Judge pumps brakes on Buick dealers’ COVID cover suit


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Law360 (May 27, 2021, 3:11 p.m. EDT) – Owners of several Buick car dealerships in Pennsylvania saw their business disruption lawsuit abruptly halt when a federal judge said government shutdown orders related to the COVID-19 pandemic will not cause any physical loss or damage to the locations.

U.S. District Judge Joseph F. Leeson Jr. said Wednesday that Sentry Insurance Group did not have to cover losses associated with the shutdown of Star Buick GMC and its affiliates during the pandemic.

“Instant claims are not unheard of in recent months,” Justice Leeson said. “This court agrees with the almost unanimous rulings in this district that the all-risk policy at issue does not cover losses in business income suffered by Star Buick during the suspension of its operations.”

Star Buick car dealerships across Pennsylvania were forced to shut down by government order, the lawsuit said, impacting its sales. The dealers alleged that Sentry’s comprehensive policy covers losses under its business income and civil authority provisions. Sentry disagreed, asking for the referral.

In Wednesday’s ruling, Judge Leeson dismissed the complaint with bias, saying the inability to use car dealerships was unrelated to “physical condition actually affecting ownership.” And the coronavirus that causes COVID-19 disease cannot be a reason for physical loss, the judge said, as dealers are not alleging the virus was present.

“Although it was the controls, not the pandemic, that prompted Star Buick to suspend operations, further evidenced by the fact that the ‘pandemic’ was declared more than a week before Star Buick closed its operations. doors to customers, neither did they physically make the property uninhabitable or unusable, ”the judge said.

Judge Leeson ruled that civil authority coverage had not been triggered because there had been no damage to the property surrounding the car dealerships. Even if it did, the judge said the government orders were issued to curb the spread of the pandemic, and not “in response to dangerous physical conditions.”

Finally, Justice Leeson drew attention to the exclusion of viruses from the policy, as another reason coverage would not be extended to losses at auto dealerships. The coronavirus falls under exclusion, said the judge.

Pennsylvania has been one of the most active states involving pandemic-related business interruption lawsuits with a total of 42 federal and state court decisions, according to data from the COVID Coverage Litigation Tracker from the University of Pennsylvania. The month of May saw mixed results.

This week, an Allegheny County Common Pleas Court judge ruled that a Pittsburgh Tavern was covered by a provision of its policy for loss of use of property during the COVID-19 pandemic. This judge turned the tide, concluding that there was no need for physical damage for there to be a loss.

This month, a Pennsylvania federal judge authorized a Furniture company in California continue to prosecute, finding ambiguity about the meaning of “direct physical loss or damage”. The judge called the furniture store’s policy a “maze of pages, paragraphs and statements.”

However, Pennsylvania federal judges have ruled in favor of insurers in lawsuits brought by a Quakertown Hair Salon, The largest vending machine company in Philadelphia and one Fashion store in Philadelphia.

Representatives for dealers and Sentry did not immediately respond to requests for comment Thursday.

The car dealers are represented by Christopher M. Reid and Isaac A. Hof of Hof & Reid LLC.

Sentry is represented by Steven J. Schildt and Bryan Shay of Post & Schell PC and Heidi L. Vogt and Janet E. Cain of von Briesen & Roper SC.

The case is Star Buick GMC et al. v. Sentry Insurance Group, Case Number 5: 20-cv-03023, in the United States District Court for the Eastern District of Pennsylvania.

– Additional reports from Hannah Albarazi, Matthew Santoni, Eli Flesch and Daphne Zhang. Editing by Vincent Sherry.

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