A Pennsylvania appeals court has overturned a lower court ruling against a Pittsburgh tavern in a case of covid-19 business interruption.
MacMiles LLC, which operates Grant Street Tavern, sued Erie, Pennsylvania-based Erie Insurance Exchange in state court in Pittsburgh after it denied coverage for claims for loss of use of its physical premises due to the COVID-19 pandemic and the governor’s order, according to Wednesday’s ruling by the Pennsylvania Superior Court in Harrisburg i MacMiles LLC d/b/a/ Grant Street Tavern v. Erie Insurance Exchange.
In May 2021, the trial court granted summary judgment for the tavern, finding coverage under the business income protection portion of the policy and a triable issue of fact under the coverage̵7;s civil authorities provision.
The dispute arises under the policy’s statement that it will pay “for direct physical ‘loss’ of or damage to the covered property,” the appeals court said.
The trial court reasoned that “the distinction ‘or’ between “direct or physical loss of” and “damage to covered property” supports a reasonable reading of the policy where a “direct physical loss” need not necessarily be the result of physical or structural damage,” stated that in the judgment.
The Court of Appeal disagreed. The policy only covers physical damage, it said, not “pure financial loss.”
“The trial court’s reading of the policy is strained,” it said. “Furthermore, MacMiles has failed to allege any physical injury,” it said, as he urged the trial court to enter an order granting judgment on the pleadings in Erie’s favor on this issue.
The appeals court also ruled that the trial court erred in finding that there was a triable issue of fact on the question of whether there is a civil authority’s coverage for covid losses under the policy.
That same day, the appeals court upheld the Pittsburgh court’s decision in favor of a dentist who sued CNA Financial Corp. for coverage of covid-19-related business interruption.
A concurring opinion in the MacMiles case, noting that a different opinion was reached by the Court of Appeals in the similar CNA case, stated that “these cases, in which the Court must address questions of coverage, are fact-intensive questions requiring, in each case, a review of the individual policy.
“We must base our decision solely on the language of the policy … our review of MacMiles’ claims is limited to the ‘specific terms used’ in Erie’s policy.”
Attorneys in the case did not respond to requests for comment.