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Policyholders pump out another COVID-19 dispute victory



A trial court in Pennsylvania denied an insurer's early attempt to withdraw coverage of COVID-19 business interruption losses suffered by a fitness center, stating that it would be too early for the court to resolve the actual decisions taken by the insurer in its indemnity. . Ridley Park Fitness, LLC v Philadelphia Indemnity Insurance Co. No. 200501093 (Pa. Ct. Com. Pl. 13 August 2020).

The insured, Ridley Park Fitness, claimed that the nature of its business, where "people – staff, customers, family of customers [sic] members of the community and others – constantly cycle in and out of the building", made the risk to COVID -1

9 contamination ”constantly present. (Complaint, § 56.) Orders issued by Pennsylvania Governor Tom Wolf also hampered its operations, and Ridley Park cited those orders as evidence of "an awareness by both state and local authorities that COVID-19 is causing property damage." ( Id ., ¶ 49.) Ridley Park accused the exclusion of the ISO virus by citing the orders as an alternative theory of loss and suggesting that the exclusion was subject to regulatory stalemate based on the ISO's misleading and fraudulent statements to state insurance departments on exclusion. ( Id. ¶¶ 19-22, 25, 31, 34, 60, 64.)

Finally, although the federal government has not responded to the pandemic with its own closure orders for non-essential corporations as a gym, Ridley Park quoted President Trump's thoughts on COVID-19-related business interruptions. ( Id. ¶ 47; see also Remarks by President Trump, Vice President Pence and members of the Coronavirus Working Group in Press Briefing (April 10, 2020).) [19659003] Philadelphia Indemnity, represented by Dentons, went through the same representatives that other insurers have used to try to refute these claims, arguing that Ridley Park had failed to determine "physical loss or damage" to property and that the virus exclusion was applied. Philadelphia Indemnity also went to great lengths to challenge Ridley Park's regulatory estoppel argument by claiming that the circular accompanying ISO's 2006 application for exclusion stated a coverage position identical to that adopted by Philadelphia Indemnity. More specifically, ISO revealed that a pandemic would not be covered and that the exclusion was only given to clarify that position.

Although the Court did not state the weight it gave to any of the parties' arguments, it ruled that the facts of the parties needed to be resolved before deciding on an operative motion. This is in line with other court decisions and reflects a well-justified approach to fact-based alleged business interruptions.
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