A Pennsylvania trial court denied an insurer’s early attempt to lunge out of coverage for COVID-19 business interruption losses suffered by a fitness center, stating it would be premature for the court to resolve factual determinations the insurer raised in its demurrer. Ridley Park Fitness, LLC v. Philadelphia Indemnity Insurance Co., No. 200501093 (Pa. Ct. Com. Pl. Aug. 13, 2020).

The insured, Ridley Park Fitness, alleged that the nature of its business, where “people–staff, customers, family of customers [sic], community members, and others–constantly cycle in and out of the building,” made the risk of COVID-19 contamination “ever-present.” (Complaint, ¶ 56.) Orders issued by Pennsylvania Governor Tom Wolf also hampered its operations, and Ridley Park cited these orders as evidence of “an awareness on the part of both state and local governments that COVID-19 causes damage to property.” (Id., ¶ 49.) Ridley Park skirted the policy’s ISO virus exclusion by citing the orders as an alternate theory of loss and suggesting that the exclusion was subject to regulatory estoppel based on ISO’s misleading and fraudulent statements to state insurance departments about the 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 of non-essential businesses like gyms, Ridley Park quoted President Trump’s musings on COVID-19-related business interruption claims. (Id., ¶ 47; see also Remarks by President Trump, Vice President Pence, and Members of the Coronavirus Task Force in Press Briefing (Apr. 10, 2020).)

Philadelphia Indemnity, represented by Dentons, went through the same reps other insurers have employed in seeking to dismiss these claims, arguing that Ridley Park had failed to establish “physical loss or damage” to property and that the virus exclusion applied. Philadelphia Indemnity also went to great lengths to duck Ridley Park’s regulatory estoppel argument by claiming that the circular that accompanied ISO’s 2006 filing for the exclusion’s approval stated a coverage position identical to that taken by Philadelphia Indemnity. Specifically, that ISO disclosed that a pandemic would not be covered, and that the exclusion was proffered merely to clarify that position.

While the court did not indicate what weight it gave either parties’ arguments, it did determine that the facts presented by the parties needed to be resolved before it would rule on a dispositive motion. This is in line with other trial court’s decisions and reflects a well-reasoned approach to fact-determinative business interruption claims.