STAR BUICK GMC v. SENTRY INSURANCE GROUP

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF PENNSYLVANIA

____________________________________

STAR BUICK GMC; :

STAR BUICK GMC CADILLAC; and :

STAR PRE-OWNED OF BETHLEHEM, :

Plaintiffs, :

:

v. : No. 5:20-cv-03023

:

SENTRY INSURANCE GROUP, :

Defendant. :

____________________________________

O P I N I O N

Motion to Dismiss, ECF No. 16 - GRANTED

Joseph F. Leeson, Jr. May 26, 2021

United States District Judge

I. INTRODUCTION

Plaintiffs Star Buick GMC, Star Buick GMC Cadillac, and Star Pre-Owned of Bethlehem

(collectively “Star Buick”) initiated this action against their insurer Defendant Sentry Insurance

Group seeking declaratory judgment that Star Buick’s insurance policy with Sentry provides

coverage for loss of business income due to the suspension of business operations during the

COVID-19 pandemic. Sentry has moved to dismiss the Amended Complaint, arguing that no

coverage is provided under the unambiguous terms of the policy. For the reasons set forth

below, the Motion to Dismiss is granted. The Amended Complaint is dismissed with prejudice.

II. BACKGROUND

According to the Amended Complaint, the factual allegations which are accepted as true

for purposes of deciding the Motion to Dismiss, Star Buick owns and operates multiple

automobile dealerships throughout Pennsylvania. See Am. Compl. ¶ 4, ECF No. 11. On March

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20, 2020, Star Buick “shut their doors to customers.” Id. ¶ 12. The closure occurred the day

after the Governor of the Commonwealth of Pennsylvania issued an order prohibiting the

operation of businesses that are not life-sustaining. See Ex. C, ECF No. 11-3 (Order dated

March 19, 2020, and list of business industries). Star Buick’s car dealerships were not one of the

enumerated life-sustaining businesses that were permitted to continue physical operations. See

id. and Am. Compl. ¶ 12. The forced suspension of operations of the “entire sales portion of

those businesses, representing an overwhelming majority and significant source of revenue,” has

resulted in substantial losses to Star Buick. Am. Compl. ¶ 58. Star Buick claims that its

business suspension and resulting losses were due to the COVID-19 Pandemic and to state

orders.1 See id. ¶ 15.

The March 19, 2020 order explained that the World Health Organization (“WHO”) and

Center for Disease Control (“CDC”) had declared COVID-19 a public emergency of

international concern and that the U.S. Department of Health and Human Services (“HHS”) had

declared that COVID-19 creates a public health emergency. Id. The order further explained that

on March 6, 2020, the Governor had proclaimed the existence of a disaster emergency

throughout the Commonwealth. Id. See also Ex. B, ECF No. 11-2 (Proclamation of Disaster

Emergency). Between the issuance of the Proclamation of Disaster Emergency and the March

19, 2020 order, the World Health Organization (“WHO”), on March 11, 2020, “made the

assessment that COVID-19 can be characterized as a pandemic.” See

1 The Amended Complaint identifies, and attaches copies of, the suspension order dated

March 19, 2020, and eight others entered by Pennsylvania Governor Tom Wolf and the

Pennsylvania Department of Health relating to the COVID-19 emergency. See Compl. ¶¶ 48-54,

Exs. B-K, ECF Nos. 11-2 to 11-11 (collectively “the orders”).

2

https://www.who.int/director-general/speeches/detail/who-director-general-s-opening-remarks-

at-the-media-briefing-on-covid-19---11-march-2020.2

At the time of its closure and throughout the suspension of operations,3 Star Buick had an

all-risks business protection policy of insurance with Sentry, which was effective from March 1,

2020, to March 1, 2021 (“the Policy”).4 Id. ¶¶ 18-19. Star Buick alleges that the Policy provides

coverage for its business income losses during the suspension of operations. Id. ¶¶ 13-16. Star

Buick seeks declaratory judgment on numerous issues related thereto. See id. ¶¶ 78-83 and

Prayer for Relief.

Sentry has filed a Motion to Dismiss arguing that the Policy does not provide coverage

for Star Buick’s claimed losses because: (1) Star Buick did not sustain direct physical loss of or

damage to property; (2) access to Star Buick’s property was not prohibited by civil authority due

to damage to other property; and (3) the claims are excluded by the Policy’s virus exclusion. See

Mot. and Mem., ECF No. 16. Star Buick opposes the Motion. See Opp. Mot., ECF No. 19;

Resp., ECF No. 20. Star Buick contends that physical loss is not defined in the Policy and is not

limited to structural damage, but includes lost operations or inability to access/use the property.

See Resp. 5-22. It asserts there has also been damage to nearby properties and the orders

prohibit access. See id. 22-25. Star Buick further argues that the virus exclusion is narrow and

2 This Court takes judicial notice of the statement made by WHO’s director-general at a

media briefing on COVID-19. See City of Phila. v. Sessions, No. 17-3894, 2018 U.S. Dist.

LEXIS 69082, at *14 (E.D. Pa. Apr. 24, 2018) (concluding that there is substantial precedent for

taking judicial notice of public statements made by federal officials); Prushan v. Select Comfort

Retail Corp., No. 16-cv-5303, 2017 U.S. Dist. LEXIS 83710, at *8 n.2 (E.D. Pa. May 30, 2017)

(taking judicial notice of a public statement made before a United States House of

Representatives subcommittee).

3 As of the filing of the Amended Complaint, Star Buick’s operations were still suspended.

See Am. Compl. ¶ 13.

4 The Policy is attached as an exhibit to the Amended Complaint. Ex. A, ECF No. 11-1.

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does not exclude coverage for lost income resulting from a global pandemic. Id. 26-29. Sentry

filed a reply to these arguments. See Reply, ECF No. 22. The parties have each provided

supplemental authority to the Court. See ECF Nos. 23-24.

III. STANDARDS OF REVIEW

A. Motions to Dismiss – Review of Applicable Law

Under Rule 12(b)(6), the court must “accept all factual allegations as true [and] construe

the complaint in the light most favorable to the plaintiff.” Phillips v. Cnty. of Allegheny, 515

F.3d 224, 233 (3d Cir. 2008) (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d

Cir. 2002)) (internal quotation marks omitted). Only if “the ‘[f]actual allegations . . . raise a right

to relief above the speculative level’” has the plaintiff stated a plausible claim. Id. at 234

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “A claim has facial plausibility

when the plaintiff pleads factual content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009). However, “the tenet that a court must accept as true all of the allegations contained in a

complaint is inapplicable to legal conclusions.” Id. (explaining that determining “whether a

complaint states a plausible claim for relief . . . [is] a context-specific task that requires the

reviewing court to draw on its judicial experience and common sense”). “[C]ourts must consider

the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on

Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by

reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues

& Rights, Ltd., 551 U.S. 308, 322 (2007). See also Mayer v. Belichick, 605 F.3d 223, 230 (3d

Cir. 2010) (“In deciding a Rule 12(b)(6) motion, a court must consider only the complaint,

exhibits attached to the complaint, matters of public record, as well as undisputedly authentic

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documents if the complainant’s claims are based upon these documents.”); In re Burlington Coat

Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (holding that “a document integral to or

explicitly relied upon in the complaint may be considered” (internal quotations omitted)). The

defendant bears the burden of demonstrating that a plaintiff has failed to state a claim upon

which relief can be granted. See Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005)

(citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)).

B. Contracts of Insurance Interpretation – Review of Applicable Law

“Under Pennsylvania law, ‘the interpretation of a contract of insurance is a matter of law

for the courts to decide.’” Allstate Prop. & Cas. Ins. Co. v. Squires, 667 F.3d 388, 390-91 (3d

Cir. 2012) (quoting Paylor v. Hartford Ins. Co., 640 A.2d 1234, 1235 (Pa. 1994)). In

interpreting an insurance contract, the court must ascertain the intent of the parties from the

language of the policy. See id. When the terms in a policy are not defined, they should be

construed in accordance with their natural, plain, and ordinary meanings. See Lititz Mut. Ins. Co.

v. Steely, 785 A.2d 975, 978 (Pa. 2001). “The court should not consider isolated individual terms

but should instead consider the entire contractual provision to determine the parties’ intent.”

Robinson v. Allstate Prop. & Cas. Ins. Co., 306 F. Supp. 3d 672, 675 (E.D. Pa. 2018). When the

policy language is clear and unambiguous, the court will give effect to that language. See

Squires, 667 F.3d at 390-91.

“Disagreement between the parties over the proper interpretation of a contract does not

necessarily mean that a contract is ambiguous.” 12th St. Gym v. Gen. Star Indem. Co., 93 F.3d

1158, 1165 (3d Cir. 1996) (citing Vogel v. Berkley, 511 A.2d 878, 881 (Pa. Super. 1986)).

“Ambiguity exists if the contract language is ‘reasonably susceptible of different constructions

and capable of being understood in more than one sense.’” Whitmore v. Liberty Mut. Fire Ins.

5

Co., No. 07-5162, 2008 U.S. Dist. LEXIS 76049, at *9 (E.D. Pa. Sep. 30, 2008) (quoting

Madison Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100, 106 (Pa. 1999)). “[T]he policy

language must not be tortured to create ambiguities where none exist.” Sikirica v. Nationwide

Ins. Co., 416 F.3d 214, 220 (3d Cir. 2005). When the policy language is ambiguous, it must “‘be

construed in favor of the insured and against the insurer, the drafter of the agreement.’” Squires,

667 F.3d at 391 (quoting Dorohovich v. W. Am. Ins. Co., 589 A.2d 252, 256 (Pa. Super. Ct.

1991)). See also Indep. Rest. Grp. v. Certain Underwriters at Lloyd’s, No. 20-2365, 2021 U.S.

Dist. LEXIS 7256, at *9 n.4 (E.D. Pa. Jan. 14, 2021) (explaining that when a policy is drafted by

one party, any ambiguous language is construed against the drafter). As with ambiguities,

“exclusions are strictly construed against the insurer.” Selko v. Home Ins. Co., 139 F.3d 146,

152 n.3 (3d Cir. 1998) (citing Standard Venetian Blind Co. v. American Empire Ins. Co., 469

A.2d 563, 566 (Pa. 1983)). “[A]n insured bears the initial burden to make a prima facie showing

that a claim falls within the policy’s grant of coverage, but if the insured meets that burden, the

insurer then bears the burden of demonstrating that a policy exclusion excuses the insurer from

providing coverage if the insurer contends that it does.” State Farm Fire & Cas. Co. v. Estate of

Mehlman, 589 F.3d 105, 111 (3d Cir. 2009).

“In very limited circumstances, the insured’s reasonable expectations may prevail over

the clear and unambiguous terms of the contract.” Glat v. Nationwide Mut. Ins. Co., No. 20-

5271, 2021 U.S. Dist. LEXIS 61613, at *4-5 (E.D. Pa. Mar. 30, 2021) (citations omitted).

“[E]ven the most clearly written exclusion will not bind the insured where the insurer or its agent

has created in the insured a reasonable expectation of coverage.” Reliance Ins. Co. v. Moessner,

121 F.3d 895, 903 (3d Cir. 1997). “The reasonable expectations doctrine was created to protect

an insured from an insurer’s unilaterally changing the coverage. It requires some affirmative

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action by the insurer or its agent that changed the coverage the insured purchased.” Glat, 2021

U.S. Dist. LEXIS 61613, at *4-5.

IV. ANALYSIS

There are three Policy provisions relevant to this action:

1. The business income provision. This provision states, in pertinent part, that Sentry

“will pay for the actual loss of Business Income you[5] sustain due to the necessary ‘suspension’

of your ‘operations’ during the ‘period of restoration’[6]. The ‘suspension’ must be caused by

direct physical loss of or damage to property at premises which are described in the

Declarations[7]. . . .” See Ex. A at 38.

2. The civil authority provision. In pertinent part, this provision states that “[w]hen a

Covered Cause of Loss causes damage to property other than property at the described

premises,” Sentry “will pay for the actual loss of Business Income you sustain and necessary

Extra Expense caused by action of civil authority that prohibits access to the described premises,

provided that both of the following apply:

(1) Access to the area immediately surrounding the damaged property is prohibited

by civil authority as a result of the damage, and the described premises are within

that area but are not more than one mile from the damaged property; and

(2) The action of civil authority is taken in response to dangerous physical

conditions resulting from the damage or continuation of the Covered Cause of Loss

5 “You” is Star Buick.

6 “Period of restoration” is defined in the Policy as “the period of time that [b]egins . . . 72

hours after the time of direct physical loss or damage. . .; and [e]nds on the earlier of [t]he date

when the property . . . should be repaired, rebuilt or replaced. . .; or . . . is resumed at a new

permanent location.” Ex. A at 46. “‘Period of restoration’ does not include any increased period

required due to the enforcement of or compliance with any ordinance or law that [r]egulates the

construction, use or repair, or requires the tearing down, of any property. . . .” Id.

7 The Declarations list several Star Buick premise addresses and buildings occupied with

automobile service/repair shops and distributors/showrooms/stores. See Declarations, Ex. A at 7,

ECF No. 11-1. There is no dispute in the Motion to Dismiss about the relevant “property.”

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that caused the damage, or the action is taken to enable a civil authority to have

unimpeded access to the damaged property.

See Ex. A at 39.

3. The virus exclusion. This exclusion provides, in pertinent part, that Sentry “will not

pay for loss or damage caused by or resulting from any virus . . . that induces or is capable of

inducing physical distress, illness or disease.” See Ex. A at 49.

A. The business income provision does not provide coverage because Star Buick

did not sustain direct physical loss of or damage to property.

The business income provision would only provide coverage for Star Buick’s claimed

losses if its suspended operations were “caused by direct physical loss of or damage to [its]

property.” The parties disagree over the meaning of “direct physical loss” and whether this term

in the Policy is ambiguous. In the last six months, numerous decisions from within this Circuit

have been issued construing this language in connection with insurance claims following

business suspensions during the COVID-19 pandemic. These decisions have almost invariably

concluded the terms are not ambiguous and there is no insurance coverage for loss of business

income. See, e.g. Hair Studio 1208, LLC v. Hartford Underwriters Ins. Co., No. 20-2171, 2021

U.S. Dist. LEXIS 91960, at *17 (E.D. Pa. May 14, 2021) (citing cases). This Court agrees.

Since the Policy does not define “direct physical loss” it must be construed in accordance

with the plain meaning of the words. “‘Direct’ means ‘stemming immediately from a source,’

without ‘an intervening agency, instrumentality, or influence.’” Mareik Inc. v. State Farm Fire

& Cas. Co., No. 20-2744, 2021 U.S. Dist. LEXIS 85859, at *9 (E.D. Pa. May 5, 2021) (quoting

Merriam-Webster (2021), available at https://www.merriam-webster.com/dictionary).

“‘Physical’ means ‘having material existence; perceptible especially through the senses and

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subject to the laws of nature.’” Id.8 After considering the entire business income provision, this

Court concludes that the plain meaning of the phrase “direct physical loss of” requires an explicit

nexus between the purported loss and the physical condition of the insured property. See Isaac’s

Deli, Inc. v. State Auto Prop. & Cas. Ins. Co., No. 5:20-cv-06165, 2021 U.S. Dist. LEXIS 92168,

at *11 (E.D. Pa. May 14, 2021). See also Mareik Inc., 2021 U.S. Dist. LEXIS 85859, at *10-11

(“[T]his Court concludes, as other courts have, that the term ‘direct physical loss to Covered

Property’ unambiguously requires some immediate impact on the actual, material premises.”);

Tria WS LLC v. Am. Auto. Ins. Co., No. 20-4159, 2021 U.S. Dist. LEXIS 60500, at *11 (E.D. Pa.

Mar. 30, 2021) (determining that “direct physical loss” “requires that the property be rendered

unusable by some physical force”).

Star Buick suggests that the mere loss of functionality/use is a covered loss. However,

“when modified by the terms ‘direct’ and ‘physical,’ the term ‘loss’ is no longer reasonably

susceptible to Plaintiffs’ proffered definition.” Id.9 See also Hair Studio 1208, LLC, 2021 U.S.

8 See also Kahn v. Pennsylvania National Mutual Casualty Insurance Company, 2021 U.S.

Dist. LEXIS 23090, *13 (M.D. Pa. Feb. 8, 2021) (“The word ‘physical’—which modifies both

‘loss’ and ‘damage’ in the Business Income provision—means ‘[o]f, relating to, or involving

material things; pertaining to real, tangible objects.’ Physical, BLACK'S LAW DICTIONARY

(11th ed. 2019) (emphasis added)”).

9 The court explained:

Cases like this one are being litigated across the country. To try and establish

physical loss or damage, business owners seeking coverage for COVID-19-related

losses have typically proceeded on one of two theories. The first is the “physical

contamination” theory, whereby business owners allege that the virus was

physically present on their properties, thus making the insured premises unsafe for

use. The second is the “loss of use” theory. This theory is not premised on COVID-

19 contamination or any other specific condition of or on the insured premises.

Instead, its advocates assert that the significant restrictions imposed by the

government on the manner and degree to which business owners may use their

premises are sufficient, on their own, to establish “direct physical loss of” property.

Tria WS LLC, 2021 U.S. Dist. LEXIS 60500, at *8-9 (commenting the plaintiff was proceeding

solely on the “loss of use” theory).

9

Dist. LEXIS 91960, at *14-16 (concluding that these “words, which modify the word ‘loss,’

ordinarily connote actual, demonstrable harm of some form to the premises itself, rather than

forced closure of the premises for reasons extraneous to the premises themselves, or adverse

business consequences that flow from such closure” (internal quotations omitted)). This Court

concludes that loss of use may be covered, but “that loss of use must be tied to a physical

condition actually impacting the property.” See SSN Hotel Mgmt., LLC v. Harford Mut. Ins. Co.,

No. 20-6228, 2021 U.S. Dist. LEXIS 68850, at *10-11 (E.D. Pa. Apr. 8, 2021).

This conclusion is consistent with the Policy limitations of recoverable losses to those

sustained “due to the necessary ‘suspension’ of your ‘operations’ during the ‘period of

restoration,’” which does not end until the property is “repaired, rebuilt or replaced . . . [or]

resumed at a new permanent location.” See Ex. A at 38, 46. This “period of restoration”

provision would be meaningless if the loss had no impact on the physical condition of the

property because there would be nothing to remedy through repair, replacement, or relocation.

See Rds Vending Llc v. Union Ins. Co., No. 20-3928, 2021 U.S. Dist. LEXIS 91301, at *8-9

(E.D. Pa. May 13, 2021) (holding that “to give meaning to the ‘period of restoration’ clause, the

cause of the loss must be directly associated with the building such that it could be remedied

through repair or by moving to a different building”); Hair Studio 1208, LLC, 2021 U.S. Dist.

LEXIS 91960, at *13-14 (explaining that the “period of restoration” clause amplifies the court’s

conclusion that mere loss of use of property cannot constitute “direct physical loss”); SSN Hotel

Mgmt., LLC, 2021 U.S. Dist. LEXIS 68850, at *12-13 (determining that the “period of

restoration” limitation indicates that “reading ‘direct physical loss of or damage to property’ to

contemplate mere loss of use is not a sound interpretation of the Policy because it does not make

sense reading the contract as a whole”).

10

The decision of Third Circuit Court of Appeals in Port Authority, which both parties cite,

further supports the Court’s conclusions. In Port Authority, the court held that “‘physical loss or

damage’ occurs only if an actual release of asbestos fibers from asbestos-containing materials

has resulted in contamination of the property such that its function is nearly eliminated or

destroyed, or the structure is made useless or uninhabitable, or if there exists an imminent threat

of the release of a quantity of asbestos fibers that would cause such loss of utility.” Port Auth. v.

Affiliated FM Ins. Co., 311 F.3d 226, 236 (3d Cir. 2002). The court qualified that “if asbestos is

present in components of a structure, but is not in such form or quantity as to make the building

unusable, the owner has not suffered a loss. The structure continues to function -- it has not lost

its utility.” Port Auth., 311 F.3d at 236 (“The mere presence of asbestos, or the general threat of

future damage from that presence, lacks the distinct and demonstrable character necessary for

first-party insurance.”). This standard was reiterated a few years later. See Motorists Mut. Ins.

Co. v. Hardinger, 131 F. App’x 823, 825-827 (3d Cir. 2005). The circuit court explained that “in

a case where sources unnoticeable to the naked eye have allegedly reduced the use of the

property to a substantial degree,” the question is “whether the functionality of the [insured]

property was nearly eliminated or destroyed, or whether their property was made useless or

uninhabitable.” Id. at 827.

Applying these standards and consistent with the almost unanimous decisions out of this

district, I find that Star Buick has not plausibly alleged that it suffered a “direct physical loss of

or damage to” property. Star Buick concedes its “losses were not caused by a virus, bacterium,

or other microorganism.” Am. Compl. ¶ 37. Accordingly, the COVID-19 virus cannot be the

basis for a physical loss. See Lansdale 329 Prop, LLC v. Hartford Underwriters Ins. Co., No.

20-2034, 2021 U.S. Dist. LEXIS 81096, at *15 (E.D. Pa. Apr. 28, 2021) (holding that where the

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plaintiffs admit the COVID-19 virus was not present at the insured’s property, there was no

“physical loss”). To the extent Star Buick claims that its losses were due to the COVID-19

pandemic, Star Buick fails to plausibly allege that if suffered a direct physical loss because even

if it lost the use of its property, “it was because of the presence of COVID-19 in the community

and not from the coronavirus existing within the building.” See Rds Vending Llc, 2021 U.S.

Dist. LEXIS 91301, at *8-9. Further, coverage due to the pandemic does not make sense with

the “period of restoration” provision because there is nothing for Star Buick to repair, rebuild, or

replace. See Moody v. Hartford Fin. Grp., Inc., No. 20-2856, 2021 U.S. Dist. LEXIS 7264, at

*16-18 (E.D. Pa. Jan. 14, 2021) (holding that to the extent there was any actual or threatened

coronavirus contamination “cleaning surfaces cannot reasonably be described as repairing,

rebuilding, or replacing”). Similarly, there is also no “period of restoration” connected to the

orders; rather, once government restrictions are lifted, the dealerships may reopen. See Hair

Studio 1208, LLC, 2021 U.S. Dist. LEXIS 91960, at *21 (holding that the COVID-19 closure

orders did not result in either physical damage or loss because once the orders are lifted, the

plaintiff may immediately reopen its business without any “period of restoration”). Although it

was the orders, not the pandemic that caused Star Buick to suspend operations, as further

evidenced by the fact that the “pandemic” was declared more than a week before Star Buick

closed its doors to customers, they too did not physically make the property either uninhabitable

or unusable. See id. at *20. Therefore, the business income provision does not provide coverage

for Star Buick’s losses.

B. The civil authority provision does not provide coverage because Star Buick

was not denied access to its property as a result of damage to other property.

The civil authority provision does not cover Star Buick’s purported losses because, for

the reasons set forth in Sections A and C of this Opinion, Star Buick does not plausibly allege a

12

“covered cause of loss.” See Ex. A at 39; Isaac’s Deli, Inc., 2021 U.S. Dist. LEXIS 92168, at

*14 (concluding that because the plaintiff did not suffer a direct physical loss during the COVID-

19 shutdowns, the plaintiff also failed to allege a “Covered Cause of Loss” so as to invoke the

Civil Authority provision). Accordingly, no surrounding10 property was damaged11 by the same.

See Shantzer v. Travelers Cas. Ins. Co. of Am., No. 20-2093, 2021 U.S. Dist. LEXIS 61627, at

*9 (E.D. Pa. Mar. 31, 2021) (denying coverage under the civil authority provision because

neither the plaintiff’s dental offices nor any surrounding properties were damaged or experienced

any physical loss during the COVID-19 suspension); Brian Handel D.M.D., P.C. v. Allstate Ins.

Co., No. 20-3198, 2020 U.S. Dist. LEXIS 207892, at *9 (E.D. Pa. Nov. 6, 2020) (“Absent facts

of direct physical loss or prohibited access to the property, plaintiff cannot sustain a claim for

coverage under the civil authority provision of this policy.”).

Moreover, even assuming Star Buick had alleged that it had a covered cause of loss and

that a surrounding property had been damaged,12 the civil authority provision would still not

10 Star Buick also fails to allege that the surrounding properties are within one-mile of its

own property. See Hair Studio 1208, LLC, 2021 U.S. Dist. LEXIS 91960, at *24 (concluding

that the absence of any allegations that any property “within one mile” of the insured premises

experienced direct physical loss or direct physical damage is fatal to the claim).

11 “In ordinary parlance and widely accepted definition, physical damage to property means

‘a distinct, demonstrable, and physical alteration’ of its structure.” Port Auth., 311 F.3d at 236

(quoting Couch on Insurance § 148:46 (3d ed. 1998)). “Physical damage to a building as an

entity by sources unnoticeable to the naked eye must meet a higher threshold.” Id.

12 For this assumption to work, the damage must have been caused by something other than

the closure orders because the orders themselves are the “actions of civil authority” that prohibit

access “as a result of the damage.” See Clear Hearing Sols., LLC v. Cont’l Cas. Co., No. 20-

3454, 2021 U.S. Dist. LEXIS 7273, at *23 (E.D. Pa. Jan. 14, 2021) (“But as a matter of logic, the

civil authority orders that purportedly affected access to Clear Hearing’s property cannot have

been issued due to loss or damage caused to other property by the same orders.”). Notably,

however, “fear of the virus in nearby properties does not establish physical damage” for purposes

of the civil authority provision. See Frank Van’s Auto Tag, LLC v. Selective Ins. Co. of the Se.,

No. 20-2740, 2021 U.S. Dist. LEXIS 15781, at *18 (E.D. Pa. Jan. 27, 2021) (citing “United Air

Lines, Inc. v. Ins. Co. of State of PA, 439 F.3d 128, 134 n.8 (2d Cir. 2006) (no civil authority

13

apply because the orders were not issued “in response to dangerous physical conditions” or to

give any civil authority unimpeded access. Rather, the orders were issued, as Star Buick alleges,

“to protect the public and minimize the risk and spread of COVID-19 Pandemic.” See Am.

Compl. ¶ 63. See also Hair Studio 1208, LLC, 2021 U.S. Dist. LEXIS 91960, at *24-25

(determining that because the closure orders were issued to prevent the spread of the COVID-19

virus to surrounding properties, the claims falls outside the coverage of the civil authority

endorsement); SSN Hotel Mgmt., LLC, 2021 U.S. Dist. LEXIS 68850, at *14-15 (holding that the

plaintiff’s losses following forced suspension of business during COVID-19 fell outside the

scope of the civil authority provision because the suspension orders “were issued to address the

health crisis,” not because of damage or direct physical loss to a nearby property or because there

was some dangerous physical condition at another nearby property”).

For all these reasons, Star Buick cannot plausibly claim that its losses are covered by the

civil authority provision.

C. The virus exclusion bars recovery for Star Buick’s COVID-19 related losses.

“Numerous courts, applying Pennsylvania law, have thoroughly addressed arguments

regarding the Virus Exclusion’s applicability to insurance claims based on COVID-19

shutdowns [and] have almost unanimously concluded that the language of the Virus Exclusion

unambiguously bars coverage.” Hair Studio 1208, LLC, 2021 U.S. Dist. LEXIS 91960, at *34

(citing cases). Star Buick’s specific argument that the virus exclusion does not exclude coverage

for loss caused by a global “pandemic” has also been considered, and rejected, in this district.

See SSN Hotel Mgmt., LLC, 2021 U.S. Dist. LEXIS 68850, at *15-16 (rejecting the plaintiffs’

coverage for airline following airport shutdown in response to September 11 attacks because

order was based on ‘fears of future attacks’ rather than ‘direct result of damage’)”).

14

contention that the virus exclusion “cannot be read to contemplate the loss or damage caused by

a pandemic as opposed to ‘an ordinary virus’”). This Court agrees with those decisions.

Under the plain language of the exclusion, coverage is not provided for loss “resulting

from any virus, bacteria or other microorganism that induces or is capable of inducing physical

distress, illness or disease.” Ex. A at 49. Star Buick alleges that its “operations have been, and

continue to be, suspended and threatened by the novel Coronavirus SARS-Co-V-2, which causes

the infectious disease, COVID-19.” Am. Compl. ¶ 13 (emphasis added). The virus exclusion

therefore unambiguously applies to COVID-19. “Though the word ‘pandemic’ is not used in the

Policy, there is no reasonable basis to find a ‘pandemic exception’ within the plain meaning of

this express exclusion.” Mareik Inc., 2021 U.S. Dist. LEXIS 85859, at *14 (quoting Lang v.

Meske, 850 A.2d 737, 740 (Pa. Super. Ct. 2004)).

Assuming that Star Buick’s losses were covered under either the business income or civil

authority provision, the virus exclusion would nevertheless bar recovery.

D. Star Buick’s reasonable expectation allegations do not save its claims, nor is

discovery warranted.

Although not separately presented in opposition to the Motion to Dismiss, Star Buick

alleged in the Amended Complaint that it had a reasonable expectation that the Policy provided

coverage for losses suffered when its business operations were suspended. See Am. Compl. ¶¶

21-34. However, because the Policy is unambiguous, for the reasons discussed herein, Star

Buick’s expectations of coverage were not reasonable. See Fuel Recharge Yourself, Inc. v.

AMCO Ins. Co., No. 20-4477, 2021 U.S. Dist. LEXIS 26173, at *11-12 (E.D. Pa. Feb. 11, 2021)

(“Because I have concluded that the policy provisions at issue unambiguously preclude

coverage, I cannot find that Plaintiff’s ‘reasonable expectations [of coverage during the COVID-

19 suspensions] were frustrated’”). Moreover, there are no allegations in the Amended

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Complaint that Sentry unilaterally changed coverage. To the contrary, Star Buick contends that

the Policy is derived from standardized language. See Am. Compl. ¶¶ 23, 25. See also Glat,

2021 U.S. Dist. LEXIS 61613, at *17 (rejecting the plaintiff’s argument (that because it had no

opportunity to negotiate the terms of its policy its reasonable expectations of coverage during the

COVID-19 suspension should override the policy language) because there were no allegations

that the defendant “deceived it or unilaterally changed the policy” and the policy’s terms were

clear and unambiguous). There are also no allegations that Sentry engaged in any deceptive

conduct or made any representations that coverage was provided for the losses. See Moody,

2021 U.S. Dist. LEXIS 7264, at *19-21 (rejecting the plaintiff’s reasonable expectations

arguments because although the plaintiff “alleges that it sought coverage for business

interruption losses, it points to no facts that it actually applied and paid for a wholly different

kind of policy than what it received[, n]or does it allege any affirmative representation by [the

defendants] that . . . constitute a reason to set aside the unambiguous language of the property

insurance policy”). The only allegations pertain to Star Buick’s own expectations and to

Sentry’s failure to correct any misunderstanding, of which Sentry may have been unaware.13

This doctrine cannot save Star Buick’s claims.

Considering the unambiguous terms of the Policy, there is no basis to allow discovery.

See Lansdale 329 Prop, LLC, 2021 U.S. Dist. LEXIS 81096, at *33-34 (concluding that the

plaintiffs failed to “plausibly plead that they reasonably expected coverage of the losses at issue”

and refusing to allow an amendment or permit discovery); Moody, 2021 U.S. Dist. LEXIS 7264,

at *29-30 (concluding that “no amount of discovery” would allow the plaintiff “to escape the

13 Notably, the Policy was effective March 1, 2020, weeks before the coronavirus pandemic

was declared or any closures ordered. See Am. Compl. ¶ 18.

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applicability of the plain language of the Virus Exclusion [a]nd even if it could, that discovery

would not alter the fact that [the plaintiff] has not and cannot state a claim for relief under the

Policy’s affirmative grant of coverage”).

Finally, although not specifically requested, leave to file a second amended complaint is

denied because it would be both futile and inequitable. See Alston v. Parker, 363 F.3d 229, 235

(3d Cir. 2004) (Where “a complaint is vulnerable to 12(b)(6) dismissal, a District Court must

permit a curative amendment, unless an amendment would be inequitable or futile.”); Moody,

2021 U.S. Dist. LEXIS 7264, at *34-35 (refusing to allow leave to amend because the business

losses suffered when the plaintiff’s art gallery was forced to shut down due to the COVID-19

pandemic were not covered under the policy).

V. CONCLUSION

The instant claims are not unfamiliar in recent months. This Court agrees with the almost

unanimous decisions in this district that the all-risks Policy at issue does not provide coverage

for the business income losses Star Buick sustained while its operations were suspended

following the Governor’s March 19, 2020 order in response to the COVID-19 pandemic. The

unambiguous Policy terms do not provide coverage under the business income or civil authority

provision. Even if they did, the virus exclusion would bar recovery. The Motion to Dismiss is

granted. The Amended Complaint is dismissed with prejudice.

A separate order follows.

BY THE COURT:

/s/ Joseph F. Leeson, Jr._________

JOSEPH F. LEESON, JR.

United States District Judge

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