Petition for Writ of Certiorari — Bel Air Auto Auction, Inc., Petitioner v. Great Northern Insurance Company

APPENDIX TO THE PETITION

FOR WRIT OF CERTIORARI

TABLE OF CONTENTS

Memorandum Opinion of the United States

District Court for the District of Maryland

(April 14, 2021) .................................................... 1a

Order of the United States Court of

Appeals for the Fourth Circuit (June

30, 2021) ................................................................ 34a

Order of the United States Court of

Appeals for the Fourth Circuit (July

27, 2021) ................................................................ 35a

MEMORANDUM ORDER OF THE

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

(April 14, 2021)

____________________________________________

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

________________

No. RDB-20-2892

BEL AIR AUTO AUCTION, INC.

Plaintiff

v.

GREAT NORTHERN INSURANCE COMPANY

Defendant

_______________

MEMORANDUM OPINION

In August of 2020, Plaintiff Bel Air Auto

Auction, Inc. (“Bel Air” or “Plaintiff”) filed suit against

Defendant Great Northern Insurance Company 1

(“Great Northern” or “Defendant”), seeking a

declaratory judgment that coverage exists under the

business interruption provisions in a property

insurance policy issued by Great Northern to Bel Air.

(ECF No. 1-2.) The now operative Amended

1 Plaintiff originally sued both Great Northern and its parent

company, Chubb Limited. Chubb Limited was voluntarily

dismissed from the suit prior to the removal of the case to this

Court. (ECF No. 1-7.)

1a

2a

Complaint specifically alleges that Bel Air’s policy

with Great Northern provides coverage for losses

caused as a direct and sole result of the Pandemic.

(ECF No. 4.) It is alleged that the presence of SARSCov-2 and its potential for causing COVID-19, as well

as the State of Maryland and Harford County’s

governmental orders have impaired, diminished, and

decreased Bel Air’s business and operations. (Id. ¶ 22.)

The suit was originally filed in the Circuit Court for

Harford County, Maryland and was removed to this

Court pursuant to 28 U.S.C. §§ 1332, 1441, and 1446

by Defendant Great Northern on October 7, 2020.

(ECF No. 1.)

On January 7, 2021, Plaintiff Bel Air filed a

Motion for Summary Judgment (ECF No. 18) in which

it asserts that there are no genuine facts in dispute

and that the only issues left to resolve are issues of

Maryland contract law as applied to insurance

policies. (See ECF No. 18-9 at 1.) That same day, the

Plaintiff also filed a Motion to Certify Questions of

Law to the Maryland Court of Appeals (ECF No. 19).

That motion notes that Maryland courts have not

directly addressed those questions which remain in

dispute and asserts that available Maryland law is

presently both insufficient and unsettled in

addressing such legal issues in the context of the

COVID-19 Pandemic. (ECF No. 19 ¶ 6.) On February

17, 2021, Defendant Great Northern filed a Motion for

Judgment on the Pleadings (ECF No. 26). The parties’

submissions have been reviewed, and no hearing is

necessary. See Local Rule 105.6 (D. Md. 2018). For the

reasons that follow, the Plaintiff Bel Air’s Motion for

Summary Judgment (ECF No. 18) and Motion for

Other Relief to Certify Questions of Law to the

Maryland Court of Appeals (ECF No. 19) are

3a

DENIED. The Defendant Great Northern’s Motion for

Judgment on the Pleadings (ECF No. 26) is

GRANTED.

BACKGROUND

Plaintiff Bel Air is a Maryland corporation with

its headquarters in Harford County, Maryland. (ECF

No. 4 ¶ 2.) It occupies and operates a vehicle auction

facility located at 4805 Philadelphia Road, Belcamp,

Maryland, as well as other locations. (ECF No. 4 ¶ 19.)

Bel Air alleges that the company typically processes

over 100,000 vehicles per year through consignments

from new and used car dealers, private business

fleets, and fleets from public service and government

agencies. (Id. ¶ 20.) Bel Air offers weekly auto

auctions, including repossessed car auctions,

government auctions, salvage auctions, and wholesale

auctions and provides a wide range of auto-related

services,

including

floor

planning,

storage,

transportation,

internet

sales,

full

vehicle

reconditioning and certification, and sales of donated

vehicles for charitable organizations. (Id.) Before the

COVID-19 Pandemic, Bel Air ran ten “lanes” of

vehicles at its auctions in which prospective buyers

could view the cars during “inlane bidding.” (Id. ¶ 20.)

Bel Air’s services also included “online bidding from

anywhere.” (Id. ¶ 21.)

Bel Air purchased from the Chubb Group of

Insurance a policy for property and liability insurance

issued on October 18, 2019 by Defendant Great

Northern, a corporation organized under the laws of

Indiana with its principal place of business in

Whitehouse Station, New Jersey. (Id. ¶ 29; ECF No. 1

¶ 3.) The purchased policy, with policy number 3601-

4a

95-62 BAL (the “Policy”), was effective for the period

from October 1, 2019 to October 1, 2020. (Id.; see Ex.

1, ECF No. 18-1.)

On March 5, 2020, Maryland Governor

Lawrence Hogan issued a proclamation which

declared a state of emergency due to the spread of

SARS-Cov-2, the virus causing the COVID-19 disease.

(ECF No. 4 ¶ 16.) The Governor issued several other

executive orders and proclamations throughout

March of 2020 prohibiting large gatherings, canceling

events, and closing the use and occupancy of

restaurants, bars, and fitness centers to the general

public. (Id.) However, Interpretive Guidance issued

on March 23, 2020 made clear that “[a]uto and truck

dealerships” were permitted to remain open as

essential businesses. See Interpretive Guidance

COVID 19-05 (Mar. 23, 2020). 2 According to the

Defendant, Bel Air’s website stated that, consistent

with that Guidance, it would remain open throughout

the Pandemic. (See ECF No. 27 at 7-8 (citing

Richeimer Decl. ¶ 6, ECF No. 27-1).) On March 30,

2020, Governor Hogan issued a “stay at home” order,

which ordered all persons in the State of Maryland to

“stay in their homes or places of residence” except “to

2 When considering a Rule 12(c) motion for judgment on the

pleadings, a court may take judicial notice of a public document,

without converting the motion into one for summary judgment.

See, e.g., Armbruster Products, Inc. v. Wilson, 35 F.3d 555

(Table), 1994 WL 489983, at *2 (4th Cir. 1994) (“The

consideration of judicially noticed facts does not transform a

motion for judgment on the pleadings into a motion for summary

judgment.”); Ancient Coin Collection Guild v. U.S. Customs and

Border Protection, 801 F. Supp. 2d 383, 410 (D. Md. 2011); Lefkoe

v. Jos. A. Bank Clothiers, No. WMN-06-1892, 2008 WL 7275126,

at *3-4 (D. Md. May 13, 2008).

5a

conduct or participate in Essential Activities” (defined

in the order), and closing “Non-Essential Businesses”

except for “Minimal Operations,” which included

allowing the presence of staff and owners to perform

essential administrative functions. See Order of the

Governor of the State of Maryland, Number 20-03-3001 (Mar. 30, 2020). On March 18, 2020, Barry

Glassman, the Harford County Executive, issued

Executive Order 20-01 declaring a state of emergency

due to the COVID-19 Pandemic and placing Harford

County in line with the orders and proclamations

issued by Governor Hogan. See Executive Order 20-01

(Mar. 18, 2020).

Nevertheless, according to Bel Air, as a direct

and sole result of the presence of SARSCov-2 and its

potential for causing COVID-19 and the orders of both

Governor Hogan and Executive Glassman, Bel Air’s

business and operations were, and continue to be,

impaired, diminished, and decreased. (Id. ¶ 22.) “All

in-person, in-lane, live bidding has been forced to

cease,” and the company has had to conduct sales by

“remote Simulcast” because it “has lost the full,

unfettered use of its facility.” (Id. ¶ 23.) Bel Air alleges

that the food services it previously offered have been

forced to close, and various restrictions inside the

facility have been imposed, such as requiring visitors

to wear masks and installing signage and safe

distancing reminders, COVID-screens, and plexiglass

dividers. (Id. ¶ 25.) As the Plaintiff explains,

“[a]lthough the SARS-Cov-2 and Covid-19 and the

State and local governmental

orders have not

resulted in a structural alteration or physical change

to its premises,” they have “caused direct physical loss

or damage in the form of a loss of full use.” (Id. ¶ 28.)

The Plaintiff alleges that such loss of full use “has

6a

directly resulted in an actual and substantial

impairment of operations, including loss of business

income and an increase in business expense.” (Id.) Bel

Air asserts that such loss is recoverable under its

policy with Great Northern.

Bel Air seeks coverage for its losses under

various sections of the Policy. The “Premises

Coverages” section of the Policy states that the insurer

will “pay for direct physical loss or damage to”

building or personal property “caused by or resulting

from a peril not otherwise excluded.” (Id. ¶ 33; see also

Ex. 1 at 000035, ECF No. 18-1.) The Policy does not

define “direct physical loss” or “damage.” The Policy

does, however, define “property damage” as:

• physical injury to tangible property,

including resulting loss or use of that

property. All such loss of use shall be

deemed to occur at the time of the

physical injury that caused it; or

• loss of use of tangible property that is

not physically injured. All such loss of

use shall be deemed to occur at the time

of the occurrence that caused it.

(Ex. 1 at 000179, ECF No. 18-1.)

The Policy also contains business interruption

coverage predicated upon on the loss of use of the

subject property. For example, the “Business Income

with Extra Expense” section provides coverage for

“business income loss” incurred “due to the actual

impairment of [ ] operations” and “extra expense”

incurred “due to the actual or potential impairment of

7a

[ ] operations” incurred “during the period of

restoration.” (Id. at 000064.) However, for this section

to apply, there must be “direct physical loss or

damage” that must “be caused by or result from a

covered peril,” and must have “occur[ed] at, or within

1,000 feet of, the premises, other than a dependent

business premises, shown the in Declarations.” (Id.)

“Covered peril” is defined as “peril covered by the

Form(s) shown in the Property Insurance Schedule

Forms . . . applicable to the lost or damaged property.”

(Id. at 000115.) The “period of restoration” is defined

as the period “immediately after the time of direct

physical loss or damage by a covered peril to property”

and continuing until operations are restored with

reasonable speed, including the time required to

“repair and replace the property.” (Id. At 000124.)

The “Civil Authority” section of the Policy also

provides coverage for business interruption, but

specifically covers such loss incurred “due to the

actual impairment” of operations and “extra expense”

incurred, “directly caused by the prohibition of access

to: your premises; or a dependent business premises,

by a civil authority.” (Id. at 000067.) “This prohibition

of access by a civil authority,” the Policy states, “must

be the direct result of direct physical loss or damage

to property away from such premises or such

dependent business premises by a covered peril,” and

applies if the property is within one mile or another

preidentified distance from the premises or the

dependent business premises, “whichever is greater.”

(Id.)

Finally, the Policy includes certain exclusions.

The “Acts Or Decisions” exclusion applicable to the

Business Income and Extra Expense coverage and the

8a

Civil Authority coverage provides that the insurance

“does not apply to loss or damage caused by or

resulting from acts or decisions, including the failure

to act or decide, of any person, group, organization or

government body.” (Id. at 000088.) It continues,

providing that the Acts Or Decisions exclusion “does

not apply to ensuing loss or damage caused by or

resulting from a peril not otherwise excluded.” (Id.)

The Policy does not include a specific, explicit

exclusion for damage caused by a virus. On July 6,

2006, the Insurance Services Office 3 (commonly

referred to as the “ISO”) published for the benefit of

the insurance industry a new endorsement for

property insurance policies designated CP 01 40 07 06

– “Exclusion Of Loss Due To Virus Or Bacteria,” which

states that there is no coverage for loss or damage

caused by or resulting from any “virus, bacterium or

other microorganism that induces or is capable of

inducing physical distress, illness or disease.”

(Answer ¶ 39, ECF No. 14.) An exclusion of this nature

is not included in the subject Policy in this case. (See

ECF No. 18-1.)

As a result of purported impairment of its

business and operations and extra expenses allegedly

incurred due to the spread of SARS-Cov-2, Bel Air

filed a claim for business interruption and extra

expense insurance coverage with Defendant Great

3 Insurance Services Office, Inc. is an insurance advisory

organization that provides statistical and actuarial information

to businesses. The company provides statistical, actuarial,

underwriting, and claims information, as well as form policy

language clients may adopt and use in their policies. See About

ISO, https://www.verisk.com/insurance/brands/iso/ (last visited

April 14, 2021).

9a

Northern. (Answer ¶ 47, ECF No. 14.) Great Northern

denied the claim for business interruption insurance

coverage on May 27, 2020, and provided several

reasons for this denial. (See Ex. 4, ECF No. 18-4.) The

Defendant asserted that SARS-Cov-2 and COVID-19

have not resulted in direct physical loss or damage to

the building or personal property of the Plaintiff and

that the Civil Authority coverage income portion of

the policy did not apply because (1) the civil

authorities did not totally prohibit all access to the

premises given that employees were permitted access

the property, and (2) there was no physical loss or

damage to a premises away from but within one mile

of the insured premises because there was no evidence

of an order from a civil authority issued due to

structural or other alteration to any such property.

(Id.) The Defendant also asserted that the Acts Or

Decision exclusion in the Policy would apply and bar

coverage for losses based on the acts or decision of any

person, group, organization, or government body,

there being no ensuing loss or damage caused by or

resulting from a peril not otherwise excluded. (Id.)

Bel Air filed the presently pending suit in

October of 2020 seeking a declaratory judgment that

coverage exists under the business interruption

provisions in the Policy. (ECF No. 1-2.) The suit was

originally filed in the Circuit Court for Harford

County, Maryland and was removed to this Court

pursuant to 28 U.S.C. §§ 1332, 1441, and 1446 by

Defendant Great Northern on October 7, 2020. (ECF

No. 1.) The now operative Amended Complaint seeks

an order stating that business interruption and extra

expense coverage exists under the Policy for Bel Air’s

losses due to the loss of use of the insured premises

caused by the SARS-Cov-2 virus and COVID-19

10a

disease and the State and local government orders,

and that the Acts Or Decisions exclusion does not

apply. (ECF No. 4 at p. 20-21.)

On January 7, 2021, Plaintiff Bel Air filed a

Motion for Summary Judgment (ECF No. 18) as well

as a Motion for Other Relief to Certify Questions of

Law to the Maryland Court of Appeals (ECF No. 19).

In its Motion for Summary Judgment, Bel Air asserts

that summary judgment in its favor is appropriate

because the Policy provides coverage for its losses

arising

from

the

COVID-19

Pandemic’s

contamination of its facility and governmental orders

issued in response to the Pandemic. (ECF No. 18-9 at

1.) The Plaintiff contends that the material facts in

this case are not in dispute, and that the only issues

in dispute are legal issues of Maryland contract law as

applied to insurance policies. (Id.) According to the

Plaintiff, three issues of law are in dispute:

1.

Whether coverage under the Business

Income with Extra Expense provision

providing coverage for “direct physical

loss or damage” requires a structural

change to or physical alteration of the

insured premises, or whether a loss of

use of the insured premises due to

contamination suffices for coverage to

exist;

2.

Whether all access has to be completely

prohibited for the Civil Authority section

to apply; and

3.

Whether the Acts Or Decisions exclusion

has any application to the question of

11a

coverage in the Business Income With

Extra Expense portion of the Policy.

(Id. at 1-2.) The Plaintiff moved for certification to the

Maryland Court of Appeals on these legal questions

under Md. Code Ann., Cts. & Jud. Proc. § 12-603, and

noted that it understood the Court may defer ruling

on its Motion for Summary Judgment if it granted

such motion for certification. (Id. at 2 n.1.)

On February 17, 2021, the Defendant Great

Northern filed a Motion for Judgment on the

Pleadings pursuant to Rule 12(c) (ECF No. 26), in

which it argues that the Plaintiff’s Motion for

Summary Judgment should be denied and requests

that this Court award judgment in its favor because

the presence or absence of a virus is irrelevant under

the clear language of the Policy. (See ECF No. 27.)

According to the Defendant, more than 100 courts

have acknowledged the distinction between actual,

physical loss or damage and the partial loss of use and

diminished business income associated with the

COVID-19 Pandemic and resulting “stay at home”

orders. (Id. at 1.) The Defendant contends that

applying basic rules of statutory construction, these

courts have held that the terms “direct” and “physical”

modify both “loss” and “damage” and ensure that

policies are limited to tangible, physical losses to

property, or, at the very least, permanent

dispossession of property rendered unfit or

uninhabitable by physical forces. (Id.) Such decisions,

the Defendant asserts, “fully comport” with Maryland

law, and, therefore, no certification is necessary.

12a

STANDARD OF REVIEW

A.

Motion for Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure

provides that a court “shall grant summary judgment

if the movant shows that there is no genuine dispute

as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(c). A

material fact is one that “might affect the outcome of

the suit under the governing law.” Libertarian Party

of Va. v. Judd, 718 F.3d 308, 313 (4th Cir. 2013)

(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

248 (1986)). A genuine issue over a material fact exists

“if the evidence is such that a reasonable jury could

return a verdict for the nonmoving party.” Anderson,

477 U.S. at 248. When considering a motion for

summary judgment, a judge’s function is limited to

determining whether sufficient evidence exists on a

claimed factual dispute to warrant submission of the

matter to a jury for resolution at trial. Id. at 249. In

undertaking this inquiry, this Court must consider

the facts and all reasonable inferences in the light

most favorable to the nonmoving party. Libertarian

Party of Va., 718 F.3d at 312; see also Scott v. Harris,

550 U.S. 372, 378 (2007).

In the specific context of a “claim for breach of

an insurance policy, ‘the insured bears the burden of

proving every fact essential to his or her right to

recovery, ordinarily by a preponderance of the

evidence.’” See Jowite Ltd. P’ship v. Federal Ins. Co.,

No. DLB-18-2413, 2020 WL 4748544, at *5 (D. Md.

Aug. 17, 2020) (quoting Gen. Ins. Co. v. Walter E.

Campbell Co., 214 F. Supp. 3d 578, 597 (D. Md. 2017)

(citing N. Am. Acc. Ins. Co. v. Plummer, 176 A. 466,

13a

469 (Md. 1935), aff’d sub nom. Gen Ins. Co. v. United

States Fire Ins. Co., 886 F.3d 346 (4th Cir. 2018), as

amended (Mar. 28, 2018))). “If the insured meets its

burden and the ‘insurer [has] relie[d] upon a policy

exclusion to deny coverage, the insurer bears the

burden of proving that the exclusion applies.’” Id.

(quoting Ellicott City Cable, LLC v. Axis Ins. Co., 196

F. Supp. 3d 577, 584 (D. Md. 2016) (citing Finci v. Am.

Cas. Co., 593 A.2d 1069, 1087 (Md. 1991))).

B.

Motion for

Pleadings

Judgment

on

the

Rule 12(c) of the Federal Rules of Civil

Procedure authorizes a party to move for judgment on

the pleadings any time after the pleadings are closed,

as long as it is early enough not to delay trial. 4 See

Fed. R. Civ. P. 12(c). The legal standard governing

such a motion is the same as a motion to dismiss

under Rule 12(b)(6). See, e.g., Edwards v. City of

Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999); Booker

v. Peterson Cos., 412 F. App’x 615, 616 (4th Cir.

Feb.25, 2011); Economides v. Gay, 155 F. Supp. 2d

485, 488 (D. Md. 2001). Under Rule 8(a)(2) of the

Federal Rules of Civil Procedure, a complaint must

contain a “short and plain statement of the claim

showing that the pleader is entitled to relief.” Fed. R.

Civ. P. 8(a)(2). Rule 12(b)(6) of the Federal Rules of

Civil Procedure authorizes the dismissal of a

complaint if it fails to state a claim upon which relief

4 Defendant filed an Answer (ECF No. 14) on November 4, 2020,

prior to filing the Motion for Judgment on the Pleadings (ECF

No. 26) on February 17, 2021. Trial has yet to be set in this

matter.

14a

can be granted. The purpose of Rule 12(b)(6) is “to test

the sufficiency of a complaint and not to resolve

contests surrounding the facts, the merits of a claim,

or the applicability of defenses.” Presley v. City of

Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006).

In

determining

whether

dismissal

is

appropriate, this Court assumes as true all wellpleaded facts in the plaintiff’s complaint but does not

accept the plaintiff’s legal conclusions. Ashcroft v.

Iqbal, 556 U.S. 662 (2009); Nemet Chevrolet, Ltd. v.

Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir.

2009). A complaint must be dismissed if it does not

allege “enough facts to state a claim to relief that is

plausible on its face.” Bell Atl. Corp. v. Twombly, 550

U.S. 544, 570 (2007); see also Simmons v. United Mort.

& Loan Invi, LLC, 634 F.3d 754, 768 (4th Cir. 2011);

Andrew v. Clark, 561 F.3d 261, 266 (4th Cir. 2009). In

making this assessment, a court must “draw on its

judicial experience and common sense” to determine

whether the pleader has stated a plausible claim for

relief. Iqbal, 556 U.S. at 679.

ANALYSIS

As the basis of this Court’s jurisdiction lies in

diversity of citizenship, under 28 U.S.C. § 1332(a),

Maryland law applies. Hartford Fire Ins. Co. v.

Harleysville Mut. Ins. Co., 736 F.3d 255, 261 n.3 (4th

Cir. 2013) (citing Erie R. Co. v. Tompkins, 304 U.S. 64

(1938)). Under Maryland law, courts follow the

general rules of contract construction in the

interpretation of an insurance contract. See CheneyBell Nat’l Life Ins. Co., 556 A.2d 1135, 1138 (Md.

1998); Pacific Indem. Co. v. Interstate Fire & Cas. Co.,

488 A.2d 486, 488 (Md. 1985). Additionally,

15a

“Maryland does not follow the rule, adopted in many

jurisdictions, that an insurance policy is to be

construed most strongly against the insurer.” Id. As

such, principles of contract law govern the property

insurance policy at issue, and the rights and

obligations of the parties are determined by the terms

of that contract. Columbia Town Ctr. Title Co. v. 100

Inv. Ltd. P’ship., 36 A.3d 985, 1005 (Md. Ct. Spec. App.

2012). “[I]f no ambiguity in the terms of the insurance

contract exists, a court has no alternative but to

enforce those terms.” Dutta v. State Farm Ins. Co., 769

A.2d 948, 957 (Md. 2001) (citing Kendall v.

Nationwide Ins. Co., 702 A.2d 767, 773 (Md. 1997)).

When interpreting an insurance policy’s terms,

this Court is instructed to interpret such policy “as a

whole, according words their usual, everyday sense,

giving force to the intent of the parties, preventing

absurd results, and effectuating clear language.”

United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 495

(4th Cir. 1998). The test for that “usual, everyday

sense,” is “what meaning a reasonably prudent

layperson would attach to the term.” See Pacific

Indem., 488 A.2d at 488. Words in a contract are only

considered ambiguous if “they reasonably can be

understood to have more than one meaning.”

Nationwide Mut. Ins. Co. v. Regency Furniture, Inc.,

963 A.2d 253, 260 (Md. Ct. Spec. App. 2009) (internal

citation omitted). This Court should give effect to each

clause “so that a court will not find an interpretation

which casts out or disregards a meaningful part of the

language of the writing unless no other course can be

sensibly and reasonably followed.” Muhammad v.

Prince George’s Cty. Bd. of Educ., 228 A.3d 1170, 1179

(Md. Ct. Spec. App. 2020) (internal citation omitted),

cert. denied, 238 A.3d 273 (Md. 2020).

16a

Where a plaintiff asserts entitlement to

coverage under an insurance policy, that party bears

the burden of proving coverage under the policy. See

Prop. & Cas. Ins. Guar. Corp. v. Beebe-Lee, 66 A.3d

615, 624 (Md. 2013). Therefore, to prevail on its claim

for coverage in this case, Plaintiff Bel Air has the

burden to show a covered loss under the terms of the

Policy.

As explained above, the Plaintiff seeks

coverage under the Premises Coverage (Ex. 1 at

000035, ECF No. 18-1), Business Income with Extra

Expense (id. at 000064), and the Civil Authority

subcoverage (id. at 000067) portions of the Policy.

Each of these sections requires that there be a “direct

physical loss or damage” to property—either to the

covered property itself, or surrounding property

identified by the Civil Authority provision. Bel Air

claims that “direct physical loss or damage” includes

not only detrimental and harmful structural changes

or alterations to a property, but also includes “a

detrimental or harmful loss of use of that tangible

property.” (ECF No. 18-9 at 16 (emphasis added).) Bel

Air seeks certification of a question related to this

issue of state law to the Court of Appeals of Maryland.

(ECF No. 19 ¶ 3.)

Although Maryland courts have not directly

opined on the meaning of “direct physical loss or

damage” to property in the context of a commercial

property insurance policy, this Court is not required

to certify questions of law to the state court as the

Plaintiff requests because a straightforward

application of Maryland contract law detailed above

can resolve all remaining issues in this case. This

Court may certify a question of law to the Court of

Appeals of Maryland “if the answer may be

17a

determinative of an issue in pending litigation in the

certifying court and there is no controlling [Maryland]

appellate decision, constitutional provision, or statute

. . . .” See Maryland Uniform Certification of Questions

of Law Act, Md. Code Ann., Cts. & Jud. Proc. § 12-603.

However, as this Court noted in Marshall v. James B.

Nutter & Co., “it is well established that the decision

to certify a question to the Court of Appeals of

Maryland is not obligatory and ‘rests in the sound

discretion of the federal court.’” No. RDB-10-3596,

2013 WL 3353475, at *7 (D. Md. July 2, 2013), aff’d,

758 F.3d 537 (4th Cir. 2014) (quoting Hafford v.

Equity One, Inc., No. AW-07-1633, 2008 WL 906015,

at *4 (D. Md. Mar. 31, 2008) (citing Lehman Bros. v.

Schein, 416 U.S. 386, 391 (1974))); see also Boyster v.

Comm’r of Internal Revenue Serv., 668 F.2d 1382,

1385 (4th Cir. 1981) (“Certainly we have discretion as

to whether to employ the Maryland certification

procedure.”).

In exercising such discretion, federal courts

may decide not to certify a question to a state court

where the federal court can reach a “reasoned and

principled conclusion.” Hafford, 2008 WL 906015, at

*4. As the U.S. Court of Appeals for the Fourth Circuit

instructs, “[o]nly if the available state law is clearly

insufficient should the court certify the issue to the

state court.” Roe v. Doe, 28 F.3d 404, 407 (4th Cir.

1994) (citing Smith v. FCX, Inc., 744 F.2d 1378, 1379

(4th Cir. 1984), cert. denied, 471 U.S. 1103 (1985)).

“When this guidance is available the federal court

should decide the case before it rather than staying

and prolonging the proceedings.” Arrington v. Coleen,

Inc., No. AMD-00-191, AMD-00-421, and AMD-001374, 2001 WL 34117735, at *5 (D. Md. Mar. 29,

2001). When the Court is satisfied that it is “able to

18a

anticipate the way in which the Maryland Court of

Appeals would rule,” certification is not necessary. See

Bethany Boardwalk Grp. LLC v. Everest Security Ins.

Co., -- F. Supp. 3d --, 2020 WL 1063060, at *11 n.6 (D.

Md. Mar. 5, 2020). As the following discussion will

explain, under the straightforward application of

Maryland contract law as applied to insurance

policies, Plaintiff Bel Air does not have a claim to

coverage under the plain language of its commercial

property insurance policy with Defendant Great

Northern, and no certification is necessary. There is

sufficient guidance from Maryland state courts, this

Court, and other federal district courts applying the

same basic principles of contract law to almost

identical insurance policy provisions to guide this

Court’s analysis. 5

A.

5

“Direct physical loss or damage” to

property does not include loss of use

unrelated to tangible, physical

damage.

Other federal district court addressing almost identical

questions of state law under commercial property insurance

policies have come to decisions without certification of such

questions of law to state courts. Some courts have specifically

denied motions for certification like the one filed in this case by

Plaintiff Bel Air. See Hillcrest Optical, Inc. v. Cont’l Cas. Co., No.

1:20-CV-275-JB-B, 2020 WL 6163142, at *5 (S.D. Ala. Oct. 21,

2020) (“Indeed, the Court could find no Alabama decision

addressing whether a temporary inability to use one's property

for its intended purpose constituted a ‘direct physical loss of

property.’ However, there is sufficient authority to guide the

Court's decision on the meaning of that phrase.”) See also Henry's

Louisiana Grill, Inc. v. Allied Ins. Co. of Am., No. 1:20-CV-2939TWT, 2020 WL 5938755, at *7 (N.D. Ga. Oct. 6, 2020); Drama

Camp Productions, Inc. v. Mt. Hawley Ins. Co., No. 1:20-CV-266JB-MU, 2020 WL 8018579, at *4 (S.D. Ala. Dec. 30, 2020).

19a

Applying basic principles of Maryland contract

law, this Court has interpreted the words “physical”

and “damage” in the context of a commercial general

liability insurance policy. See M Consulting & Export,

LLC v. Travelers Cas. Ins. Co. of America, 2 F. Supp.

3d 730, 735-737 (D. Md. 2014). In that case, the policy

provided coverage for property damage, defined as

“[p]hysical injury to tangible property, including all

resulting loss of use of that property” and “[l]oss of

use of tangible property that is not physically injured.”

Id. at 735-36. The plaintiff argued that conversion of

the property, a form of a “loss of use” claim, qualified

as “physical loss” to tangible property. Id. at 736. This

Court found such claim was unsupported by any

applicable case law and stated that the term “physical

damage” was “in no way ambiguous.” Id. Looking to

the definitions of “physical” and “physical harm” as

provided in the Merriam-Webster Online Dictionary

and Black’s Law Dictionary, this Court held that

“inclusion of the term ‘physical’ clearly indicates that

the damage must affect the good itself, rather than the

Plaintiff’s use of the good.” Id. (emphasis added)

(citing Merriam-Webster Online Dictionary (defining

“physical” as “having a material existence,”

“perceptible especially through the senses and subject

to the laws of nature,” or “of or relating to material

things”) and Black’s Law Dictionary (8th ed.) (defining

“physical harm” as “[a]ny physical impairment of

land, chattels, or the human body.”)).

The Maryland Court of Appeals has in one

context found a loss of use to constitute a form of

“damage to property” in a case applying the Maryland

uninsured motorist statute. See Berry v. Queen, 233

A.3d 42 (Md. 2020). The Court held that the statute,

20a

which mandated coverage for “damage to property,”

required automobile insurers to pay for a car rental

while an insured’s physically damaged vehicle was

being repaired. Id. at 48. The court found that the

ordinary meaning of “damage” necessarily included a

“loss of something” and that “loss of property” could

include circumstances in which “the lawful owner is

deprived of the ability to apply the object in a manner

he or she desires—i.e., a loss of use.” Id. at 51.

However, the context of Berry still involved physical

harm or injury to property. As the Defendant aptly

notes, “[t]he Court of Appeals was not asked to hold,

nor did it hold . . . that a policyholder could make an

uninsured motorist claim for rental car coverage every

time it suffered a ‘loss of use’ of a vehicle untethered

to physical damage to that vehicle.” (ECF No. 30 at 9.)

Further, the language of the uninsured

motorist statute did not include the modifier

“physical.” Numerous courts have found that the

phrase “direct physical loss or damage” to property,

commonly used in property insurance policies, is

unambiguous and have specifically held that the

modifier “direct physical” applies to both “loss” and

“damage.” See, e.g., AFLAC, Inc. v. Chubb & Sons,

Inc., 581 S.E.2d 317, 319 (Ga. Ct. App. 2003); Ward

Gen. Ins. Servs., Inc. v. Emp’rs Fire Ins. Co., 7 Cal.

Rptr. 3d 844, 849 (Cal. Ct. App. 2003); Phila. Parking

Auth. v. Fed. Ins. Co., 385 F. Supp. 2d 280, 287-88

(S.D.N.Y. 2005). Accordingly, such courts have held

that the phrase “direct physical loss or damage” to

property expressly limits coverage to tangible,

physical changes to insured property. Id. For example,

in AFLAC, Inc., the court was unable to find any state

precedent directly “construing the term of insurance

‘direct physical loss or damage,’” but found that “the

21a

common meaning of the words and the policies as a

whole, indicate that it contemplates an actual change

in insured property . . . causing it to become

unsatisfactory for future use or requiring that repairs

be made to make it so.” 581 S.E.2d at 319 (citing

Trinity Indus. v. Ins. Co. of North America, 916 F.2d

267, 271 (5th Cir. 1990), Wolstein v. Yorkshire Ins. Co.,

985 P.2d 400 (Wash. Ct. App. 1999), and North

American Shipbldg., Inc. v. Southern Marine &

Aviation Underwriting, Inc., 930 S.W.2d 829, 833

(Tex. App. 1996)).

Numerous courts have had the opportunity to

directly address the meaning of identical “direct

physical loss or damage” language in commercial

property insurance policies in the context of a plaintiff

claiming loss of use due to the COVID-19 Pandemic

and stay at home orders. Those courts have

overwhelming held that the phrase requires tangible,

physical losses to property, or, at the very least,

permanent dispossession of the property rendered

unfit or uninhabitable by physical forces, rejecting

plaintiffs’ claims for coverage in the context of COVID19 through the application of the same basic

principles of contract law that this Court must apply

under Maryland law. See, e.g., Bluegrass Oral Health

Ctr. v. Cincinnati Ins. Co., No. 1:20-CV-0120-GNS,

2021 WL 1069038, at *4 (W.D. Ky. Mar. 18, 2021)

(finding that “the great weight of decisions recently

considering” the issue of the meaning of “direct

physical loss or damage” in “the midst of the current

pandemic have reached the same conclusion” that the

22a

phrase requires some physical damage, rather than

mere loss of use). 6

In 1 S.A.N.T. Inc. v. Berkshire Hathaway, Inc.,

the plaintiff, an operator of a restaurant and tavern

business, claimed that it had incurred and was

continuing to incur substantial loss of business

income and other expenses due to state orders closing

all “non-life sustaining businesses,” which included 1

S.A.N.T., a restaurant property covered by a property

insurance policy. -- F. Supp. 3d --, 2021 WL 147139, at

*1 (W.D. Pa. Jan. 15, 2021). The plaintiff was denied

coverage under that policy because it did not sustain

“direct physical loss or damage to a Covered

Property.” Id. The plaintiff filed suit against its

insurer, contending the policy should cover its claim

because it could not use the property for its intended

purpose during the Pandemic and, therefore, had

suffered “direct physical loss or damage” to such

property. Id. The court held that the plain meaning

6 The court in Bluegrass Oral Health cited to numerous opinions

of other courts. See 10E, LLC v. Travelers Indemnity Co. of

Connecticut, 483 F. Supp. 3d 828, 836 (C.D. Cal. 2020); Diesel

Barbershop, LLC v. State Farm Lloyds, No. 5:20-CV-461-DAE,

2020 WL 4724305, at *5 (W.D. Tex. Aug. 13, 2020); Rose's 1, LLC

v. Erie Ins. Exch., No. 2020 CA 002424 B, 2020 WL 4589206, at

*2 (D.C. Super. Ct. Aug. 6, 2020); Turek Enters., Inc. v. State

Farm Mut. Auto. Ins. Co., 484 F. Supp. 3d 492, 500 (E.D. Mich.

2020) (citing Merriam Webster's definition of “loss” to reject the

interpretation of loss as, inter alia, loss of use); Kirsch v. Aspen

Am. Ins. Co., No. 20-11930, 2020 WL 7338570, at *5 (E.D. Mich.

Dec. 14, 2020) (same); Fam. Tacos, LLC v. Auto Owners Ins. Co.,

No. 5:20-CV-01922, 2021 WL 615307, at *5 (N.D. Ohio Feb. 17,

2021) (same); Ceres Enters., LLC v. Travelers Ins. Co., No. 1:20CV-1925, 2021 WL 634982, at *5 (N.D. Ohio Feb. 18, 2021)

(same); Dakota Girls, LLC v. Phila. Indem. Ins. Co., No. 2:20-CV2035, 2021 WL 858489, at *6 (S.D. Ohio Mar. 8, 2021) (same).

23a

of the phrase “direct physical loss or damage” to

property could not support the plaintiff’s claim. Id. at

*5. As the court explained, the words “‘loss’ and

‘damage’ do not stand alone but are modified by the

terms ‘direct physical.’” Id. Just as under Maryland

law, the state law at issue required the court to “give

effect to all the terms in the context of the Policy

language.” Id. According to the court, the presence of

both “direct” and “physical” meant “there [was] no

reasonable question that the Policy language

presupposes that the request for coverage stems from

an actual impact to the property’s structure, rather

than the diminution of its economic value because of

governmental actions that do not affect the structure.”

Id. The court granted the defendant-insurer’s motion

to dismiss in this context of a restaurant property

where the plaintiff, unlike Bel Air, did not concede

that customers still had access to the premises.

Similarly, in Chief of Staff, LLC v. Hiscox Ins.

Co. Inc., the court granted a motion to dismiss in a

case where the plaintiff, a hospitality support agency,

sought to recover its loss of income caused by a

governor’s COVID-19-related orders under a

commercial property insurance policy issued by the

defendant pursuant to the “Business Income,” “Excess

Expense,” and “Civil Authority” provisions of the

applicable policy. No. 20-C-3169, 2021 WL 1208969, at

*1-*2 (N.D. Ill. Mar. 31, 2021). As in the case at hand,

the policy at issue limited the applicability of

“Business Income” and “Excess Expense” provisions to

the “direct physical loss of or damage to property at

the described premises.” Id. at *2. The court, as

others, turned to the plain meaning of the words in

the policy and held that “‘physical loss’ refers to a

deprivation caused by a tangible or concrete change in

24a

or to the thing that is lost.’” Id. The plaintiff’s

complaint alleged loss of the use of its property due to

the governor’s closure orders, but without any

allegation of a tangible or concrete change in or to the

property, the court held that the plaintiff had failed to

state a claim for relief under either the business

income or excess expense provisions. Id.

The Civil Authority provision in that case

included language almost identical to the one at hand,

and the court held that such provision failed to

provide coverage for the same reasons as the other

business interruption provisions. As the court

explained, the Civil Authority section provided

coverage for actual loss of business income and excess

expenses “caused by action of civil authority that

prohibits access to the described premises” when a

“Covered Cause of Loss causes damage to property

other than property at the described premise.” Id. at

*5. The section was limited to those cases in which (1)

“[a]ccess to the area immediately surrounding the

damaged property [was] prohibited by civil authority

as a result of the damage,” and the premises was

within a mile of the damaged property; and (2) the

civil action was “taken in response to dangerous

physical conditions resulting from the damage or

continuation of the Covered Cause of Loss that caused

the damage, or the action [was] taken to enable a civil

authority to have unimpeded access to the damaged

property.” Id. The court held there could not be

coverage under this section because the “other

property,” like the premises covered by the policy, had

not suffered the type of physical damage the plain

language of the policy required. Id. As the court

explained, a “Civil Authority provision requires that

the ‘other property’ have suffered ‘damage,’ and the

25a

complaint does not allege, nor does [the plaintiff]

argue, that the closure orders were due to some

property within one mile of the [plaintiff’s] premises

having been damaged by the coronavirus.” Id. at *6.

The court noted that “[i]n holding that the Civil

Authority provision does not provide coverage to [the

plaintiff], this Court joins the many other courts to

have interpreted materially identical provisions in the

same manner.” Id. (citing Bluegrass Oral Health Ctr.,

2021 WL 1069038, at *4.) 7

Bel Air asserts that despite the clear language

of the Policy, Great Northern “intended” to provide

coverage for losses related to the COVID-19 Pandemic

because it did not include an express virus exclusion.

(ECF No. 18-9 at 19.) Bel Air is not entitled to

coverage in contravention to the plain meaning of

“direct physical loss or damage” to property under the

Premises Coverage, Business Income with Extra

Expense, or the Civil Authority provisions of the

Policy simply because of this alleged omission. It is

true, as noted above, that the

7 See also Kahn v. Pa. Nat'l Mut. Cas. Ins. Co., -- F. Supp. 3d --,

2021 WL 422607, at *8 (M.D. Pa. Feb. 8, 2021) (“Plaintiffs here

do not allege any loss of or damage to another property caused by

any ‘covered cause of loss’ that triggered an action of civil

authority.”); O'Brien Sales & Mktg., Inc. v. Transp. Ins. Co., -- F.

Supp. 3d --, 2021 WL 105772, at *5 (N.D. Cal. Jan. 12, 2021) (“[I]t

is apparent from the plain language of the cited civil authority

orders that such directives were issued to stop the spread of

COVID-19 and not as a result of any physical loss of or damage

to property.”); Gerleman Mgmt., Inc. v. Atl. States Ins. Co., -- F.

Supp. 3d --, 2020 WL 8093577, at *6 (S.D. Iowa Dec. 11, 2020)

(“Plaintiffs have not alleged damage to another property.”),

appeal docketed, No. 21-1082 (8th Cir. Jan. 12, 2021);

26a

Insurance Services Office (“ISO”) form endorsement

entitled “Exclusion Of Loss Due to Virus Or Bacteria”

was promulgated in 2006 in response to a previous

SARS outbreak. (Id.) The Plaintiff contends that

“[t]he ISO published this form exclusion in response

to the SARS pandemic and in recognition that virus

contagion was at least potentially covered under the

standard property policy.” (Id.) The Plaintiff argues

that when Great Northern elected not to include a

similar virus exclusion in its property policies, it

signaled that it did want to provide virus-related

coverage. (Id.) This argument is without merit. As the

court noted in Bluegrass Oral Health, it is

“elementary” that “‘an exclusion cannot grant

coverage.’” See 2021 WL 1069038, at *4 (citing Kemper

Nat’l Ins. Cos. v. Heaven Hill Distilleries, Inc., 82

S.W.3d 869, 873 (Ky. 2002)). Omission of an exclusion

does not alter the plain language of the provisions

under which the Plaintiff seeks coverage, and such

provisions simply do not provide coverage for a loss of

use unrelated to physical, structural, tangible damage

to property.

B.

“Contamination” by the COVID-19

virus does not constitute “direct

physical loss or damage” to

property.

In an attempt to distinguish itself from other

plaintiffs who have failed to assert claims for loss of

use due to the COVID-19 Pandemic, Bel Air asserts a

new argument in its Motion for Summary Judgment.

(ECF No. 18; Memorandum in Support, ECF No. 189.) Bel Air claims that COVID-19 did in fact physically

“damage” its property, as well as surrounding

properties, by “contaminating” the property with the

27a

virus. (ECF No. 18-9 at 11-29.) This argument fails for

several reasons.

First, this Court notes that Plaintiff Bel Air did

not allege that COVID-19 “contaminated” its covered

property or other surrounding property in the

Amended Complaint. (See ECF No. 4.) In granting the

defendant’s motion to dismiss in Bluegrass Oral

Health, the court noted the plaintiff’s omission of any

allegations that the relevant property was actually

contaminated by the virus was relevant to its decision.

2021 WL 1069038, at *4. In this case, the Amended

Complaint alleges that aerosolized respiratory

droplets can remain on a surface and contaminate any

person coming into contract with that surface, but Bel

Air does not specifically allege that its property or

surrounding property was in fact contaminated by the

virus. (Id. ¶ 10.) The Plaintiff in fact concedes that

“the SARS-Cov-2 and Covid-19 and the State and local

governmental orders have not resulted in a structural

alteration or physical change to its premises.” (Id. ¶ 28

(emphasis added).) Given that the standard of review

for a motion for judgment on the pleadings is the same

as a motion to dismiss, Edwards, 178 F.3d at 243, the

Plaintiff’s allegations, and omitted allegations, are

relevant in ruling on the Defendant’s motion.

Nevertheless, even if the Plaintiff had clearly

alleged contamination of its property, the argument

still fails. First, the Plaintiff cannot prevail under the

Civil Authority section of the Policy because, as it

concedes, the stay at home orders issued by the

Governor and County Executive did not actually

prohibit Bel Air’s use of its facilities. Bel Air asserts

that its operations were, and continue to be,

“impaired, diminished, and decreased,” but it admits

28a

that visitors may still access its facilities. (Id. ¶ 22-25.)

As Bel Air alleges, visitors are required to wear face

masks and practice social distancing, but the

Amended Complaint does not allege that Bel Air

employees or, its customers, ever completely lost use

of its facilities. (Id.) Additionally, as noted above,

Interpretive Guidance issued on March 23, 2020 made

clear that “[a]uto and truck dealerships” were

permitted to remain open as essential businesses. See

Interpretive Guidance COVID 19-05 (Mar. 23, 2020).

Unlike restaurants, bars, and fitness centers

shuttered by the Governor’s stay at home order, Bel

Air was never required to completely cease its

operations. This is significant. The Civil Authority

section explicitly requires that the claimed loss be

attributable to “the prohibition of access to” the

covered premises or a dependent business premises,

by a civil authority. (ECF No. 18-1 at 000067.) In

granting a motion to dismiss in Skillets, LLC v. Colony

Ins. Co., the court noted that COVID-19 did not cause

“physical damage” to property at or near the plaintiff’s

premises and that “[t]he closure orders restricted the

services [the plaintiff] could provide to customers, but

‘[m]erely restricting access . . . does not trigger

coverage under [a] Civil Authority provision.’” No.

3:20cv678-HEH, 2021 WL 926211, at *7 (E.D. Va.

Mar. 10, 2021) (quoting Raymond H Nahmad DDS PA

v. Hartford Casualty Ins. Co., No. 1:20CV22833BLOOM/Louis, 2020 WL 6392841, at *9 (S.D. Fla.

Nov. 1, 2020)). As Great Northern notes, “if the

presence of COVID-19 were actual ‘contamination’ . .

. then every place of business in the State and the

country” would have a claim for “contamination,”

“including hospitals, grocery stores and other

businesses where people continue to flock during the

pandemic.” (ECF No. 27 at 23.)

29a

Second, Bel Air cannot recover for

contamination under the Business Income with Extra

Expense provision either. As noted above, Maryland

law requires this Court to give effect to each clause of

a contract such that “a court will not find an

interpretation which casts out or disregards a

meaningful part of the language of the writing unless

no other course can be sensibly and reasonably

followed.” Muhammad, 228 A.3d at 1179 (internal

citation omitted). The Business Income with Extra

Expense section of the Policy provides coverage for

“business income loss” incurred “due to the actual

impairment of [ ] operations” and “extra expense”

incurred “due to the actual or potential impairment of

[ ] operations” incurred “during the period of

restoration.” (Ex. 1 at 000064, ECF No. 18-1 (emphasis

added).) The “period of restoration” is defined as the

period “immediately after the time of direct physical

loss or damage by a covered peril to property” and

continuing until operations are restored with

reasonable speed, including the time required to

“repair and replace the property.” (Id. At 000124.) In

other words, coverage under this section of the Policy

is triggered by physical loss or damage to the property,

and the coverage period is defined by the “period of

restoration,” the time it takes to “repair and replace”

the damaged property. See Summit Hosp. Grp., Ltd. v.

Cincinnati Ins. Co., No. 5:20-CV-254-BO, 2021 WL

831013, at *4 (E.D.N.C. Mar. 4, 2021); see also Moody

v. Fin. Grp., Inc., -- F. Supp. 3d --, 2021 WL 135897, at

*6 (E.D. Pa. Jan. 14, 2021) (“Built into coverage for

business income, extra expense, or extended business

income losses under the Policy, then, is the idea that

there is something to repair, rebuild, or replace.”).

30a

In order for the period of restoration definition

to have some effect in this case, Bel Air would

seemingly need to argue that cleaning surfaces of a

property constitutes repair or replacement. However,

as the court held in Moody, contamination by the

COVID-19 virus would not “render the property

useless or uninhabitable or nearly eliminate or

destroy its functionality,” and “cleaning surfaces

cannot reasonably be described as repairing,

rebuilding, or replacing property.” Moody, 2021 WL

135897, at *6. In doing so, the court in Moody relied

on Port Authority of New York and New Jersey v.

Affiliated FM Ins. Co., in which the U.S. Court of

Appeals for the Third Circuit considered whether the

presence of asbestos in a building constituted “direct

physical loss or damage” to property under New

Jersey law. 311 F.3d 226, 235 (3d Cir. 2002). The

Court held that “[i]n ordinary parlance and widely

accepted definition, physical damage to property

means distinct, demonstrable, and physical alteration

of its structure.” Id. (quoting 10 Couch on Ins., §

148:46 (3d ed. 1998)). The Court noted that damages

not visible to the eye could qualify as this sort of

alteration, but that such damage must “meet a higher

threshold” and that asbestos could qualify as such

damage “only if an actual release of asbestos fibers ...

has resulted in contamination of the property such

that its function is nearly eliminated or destroyed, or

the structure is made useless or uninhabitable.” Id. at

236. Particles of a virus are akin to asbestos, or are

perhaps more similar to a layer of dust or debris,

which courts have held is insufficient to establish

physical damage or loss. See Rococo Steak, LLC v.

Aspen Specialty Ins. Co., -- F. Supp. 3d --, 2021 WL

268478, at *4 (M.D. Fla. Jan. 27, 2021) (granting

motion to dismiss, stating “[r]ather, like the coating of

31a

dust and debris in [Mama Jo’s Inc. v. Sparta Ins. Co.,

823 F. App’x 868, 879 (11th Cir. 2020)], the surfaces

allegedly contaminated by COVID-19 seem to only

require cleaning to fix.”)

In sum, “[t]he virus does not threaten the

structures covered by property insurance policies, and

can be removed from surfaces with routine cleaning

and disinfectant.” See Barbizon Sch. of San Francisco,

Inc. v. Sentinel Ins. Co. LTD, No. 20-cv-08578-TSH,

2021 WL 1222161, at *9 (N.D. Cal. Mar. 31, 2021)

(citing Promotional Headwear Int’l v. Cincinnati Ins.

Co., -- F. Supp. 3d --, 2020 WL 7078735, at *8-*9 (D.

Kan. Dec. 3, 2020)). Plaintiff Bel Air has not had to

repair or replace its property due to the Pandemic.

Arguments that the surfaces at its premises needed to

be cleaned cannot qualify as restoration, and “[t]o

adopt plaintiff’s reading, which would allow for

intangible damage to trigger coverage, would render

other sections of the provision ineffective, which is

something the Court cannot do.” Summit Hosp. Grp.,

2021 WL 831013, at *4 (citing Woods v. Nationwide

Mut. Ins. Co., 246 S.E.2d 773, 777 (N.C. 1978) (relying

on the same rule as under Maryland law that “every

word and every provision [in the policy] is to be given

effect”)).

C.

The Plaintiff cannot recover under

the Policy for losses related to

COVID-19.

Quite simply, this Court is unpersuaded that

the COVID-19 virus in some way physically altered

Bel Air’s covered properties or the surrounding areas

in a manner that triggers coverage under the plain

language of the Policy. A mere loss of use of property

32a

is not “physical damage” within the meaning of

Maryland law. See M Consulting & Export, LLC, 2 F.

Supp. 3d at 735-737. Further, “even actual presence of

the virus would not be sufficient to trigger coverage

for physical damage or physical loss to the property,”

as “routine cleaning . . . eliminates the virus on

surfaces,” and there is simply “nothing for an insurer

to cover” as required to invoke coverage for loss of

business income under the Policy. 8 See Uncork and

Create LLC v. Cincinnati Ins. Co., -- F. Supp. 3d --,

2020 WL 6436948, at *5 (S.D.W. Va. Nov. 2, 2020). To

allow contamination of property to constitute a

physical loss would render the “period of restoration”

definition meaningless and would “ignore the reality”

that businesses like Bel Air “have continued to

operate during the pandemic.” Bluegrass, LLC v. State

Auto. Mut. Ins. Co., No. 2:30-CV-00414, 2021 WL

42050, at *5 (S.D.W. Va. Jan. 5, 2021). As one court

within the Fourth Circuit neatly summarized:

In short, the pandemic impacts human

health and human behavior, not physical

structures. Those changes in behavior,

including

changes

required

by

governmental

action,

caused

the

Plaintiff economic losses. The Court is

not unsympathetic to the situation

facing the Plaintiff and other businesses.

But the unambiguous terms of the Policy

do not provide coverage for solely

8 This Court need not consider the applicability of the Acts Or

Decision exclusion in this case, as there is no coverage under the

plain language of the allegedly applicable provisions.

33a

economic losses unaccompanied

physical property damage.

by

Uncork and Create, 2020 WL 6436948, at *5. Having

considered the allegations in the pleadings and briefs,

this Court finds there is no genuine issue of material

fact as to the Plaintiff Bel Air’s claims, and this Court

will grant the Defendant’s Motion for Judgment on

the pleadings (ECF No. 26).

CONCLUSION

For these reasons, the Plaintiff Bel Air’s Motion

for Summary Judgment (ECF No. 18) is DENIED. The

Plaintiff Bel Air’s Motion for Other Relief to Certify

Questions of Law to the Maryland Court of Appeals

(ECF No. 19) is also DENIED. The Defendant Great

Northern’s Motion for Judgment on the Pleadings

(ECF No. 26) is GRANTED. Judgment will be entered

in favor of the Defendant.

A Separate Order follows.

For the Court:

/s/ Richard D. Bennett

United States District Judge

34a

ORDER OF THE FOURTH CIRCUIT DENYING

MOTION TO CERTIFY QUESTIONS OF LAW

(JUNE 30, 2021)

____________________________________________

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

________________

No. 21-1493

(1:20-cv-02892-RDB)

BEL AIR AUTO AUCTION, INC.

Plaintiff-Appellant

v.

GREAT NORTHERN INSURANCE COMPANY

Defendant – Appellee

_______________

ORDER

_______________

Upon the consideration of submissions relative

to appellant’s motion to certify questions of law to the

Court of Appeals of Maryland, the court denies the

motion.

For the Court

/s/ Patricia S. Connor, Clerk

35a

ORDER OF THE FOURTH CIRCUIT DENYING

MOTION FOR RECONSIDERATION

(July 27, 2021)

____________________________________________

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

________________

No. 21-1493

(1:20-cv-02892-RDB)

BEL AIR AUTO AUCTION, INC.

Plaintiff-Appellant

v.

GREAT NORTHERN INSURANCE COMPANY

Defendant – Appellee

_______________

ORDER

_______________

Upon the consideration of submissions relative

to the motion for reconsideration, the court denies the

motion.

For the Court

/s/ Patricia S. Connor, Clerk