ct. App. 2021);
Collectivo Coffee Roasters Inc. v. Society Ins., 974 N.W.2d 442 (Wis.
2022).
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proposition that physical loss exists when a structure is “uninhabitable and
unusable.” Id. at 417. Pure economic loss is not property damage. Id. Said
another way, policy language covering “direct physical loss or damage”
unambiguously requires that the “claimed loss or damage must be physical in
nature.” Id. at 418 (quoting Philadelphia Parking Auth. v. Fed. Ins. Co.,
385 F.Supp.2d 280, 289 (S.D.N.Y. 2005)).4
Cases cited by Ungarean and various amici do not refute this point. In
Motorists Mut. Ins. Co. v. Hardinger, 131 Fed. App’x 823, 826 (3d Cir.
2005), for example, the Third Circuit found a question of fact as to whether
an e coli contamination of well water was a “physical loss” under a
homeowner’s policy. The family alleged they vacated the house because all
of them experienced persistent illnesses and skin problems upon moving in.
Id. at 824. Thus, the facts in Hardinger met the test set forth in Port
Authority of New York, wherein the Third Circuit wrote that invisible
damage constitutes physical loss where it renders the building unusable or
uninhabitable. 311 F.3d at 236 The same is true of cases where buildings
became unusable due to the presence of gas or noxious fumes. See Essex
Ins. Co. v. BloomSouth Flooring Corp., 562 F.3d 399 (1st Cir. 2009)
(holding that the presence of an unexplained chemical odor sufficiently alleged
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4 In Philadelphia Parking Auth., the Southern District of New York held
that economic loss stemming from loss of business after the September 11,
2001 terrorist attacks was not covered.
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a physical injury to the insured’s building, thus triggering the insurer’s duty to
defend); TRAVCO Ins. Co. v. Ward, 715 F.Supp.2d 699, 707 (E.D.Va. 2010)
(holding that a noxious odor emitting from defective drywall constituted a
direct physical loss), aff’d, 504 Fed. App’x 251 (4th Cir. 2013) Western Fire
Ins. Co. v. First Presbyterian Church, 437 P.2d 52 (Colo. 1968) (holding
that the insured suffered a direct physical loss where gasoline accumulated in
the soil under and around the insured’s building and gasoline vapors rendered
the building uninhabitable).
In these cases, the condition that caused the loss, though not visible,
was physically present in the insured property, not easily remediable or
removable, and/or not likely to dissipate quickly on its own.5 In contrast, the
case before us arises from restrictions on Ungarean’s use of his property in
response to a highly contagious airborne virus that workers and patrons might
bring in with them and spread to others. Ungarean did not allege that the
Covid-19 virus was present on any surface in his covered property, nor did he
allege that its temporary presence in his covered property was the reason for
his prolonged inability to perform nonemergency dental work.
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5 Much has been made of the observation in Couch on Insurance that “physical
alteration” is the most common coverage trigger for a policy insuring against
“physical loss or damage” to covered property. COUCH ON INSURANCE, § 148:46
(3d ed. 2000). Because the analysis in § 148:46 neither relied on nor
anticipated the present circumstances, I do not find it helpful. In my view,
neither side of this debate advances its argument by citing or attacking the
conclusions reached in § 148:46.
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In light of all the foregoing, the proper disposition of this appeal is clear.
The provisions of the Policy at issue here cover commercial property.
Ungarean does not allege that any covered property was destroyed, damaged,
or in need of repair, rebuilding, or replacing. He had access to his business
property at all times; there was no physical alteration to the property itself
that prevented him from using it as normal. Rather, he was limited to
performing emergency dental procedures so as to limit the number of patients
coming in and thereby limit the potential for person-to-person spread of Covid.
There is no reasonable reading of the phrase “direct physical loss” that applies
to the covered property involved in this case.6 Ungarean’s claim fails for this
reason alone.
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6 The trial court justified its result by relying in part on a dictionary definition
of loss: “loss is defined as DESTRUCTION, RUIN, … [and/or] the act of losing
possession [and/or] DEPRIVATION …” Trial Court Opinion, 8/2/21, at 12
(pagination ours) (citing https://www.merriam-
webster.com/dictionary/loss). Given the disjunctive “or” between “loss” and
“damage” in the Policy language, the trial court concluded that loss must mean
something other than destruction. Therefore, the trial court relied on the
portion of the definition defining loss as “the act of losing possession [and/or]
DEPRIVATION.” Id. We are unable to confirm the accuracy of the trial court’s
citation. Merriam Webster’s online dictionary contains seven entries under
“loss.” The first entry, ”DESTRUCTION, RUIN” appears exactly as quoted in
the trial court’s opinion. https://www.merriam-webster.com/dictionary/loss
(last visited October 13, 2022). The remainder of the definition as quoted and
relied on by the trial court—“the act of losing possession [and/or]
DEPRIVATION”—appears nowhere. Id. This definition does not support a
conclusion that “direct physical loss”, as used in the Policy, encompasses a
mere loss of use.
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The Majority’s argument from the Policy’s disjunctive language is
unavailing. According to the Majority’s reading of “direct physical loss of or
damage to…”, the phrases on either side of the word “or” must mean
something different. Indeed, they do, as is evident from the period of
restoration clause (and the extra expense clause, quoted above, which also
ties itself to the period of restoration). The period of restoration is the time
period necessary to “repair, replace, or rebuild” any part of the covered
property that had been “damaged or destroyed.” Thus, where there is a
“physical loss”—i.e. total loss or destruction of covered property—the period
of restoration is the time necessary to rebuild or replace it. Where there is
partial “damage to” covered property the period of restoration is the time
necessary to make repairs. Thus, the appropriate, and by far the most
reasonable, distinction between “physical loss” and “damage” is to read the
former as applying in cases of total loss and the latter as applying in cases of
partial damage. The terms “repair, replace, or rebuild” make sense only in
the case of physical damage to or physical destruction (loss) of the property.
They make no sense in a case of pure economic loss. See e.g., Dino Drop,
Inc. v. Cincinnati Ins. Co., 544 F.Supp.3d 789, 798 (E.D.Mich. 2021)
(holding that physical loss and damage “can only be reasonably be construed
as extending to events that impact the physical premises completely (loss) or
partially (damage).”).
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The Majority’s reading—that the “period of restoration” is merely a time
limit for coverage that has no bearing on the meaning of “direct physical
loss”—does not withstand scrutiny. See Majority Opinion, at 12. In addition
to its failure to account for the words “repair, rebuild, or replace,” it is not
clear how the “period of restoration” is to be computed in the case before us,
wherein the insured has alleged neither destruction of or damage to covered
property nor the need to rebuild, repair, or replace any part of it. Rather,
Ungarean alleges a partial loss of use of his property because he was forbidden
to perform non-emergency dental procedures. There simply was no period of
restoration involved in this case.
The Majority and the trial court have engaged in a strained reading of a
property insurance policy in order to find coverage for a purely economic loss.
The conclusion they reach is unsupportable and unreasonable under the plain
language of the Policy and case law governing the interpretation of insurance
policies. While I sympathize with the plight of the many business owners who
have suffered, and continue to suffer, significant financial hardship because of
the Covid-19 pandemic, this Court must render decisions based on the law
and the facts of each case. In my view, the applicable law, the Policy
language, and the facts before us lead inexorably to the conclusion that the
trial court erred in granting summary judgment in favor of Ungarean and
denying Appellants’ competing motion for summary judgment.
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Alternatively, the Majority concludes that none of the Policy exclusions
apply to coverage claimed by Ungarean and therefore, the trial court properly
declared that CNA was obligated to provide business loss and extra expense
coverage. I conclude this alternative analysis to be unnecessary. If there is
no right to coverage under the insuring provision, then it is a non sequitur to
consider if any exclusions apply.
Likewise, I disagree with the trial court’s conclusion, affirmed by the
Majority, that Ungarean was entitled to coverage under the Civil Authority
Provision of the Policy that provides:
When the Declarations show that you have coverage for
Business Income and Extra Expense, you may extend that
insurance to apply to the actual loss of Business Income you
sustain and reasonable and necessary Extra Expense you incur
caused by action of civil authority that prohibits access to the
described premises. The civil authority action must be due to
direct physical loss of or damage to property at locations,
other than described premises, caused by or resulting from a
Covered Cause of Loss.
CNA Policy, Civil Authority, at 1. (Emphasis added). I conclude that Ungarean
failed to establish a claim for coverage under the Policy’s Civil Authority
provision, which provides in essence that the coverage exists when a civil
authority limits Ungarean’s access to his own covered property because of
direct physical loss of or damage to property at another location. The trial
court found that other properties suffered direct physical loss or damage for
the same reason it found that Ungarean’s business premises were damaged.
I reach a different conclusion for the reasons already explained.
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I respectfully dissent, and would reverse the trial court and enter
judgment in favor of Appellants CNA and Valley Forge Insurance Company,
and against Appellee, Timothy A. Ungarean.
President Judge Emeritus Bender, Judge Bowes, and Judge King join the
dissenting opinion.
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