Petition for Writ of Certiorari — The Cordish Companies, Inc., Petitioner v. Affiliated FM Insurance Company

Supreme Court briefNov 3, 2022

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No. 22In the

Supreme Court of the United States

THE CORDISH COMPANIES, INC.,

Petitioner,

AFFILIATED FM INSURANCE COMPANY,

Respondent.

On Petition for a Writ of Certiorari to the United

States Court of A ppeals for the Fourth Circuit

PETITION FOR A WRIT OF CERTIORARI

Marshall N. Gilinsky

A nderson Kill, P.C.

1251 Avenue of the Americas,

42nd Floor

New York, New York 10020

Rhonda D. Orin

Daniel J. Healy*

A nderson Kill, P.C.

1717 Pennsylvania Avenue,

NW, Suite 200

Washington, DC 20006

(202) 416-6500

dhealy@andersonkill.com

Counsel for Petitioner

Counsel of Record

315226

(800) 274-3321 • (800) 359-6859

QUESTION PRESENTED FOR REVIEW

Whether the Fourth Circuit violated the constitutional

principles set forth in Erie Railroad Co. v. Tompkins,

304 U.S. 64 (1938), which protect each state’s rights to

establish its own laws regarding insurance by applying

West Virginia law to a Maryland insurance coverage

dispute, despite a pending certified question to be decided

by the Maryland Court of Appeals that will be dispositive

on the same issue Petitioner presented to the Fourth

Circuit.

PARTIES TO THE PROCEEDINGS

IN THE FOURTH CIRCUIT

In the Fourth Circuit, Petitioner The Cordish

Companies, Inc. filed as appellant and Respondent

Affiliated FM Insurance Company filed as appellee.

iii

CORPORATE DISCLOSURE STATEMENT

As required by Supreme Court Rule 29.6, The

Cordish Companies, Inc. states that it is a privately

held corporation with no parent company and no public

company owns any stock or interest in it.

RELATED CASES

• The Cordish Companies, Inc. v. Affiliated FM

Insurance Company, 1:20-cv-02419, U.S. District

Court for the District of Maryland. Judgment

entered August 31, 2021.

• The Cordish Companies, Inc. v. Affiliated FM

Insurance Company, 21-055, U.S. Court of

Appeals for the Fourth Circuit. Judgment entered

April 14, 2022.

TABLE OF CONTENTS

Page

QUESTION PRESENTED FOR REVIEW . . . . . . . . . . i

PARTIES TO THE PROCEEDINGS

IN THE FOURTH CIRCUIT . . . . . . . . . . . . . . . . . . . . . ii

CORPORATE DISCLOSURE STATEMENT . . . . . . iii

RELATED CASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . v

TABLE OF APPENDICES . . . . . . . . . . . . . . . . . . . . . . vii

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . viii

OPINIONS BELOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STATUTE INVOLVED . . . . . . . . . . . . . . . . . . . . . . . . . . 2

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . 2

Factual Background . . . . . . . . . . . . . . . . . . . . . . . 3

II. Procedural History . . . . . . . . . . . . . . . . . . . . . . . . 4

REASONS FOR GRANTING THE PETITION . . . . . 5

Table of Contents

Page

THE FOURTH CIRCUIT VIOLATED

ERIE BY APPLYING WEST VIRGINIA

LAW TO THIS MARYLAND STATE

LAW DISPUTE . . . . . . . . . . . . . . . . . . . . . . . . . . 5

A. Insurance Law is Determined by State

Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

B. The Fourth Circuit Failed to Apply the

Erie Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . 7

II. The Decision in Tapestry – Which Will

Soon Establish Maryland Law on this

Very Issue – Presents a Significant Risk

of Inconsistent and Inequitable Outcomes

Absent Reconsideration . . . . . . . . . . . . . . . . . . . . 11

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

vii

TABLE OF APPENDICES

Page

APPENDIX A — OPINION OF THE UNITED

STATES COURT OF APPEALS FOR THE

FOURTH CIRCUIT, DATED APRIL 14, 2022 . . . 1a

APPENDIX B — MEMORANDUM OPINION OF

THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND,

FILED NOVEMBER 22, 2021 . . . . . . . . . . . . . . . . . 3a

APPENDIX C — DENIAL OF REHEARING

OF THE UNITED STATES COURT OF

APPEALS FOR THE FOURTH CIRCUIT,

FILED, JUNE 6, 2022 . . . . . . . . . . . . . . . . . . . . . . . 57a

viii

TABLE OF CITED AUTHORITIES

Page

CASES

Bel Air Auto Auction, Inc. v. Great N. Ins. Co.,

No. 21-1493, 2022 WL 2128586

(4th Cir. June 14, 2022) . . . . . . . . . . . . . . . . . . . . . . . . 11

Cinemark Holdings, Inc. v.

Factory Mutual Ins. Co.,

500 F. Supp. 3d 565 (E.D. Tex. 2021) . . . . . . . . . . . . 10

Commercial Union Ins. Co. v.

Porter Hayden Co.,

698 A.2d 116 (Md. Ct. Spec. App. 1997) . . . . . . . . . . . 7

CSX Transp. v. Continental Ins. Co.,

680 A.2d 1082 (Md. 1996) . . . . . . . . . . . . . . . . . . . . . . . 7

Erie R. Co. v. Tompkins,

304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188

(1938) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 7, 10, 11

Fountain Enters., LLC, et al. v. Markel Ins. Co.,

No. 21-2326 (4th Cir. Nov. 3, 2022) . . . . . . . . . . . . . . 11

Hanna v. Plumer,

380 U.S. 460 (1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Huntington Ingalls Indus., Inc. v.

Ace American Ins. Co.,

--- A.3d ---, 2022 WL 4396475 (Vt. 2022) . . . . . . . . . . 8

Cited Authorities

Page

Kosnoski v. Rogers,

No. 13-0494, 2014 WL 629343

(W. Va. Feb. 18, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Maryland Cas. Co. v. Hanson,

902 A.2d 152 (Md. Ct. Spec. App. 2006) . . . . . . . . . . . 7

Mashantucket Pequot Tribal Nation v.

Factory Mutual Ins. Co.,

No. X07HHDCV216140378, 2021 WL 4477089

(Conn. Super. Ct. Aug. 18, 2021) . . . . . . . . . . . . . . . . 10

Nat’l Coatings & Supplies, Inc. v.

Valley Forge Ins. Co.,

No. 21-1421, 2022 WL 2045334

(4th Cir. June 7, 2022) . . . . . . . . . . . . . . . . . . . . . . . . . 10

Nevada Property 1 LLC v.

Factory Mutual Ins. Co.,

No. A-21-831049-B (Nev. Cnty. Aug. 16, 2021) . . . . . 10

Paul v. Virginia

75 U.S. (8 Wall.) 168 (1868) . . . . . . . . . . . . . . . . . . . . 5

Rossello v. Zurich American Ins. Co.,

226 A.3d 444 (Md. 2020) . . . . . . . . . . . . . . . . . . . . . . . . 8

Sacramento Downtown Arena LLC, et al. v.

Factory Mutual Ins. Co.,

No. 2:21-cv-00441-KJM-DB, 2022 WL 16529547

(E.D. Cal. Oct. 28, 2022) . . . . . . . . . . . . . . . . . . . . . . . . 9

Cited Authorities

Page

Securities and Exchange Comm’n v.

National Sec., Inc.,

393 U.S. 453 (1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Snoqualmie Ent. Authority v.

Affiliated FM Ins. Co.,

No. 21-2-03194-0, 2021 WL 4098938

(Wash. Super. Ct. Kings Cnty. Sept. 2, 2021) . . . . . 10

Sullivan Mgmt., LLC v.

Fireman’s Fund Ins. Co.,

No. 2021-001209, 2022 WL 3221920

(S.C. Aug. 10, 2022) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Summit Hospitality Grp. v.

The Cincinnati Ins. Co.,

No. 21-1362, 2022 WL 2072759

(4th Cir. June 9, 2022) . . . . . . . . . . . . . . . . . . . . . . . . . 11

Tapestry, Inc. v. Factory Mut. Ins. Co.,

No. COA-MISC-00001-2022 (Md. May 2,

2022) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 4, 5

Tapestry, Inc. v. Factory Mut. Ins. Co.,

No. GLR-21-1941, 2022 WL 1227058

(D. Md. April 25, 2022) . . . . . . . . . . . . . . . . . . . . . 11, 12

The Cordish Companies, Inc. v.

Affiliated FM Insurance Company,

No. 21-2055, 2022 WL 1114373

(4th Cir. April 14, 2022) . . . . . . . . . . . . . . . . . . . . 1, 7, 9

Cited Authorities

Page

The Regents of the University of Colorado v.

Factory Mutual Ins. Co.,

No. 2021-cv-30206, 2022 WL 245327

(Col. Dist. Ct., Boulder Cnty. Jan. 26, 2022) . . . . . . . 9

Thor Equities, LLC v. Factory Mutual Ins. Co.,

531 F. Supp. 3d 802 (S.D.N.Y. 2021) . . . . . . . . . . . . . 10

Treasure Island, LLC v. Affiliated FM Ins. Co.,

No. 2:20-cv-00965-JCM-EJY, ECF No. 243-1

(D. Nev. Mar. 21, 2022) . . . . . . . . . . . . . . . . . . . . . . . . . 9

United States v.

South-Eastern Underwriters Association,

322 U.S. 533 (1944) . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 6

Wakonda Club v. Selective Ins. Co. of Am.,

973 N.W.2d 545 (Iowa 2022) . . . . . . . . . . . . . . . . . . . . . 9

Wheeling Pittsburgh Corp. v. American Ins. Co.,

No. Civ. A. 93-C-340, 2003 WL 23652106

(W.V. Cir. Ct. Oct. 18, 2003) . . . . . . . . . . . . . . . . . . . . . 8

CONSTITUTION & STATUTES

U.S. CONST. art. I, § 8, cl. 3 . . . . . . . . . . . . . . . . . . . . . . . 5

15 U.S.C. §§ 1011-1015 . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 6

28 U.S.C. § 1254(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

xii

Cited Authorities

Page

Other Authorities

Fed. R. Civ. P. 56 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

S. 804, 100th Cong., 1st Sess. (1987) . . . . . . . . . . . . . . . . 6

S. 1299, 100th Cong., 1st Sess. (1987) . . . . . . . . . . . . . . . .6

S. 719, 101st Cong., 1st Sess. (1989) . . . . . . . . . . . . . . . . . 6

S. 430, 102d Cong., 1st Sess. (1991) . . . . . . . . . . . . . . . . . 6

Sup. Ct. R. 29.4(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Sup. Ct. R. 29.4(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

H.R. 10, 102d Cong., 1st Sess. (1991) . . . . . . . . . . . . . . . . 6

Jonathan R. Macey & Geoffrey P. Miller,

T he McCa r ra n-Ferg uson Act of 19 4 5:

Reconceiving the Federal Role in Insurance

Regulation, 68 N.Y.U.L. REV. 13 (1993) . . . . . . . . . . . 6

The McCarran-Ferguson Act-State Antitrust

Action Against Insurance Agencies: Hearings

on S. 1299 Before the Senate Comm. on the

Judiciary, 100th Cong., 2d Sess. (1988) . . . . . . . . . . . 6

To Repeal or Revise the McCarran-Ferguson

Act: Hearings on S. 80 and S. 1299 Before

t he S en at e C om m . on t he Jud ic i a r y,

100th Cong., 1st Sess. (1987) . . . . . . . . . . . . . . . . . . . . 6

xiii

Cited Authorities

Page

Willy E. Rice, Federal Courts and the Regulation

of the Insurance Industry: An Empirical and

Historical Analysis of the Courts’ Ineffectual

Attempts to Harmonize Federal Antitrust,

Arbitration, and Insolvency Statutes with the

McCarran-Ferguson Act-1941-1993, 43 CATH.

U. L. REV. 399, 407 (1994) . . . . . . . . . . . . . . . . . . . . . . 6

Wright & Miller, 19 Federal Practice and

Procedure § 4501 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

OPINIONS BELOW

In a per curiam, unpublished decision, the Fourth

Circuit on April 14, 2022 denied The Cordish Companies,

Inc.’s (“Cordish”) appeal. See App. A at 1a-2a (The Cordish

Companies, Inc. v. Affiliated FM Insurance Company,

No. 21-2055, 2022 WL 1114373 (4th Cir. April 14, 2022)).

The Fourth Circuit on June 6, 2022 denied Cordish’s

petition for rehearing and rehearing en banc and motion

for stay of mandate until the Maryland Court of Appeals

had decided Tapestry, Inc. v Factory Mutual Insurance

Company. See App. C at 57a-58a (The Cordish Companies,

Inc. v. Affiliated FM Insurance Company, No. 21-2055

(4th Cir. June 6, 2022) (unreported)).

JURISDICTION

The Fourth Circuit entered its decision and order

on Applicant’s appeal and the judgment on that decision

on April 14, 2022. Petitioner timely filed the petition for

rehearing and rehearing en banc and motion for stay of

mandate, which the Fourth Circuit denied on June 6, 2022.

On August 29, 2022, this Court granted an extension

of time to file the petition for writ of certiorari from

September 6, 2022 to October 5, 2022. On September 26,

2022, this Court granted a subsequent extension of time to

file the petition for writ of certiorari to November 3, 2022.

Petitioner invokes the jurisdiction of this Court under

28 U.S.C. § 1254(1). Supreme Court Rule 29.4(b) and (c)

are inapplicable.

STATUTE INVOLVED

No statute is involved in this case.

STATEMENT OF THE CASE

Under Supreme Court precedent and a 77-year-old

act of Congress, insurance law is established by each

state. See Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S. Ct.

817, 82 L. Ed. 1188 (1938); 15 U.S.C. §§ 1011-1015 (1976).

This precedent ensures that in diversity cases, such as

this insurance coverage dispute, the law of one state is

not imposed upon the citizens of another. The parties do

not dispute that Maryland law applies to The Cordish

Companies, Inc.’s (“Cordish”) case. 1 The Fourth Circuit,

however, based its decision affirming the dismissal of

this case entirely upon a federal court opinion decided

under West Virginia law and failed to even provide an

“Erie guess” under Maryland law. This approach clearly

violates settled Supreme Court precedent.

This case involves the interpretation of the undefined

term “physical loss or damage” to the impact of COVID-19

when present in the air and on surfaces at a property.

As the District Court conceded, there is currently no

controlling Maryland law regarding this issue. However,

that will soon change. On September 9, 2022, the

Maryland Court of Appeals heard oral argument in

Tapestry, Inc. v. Factory Mutual Insurance Company

1. See App. B at 26a (holding that Maryland law applies because

Maryland follows lex loci contractus, Cordish is incorporated there,

Cordish has its principal place of business there and Cordish alleges

the policy was sold there, among other things).

on the same legal issue involving the same insurance

company and virtually the same broad insurance policy

form and direct allegations of how COVID-19 causes

physical loss or damage to property.

Cordish, therefore, asked the Fourth Circuit to

reconsider and refrain from making a final determination

until the Maryland Court of Appeals issues its dispositive

ruling. The Fourth Circuit refused.

The Fourth Circuit’s decision on April 14, 2022 and

denial of rehearing en banc on June 6, 2022 conflict with

established Supreme Court precedent. Accordingly,

Cordish respectfully asks this Court to grant a writ of

certiorari so that Cordish’s case may be determined in

accordance with dispositive Maryland law, rather than

inapplicable West Virginia law.

Factual Background

Petitioner Cordish is a Maryland business. Its

affiliates own and operate commercial real estate

properties, including resorts, casinos, entertainment

and dining complexes, shopping centers, and various

other commercial venues – the operation of which all

depend on large numbers of customers gathering and

interacting with one another. To protect its properties,

and the revenue generated therefrom, Cordish purchased

an all-risk insurance policy from Affiliated FM Insurance

Company (“FM”) with limits up to $1 Billion (the “Policy”)

– paying nearly $2 million in annual premiums to maintain

coverage. As reflected in the premiums, FM sold Cordish a

sophisticated policy with broad terms providing enhanced

coverage that extends beyond the coverage offered by

most standardized property insurance policies.

As a result of the widespread damage and disruptions

caused by the coronavirus pandemic, Cordish sustained

substantial business interruption losses. Cordish’s losses

are covered under the broad all-risk Policy it purchased

from FM, but FM refused to honor its obligations under

the Policy. As a result, Cordish was forced to bring this

suit to recover for the amounts owed under the Policy as

a result of physical loss of or damage to property due to

SARS-CoV-2 and the resulting orders of civil authority.

II. Procedural History

The District Court of Maryland dismissed Cordish’s

claim (App. B at 3a-56a) and on April 14, 2022, the U.S.

Circuit Court of Appeals for the Fourth Circuit affirmed

– citing a single federal court decision decided under West

Virginia law (App. A at 1a-2a) (the “Decision”). Nearly

simultaneously, the Maryland Court of Appeals certified

exactly the question implicated here: “When a first-party,

all-risk property insurance policy covers ‘all risks of

physical loss or damage’ to insured property from any

cause unless excluded, is coverage triggered when a toxic,

noxious, or hazardous substance – such as Coronavirus

or COVID-19 - that is physically present in the indoor air

of that property damages the property or causes loss,

either in whole or in part, of the functional use of the

property?” Tapestry, Inc. v. Factory Mut. Ins. Co., No.

COA-MISC-00001-2022 (Md. May 2, 2022) (unreported).

As a result, Cordish filed a motion for rehearing en

banc and to stay the mandate pending a determination

on Maryland state law in Tapestry. However, the Fourth

Circuit denied the motion on June 6, 2022. App. C at

57a-58a.

On August 29, 2022, this Court granted Petitioner’s

request for an extension of the time to file a petition for a

writ of certiorari to October 5, 2022 in light of the pending

decision in Tapestry. On September 26, 2022, this Court

granted a subsequent extension of time to file the petition

for writ of certiorari to November 3, 2022.

REASONS FOR GRANTING THE PETITION

THE FOURTH CIRCUIT VIOLATED ERIE

BY APPLYING WEST VIRGINIA LAW TO

THIS MARYLAND STATE LAW DISPUTE.

Insurance Law is Determined by State Law.

Pursuant to longstanding Supreme Court precedent

dating back to the Reconstruction and a statute enacted

by Congress 77 years ago, insurance is regulated solely

under state law. This Court initially determined in Paul

v. Virginia that “[i]ssuing a policy of insurance is not

a transaction of commerce.” 75 U.S. (8 Wall.) 168, 183

(1868). Rather, insurance policies are “local transactions

and are governed by the local law.” Id. at 182-83. This

Court established, therefore, that the Commerce Clause

of the U.S. Constitution (U.S. CONST. art. I, § 8, cl. 3)

does not apply to the business of insurance, so the federal

government cannot regulate it.

Subsequently, in United States v. South-Eastern

Underwriters Association, 322 U.S. 533 (1944), this Court

held that insurance transactions are subject to federal

regulation under the Commerce Clause, specifically

including the Sherman Act. 322 U.S. at 539-49. But

that ruling prompted Congress to enact the McCarran-

Ferguson Act of 1945, 15 U.S.C. §§ 1011-1015 (1976)

(the “McCarran-Ferguson Act”), which reinstated the

state control that existed prior to South-Eastern. See

Securities and Exchange Comm’n v. National Sec.,

Inc., 393 U.S. 453, 459 (1969). The McCarran-Ferguson

Act empowered the states to regulate the business of

insurance without federal interference. See Jonathan R.

Macey & Geoffrey P. Miller, The McCarran-Ferguson

Act of 1945: Reconceiving the Federal Role in Insurance

Regulation, 68 N.Y.U.L. REV. 13, 17 (1993).

Despite challenges to the scope of the act, the

McCarran-Ferguson Act remains unaltered today. 2 It is

the clear law of the land that the business of insurance is

state regulated. Therefore, state law must be applied in

all insurance coverage disputes.

2. See, e.g., S. 430, 102d Cong., 1st Sess. (1991) (modifying the

antitrust exemption applicable to the insurance industry); H.R. 10,

102d Cong., 1st Sess. (1991) (same); S. 719, 101st Cong., 1st Sess.

(1989) (same); S. 1299, 100th Cong., 1st Sess. (1987) (same); S. 804,

100th Cong., 1st Sess. (1987) (proposing Insurance Competition Act of

1987 to strike all deference to “insurance” in the McCarran-Ferguson

Act); see also The McCarran-Ferguson Act-State Antitrust Action

Against Insurance Agencies: Hearings on S. 1299 Before the Senate

Comm. on the Judiciary, 100th Cong., 2d Sess. (1988); To Repeal or

Revise the McCarran-Ferguson Act: Hearings on S. 80 and S. 1299

Before the Senate Comm. on the Judiciary, 100th Cong., 1st Sess.

(1987). For a related discussion, see Willy E. Rice, Federal Courts

and the Regulation of the Insurance Industry: An Empirical and

Historical Analysis of the Courts’ Ineffectual Attempts to Harmonize

Federal Antitrust, Arbitration, and Insolvency Statutes with the

McCarran-Ferguson Act-1941-1993, 43 CATH. U. L. REV. 399, 407

(1994).

B. The Fourth Circuit Failed to Apply the Erie

Doctrine.

Our federalist system mandates that state substantive

law is to be applied to insurance coverage disputes such as

the one presented here. See Wright & Miller, 19 Federal

Practice and Procedure § 4501 (citing Erie R. Co. v.

Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938)).

The Erie Doctrine directs that Maryland citizens are

entitled to the application of Maryland law as declared by

that state’s legislature or highest court. Erie, 304 U.S.

at 78, 58 S. Ct. at 822, 82 L. Ed. 1188. The Decision’s

application of West Virginia law, however, without citation

to any Maryland law, violates these clear constitutional

principles and directly contravenes Erie. See App. B at

2a (Cordish, 2022 WL 1114373, at *1).

Notably, Maryland insurance law is historically

distinct and substantially differs from that of West

Virginia law. For example, with respect to environmental

liabilities, Maryland law treats multiple claims arising

from environmental torts as multiple occurrences, while

West Virginia groups them as a single occurrence based

on the overriding cause. 3 Moreover, the states apply

3. Compare CSX Transp. v. Continental Ins. Co., 680 A.2d 1082

(Md. 1996) (multiple noise-induced hearing loss claims constituted

multiple occurrences); Maryland Cas. Co. v. Hanson, 902 A.2d 152

(Md. Ct. Spec. App. 2006) (multiple claimants alleging elevated levels

of lead poisoning constituted multiple occurrences); Commercial

Union Ins. Co. v. Porter Hayden Co., 698 A.2d 116 (Md. Ct. Spec.

App. 1997) (multiple claimants alleging exposure to asbestos

constitute multiple occurrences); with Kosnoski v. Rogers, No. 130494, 2014 WL 629343 (W. Va. Feb. 18, 2014) (carbon monoxide leak

in apartments was a single occurrence despite multiple claimants).

different rules of allocation when evaluating what share

of a claim each triggered policy must pay.4

The law on coverage for COVID-related business

interruption losses will similarly vary from state to state

as well. Various state high courts have already arrived

at diverging decisions in evaluating the principal legal

issue presented in this matter. For example, the Vermont

Supreme Court recently reversed the dismissal of a

policyholder’s case based upon the issue of whether the

presence of COVID-19 results in “physical loss or damage”

to property. See Huntington Ingalls Indus., Inc. v. Ace

American Ins. Co., --- A.3d --- 2022 WL 4396475, at ¶ 20

(Vt. 2022). The Vermont Supreme Court reasoned that its

“ultimate objective [was] to reach decisions that comport

with Vermont law and reasonable expectations of the

parties to the contract, and not adopt a rule simply because

there is apparent strength in numbers.” Id. (emphasis

added). In contrast, the South Carolina Supreme Court

affirmed the dismissal of a policyholder’s claim, holding

that the presence of COVID-19 at a property does not

cause “physical loss or damage” to property. See Sullivan

Mgmt., LLC v. Fireman’s Fund Ins. Co., No. 2021001209, 2022 WL 3221920 (S.C. Aug. 10, 2022). Falling

somewhere in between, the Iowa Supreme Court cited

pro-policyholder cases recognizing that things like odors

and asbestos fibers can cause “physical loss or damage”

to property, but held that a claim alleging “physical loss”

4. Compare Rossello v. Zurich American Ins. Co., 226 A.3d

444 (Md. 2020) (holding that pro rata allocation, rather than all sums,

applies to asbestos claims and finding all sums inconsistent with an

injury-in-fact/continuous trigger), with Wheeling Pittsburgh Corp.

v. American Ins. Co., No. Civ.A. 93-C-340, 2003 WL 23652106 (W.V.

Cir. Ct. Oct. 18, 2003) (applying all sums allocation to environmental

property liability claims and a continuous trigger approach).

from government orders alone fails to trigger coverage.

See Wakonda Club v. Selective Ins. Co. of Am., 973 N.W.2d

545, 551-555 (Iowa 2022). Such variance in state high court

decisions illustrate the importance of allowing COVID-19

business interruption cases to be decided based upon the

law of each state, consistent with Federalist principles

long-recognized by this Court.

The likelihood of varied outcomes from one state to

another is further reflected in the contrasting decisions

in cases based on FM’s broad policy form, where most

courts have denied FM’s motions to dismiss and allowed

the cases to proceed to discovery5 and towards trial.

See e.g., Sacramento Downtown Arena LLC, et al. v.

Factory Mutual Ins. Co., No. 2:21-cv-00441-KJM-DB,

2022 WL 16529547, at *4 (E.D. Cal. Oct. 28, 2022) (holding

that “[a]n insured could reasonably expect, given [FM’s]

terms, that the presence of a communicable disease such

as COVID-19 fits under the ‘physical loss or damage’

umbrella for the policy as a whole”); The Regents of the

University of Colorado v. Factory Mutual Ins. Co., No.

2021-cv-30206, 2022 WL 245327 (Col. Dist. Ct., Boulder

Cnty. Jan. 26, 2022) (finding ambiguity as to whether

the presence of COVID-19 constitutes physical loss or

5. Internal FM documents produced in other cases reveal

FM’s recognition that “the presence of a communicable disease”

results in “physical loss or damage.” The “loss code” used by FM

for “communicable disease” claims was described by FM itself as

claims for “[p]hysical loss or damage which results from the actual

presence of a communicable disease and the associated business

interruption as defined in the policy.” See Cordish, No. 21-2055, ECF

No. 29-1 (4th Cir. filed Mar. 21, 2022) (citing Treasure Island, LLC

v. Affiliated FM Ins. Co., No. 2:20-cv-00965-JCM-EJY, ECF No.

243-1 at p. 9 of 21 (D. Nev. Mar. 21, 2022)).

damage); Cinemark Holdings, Inc. v. Factory Mutual Ins.

Co., 500 F. Supp.3d 565 (E.D. Tex. 2021); Nevada Property

1 LLC v. Factory Mutual Ins. Co., No. A-21-831049-B

(Nev. Cnty. Aug. 16, 2021) (unreported); Snoqualmie Ent.

Authority v. Affiliated FM Ins. Co., No. 21-2-03194-0,

2021 WL 4098938 (Wash. Super. Ct. Kings Cnty. Sept.

2, 2021) (denying FM’s Rule 56 motion); Mashantucket

Pequot Tribal Nation v. Factory Mutual Ins. Co., No.

X07HHDCV216140378, 2021 WL 4477089 (Conn. Super.

Ct. Aug. 18, 2021); see also Thor Equities, LLC v. Factory

Mutual Ins. Co., 531 F. Supp. 3d 802 (S.D.N.Y. 2021)

(denying FM’s motion to dismiss, but that motion did not

raise the “physical loss or damage” issue).

As there is no Maryland authority on the key issue,6 the

Fourth Circuit had no basis for turning to West Virginia

law instead. The Fourth Circuit did not even engage in

an “Erie guess” of what the highest court in Maryland

would decide.7 The Fourth Circuit’s disregard of the Erie

Doctrine is not unique to Cordish’s case; it has continued

to disregard these fundamental principles, citing only

West Virginia law to dispose of other policyholders’ claims

arising under other state’s laws. 8

6. See App. B at 35a (“the Policy does not define ‘physical loss

or damage’ and, to my knowledge, no Maryland State Court has

opined on the meaning of this precise phrase in a reported opinion.”).

7. While the District Court claimed it found “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” there were no citations

to Maryland state court decisions other than on basic principles of

contract interpretation. App. B at 35a.

8. See e.g., Nat’l Coatings & Supplies, Inc. v. Valley Forge Ins.

Co., No. 21-1421, 2022 WL 2045334 (4th Cir. June 7, 2022) (North

This disregard for state law flouts decades of Supreme

Court precedent and threatens the principle underlying

the Erie Doctrine – protection of states’ rights and

avoiding the inequitable administration of the law. See

Hanna v. Plumer, 380 U.S. 460, 468 (1965).

II. The Decision in Tapestry – Which Will Soon

Establish Maryland Law on this Very Issue –

Presents a Significant Risk of Inconsistent and

Inequitable Outcomes Absent Reconsideration.

The Fourth Circuit also erred in refusing to stay the

mandate pending a determination on the same legal issue

presented here, addressing virtually the same insurance

policy sold by the same insurance company. Faced with

a similar issue as presented to the lower courts in this

matter, the District Court in Tapestry, Inc. v. Factory

Mut. Ins. Co., No. GLR-21-1941, 2022 WL 1227058 (D.

Md. April 25, 2022) recognized that Maryland law has not

determined the meaning of “physical loss or damage”.9

Carolina law); Summit Hospitality Grp. v. The Cincinnati Ins. Co.,

No. 21-1362, 2022 WL 2072759, at *1 (4th Cir. June 9, 2022) (North

Carolina law); Bel Air Auto Auction, Inc. v. Great N. Ins. Co., No.

21-1493, 2022 WL 2128586, at *1 (4th Cir. June 14, 2022) (Maryland

law); Fountain Enters., LLC, et al. v. Markel Ins. Co., No. 21-2326

(4th Cir. Nov. 3, 2022) (unreported) (Virginia law).

9. The District Court’s recognition in Tapestry that there

were allegations of physical damage or loss (see Tapestry, 2022 WL

1227058 at *3), does not distinguish Tapestry from this case. Like

Tapestry’s Complaint, Cordish’s Complaint also alleges that COVID

causes physical loss or damage to property both at and away from

insurance premises (and FM’s insurance policy covered losses due

to both). See Cordish, No. 1:20-cv-02419-ELH, ECF 4 at ¶¶ 11, 1314, 83-86, 108-110 (D. Md. filed Aug. 21, 2020). The District Court’s

Rather than guess about how Maryland law would

interpret the “ambiguity concerning [the] key language”

in the insurance policy or apply another state’s law to the

issue entirely, it certified the issue for a determination by

Maryland’s highest court. Tapestry, 2022 WL 1227058

at * 9.

On September 9, 2022, the Maryland Court of Appeals

heard oral argument on the issue of whether the presence

of the Coronavirus or COVID-19 resulted in the “physical

loss or damage to” property. Importantly, both Tapestry

and this case involve the same insurance company and

virtually the same, broadly worded insurance policy

form, as well as specific allegations of how COVID causes

physical loss or damage to property. Accordingly, the

outcome of this Maryland case should be determined

based on the forthcoming ruling of the Maryland Court

of Appeals, not a federal court’s interpretation of West

Virginia law.

It would be manifestly unjust for the present Petition

to be denied and Cordish’s claim forever dismissed, only

to see the merits of Cordish’s case be validated by the

Maryland Court of Appeals in just a few weeks, if not

days. In that event, another litigant with the exact same

contractual rights as Cordish would be paid, but Cordish

would not.

failure to recognize and accept these allegations as true was in

error. Notably, the District Court in both this case and in Tapestry

acknowledged that there is no controlling Maryland law on the issue

to be decided. See App. B at 35a (“no Maryland State court has

opined on the meaning of this precise phrase in a reported opinion”);

Tapestry, 2022 WL 1227058 at *9 (“the Court finds that this case is

appropriate for certification because ‘there is no controlling appellate

decision, constitutional provision, or Maryland statute on point’”).

CONCLUSION

For the reasons set forth above, the petition for a writ

of certiorari should be granted.

Respectuflly submitted

Marshall N. Gilinsky

A nderson Kill, P.C.

1251 Avenue of the Americas,

42nd Floor

New York, New York 10020

Rhonda D. Orin

Daniel J. Healy*

A nderson Kill, P.C.

1717 Pennsylvania Avenue,

NW, Suite 200

Washington, DC 20006

(202) 416-6500

dhealy@andersonkill.com

Counsel for Petitioner

Counsel of Record

Dated: November 3, 2022

APPENDIX

APPENDIX A — Appendix

OPINIONAOF THE UNITED

STATES COURT OF APPEALS FOR THE FOURTH

CIRCUIT, DATED APRIL 14, 2022

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 21-2055

THE CORDISH COMPANIES, INC.,

Plaintiff-Appellant,

AFFILIATED FM INSURANCE COMPANY,

Defendant-Appellee.

UNITED POLICYHOLDERS,

Amicus Supporting Appellant.

Appeal from the United States District Court for the

District of Maryland, at Baltimore. (1:20-cv-02419-ELH).

Ellen Lipton Hollander, Senior District Judge.

March 31, 2022, Submitted;

April 14, 2022, Decided

Before W YNN and QUATTLEBAUM, Circuit

Judges, and SHEDD, Senior Circuit Judge.

Appendix A

Affirmed by unpublished per curiam opinion.

PER CURIAM:

The Cordish Companies, Inc. (“Cordish”) appeals the

district court’s order granting Affiliated FM Insurance

Company’s (“Affiliated”) motions to strike Cordish’s

Fed. R. App. P. 28(j) citation of supplemental authority

and to dismiss Cordish’s complaint asserting claims for

declaratory judgment and breach of contract. Cordish’s

claims stemmed from Affiliated’s denial of insurance

benefits Cordish asserts Affiliated owed Cordish to

cover losses Cordish’s affiliates suffered as a result of the

COVID-19 pandemic. We have reviewed the record and

find no reversible error. Accordingly, we affirm the district

court’s order. See, Uncork & Create LLC v. Cincinnati

Ins. Co., 27 F.4th 926, 933-34 (4th Cir. 2022) (holding that

insurance “policy’s coverage for business income loss and

other expenses d[id] not apply to [plaintiff’s] claim for

financial losses [caused by the COVID-19 pandemic] in

the absence of any material destruction or material harm

to its covered premises” and further “observ{ing} that

our holding is consistent with the unanimous decisions

by our sister circuits, which have applied various states’

laws to similar insurance claims and policy provisions”).

We dispense with oral argument because the facts

and legal contentions are adequately presented in the

materials before this court and argument would not aid

the decisional process.

AFFIRMED

Appendix B

APPENDIX B — MEMORANDUM

OPINION OF

THE UNITED STATES DISTRICT COURT FOR

THE DISTRICT OF MARYLAND,

FILED NOVEMBER 22, 2021

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

Civil Action No. ELH-20-2419

THE CORDISH COMPANIES, INC.

Plaintiff,

AFFILIATED FM INSURANCE COMPANY,

Defendant.

MEMORANDUM OPINION

The World Health Organization declared COVID-19

a global pandemic on March 11, 2020. See Seth v.

McDonough, 461 F. Supp. 3d 242, 247 (D. Md. 2020). This

insurance dispute arises from financial losses sustained

by The Cordish Companies, Inc. (“Cordish”), plaintiff,

due to the pandemic.

COVID-19 is caused by a highly contagious virus. See

Coronavirus Disease 2019 (COVID-19), How COVID-19

Spreads, Ctrs. For Disease Control & Prevention (Apr.

2, 2020), https://bit.ly/2XoiDDh.1 Since at least March of

1. Severe Acute Respiratory Syndrome Coronavirus 2 (SARSCoV-2) is commonly known as the coronavirus, and it causes an

illness known as COVID-19. See ECF 4 at 5, ¶ 9; see also Naming the

Appendix B

2020, the nation has been “in the grip of a public health

crisis more severe than any seen for a hundred years.”

Antietam Battlefield KOA v. Hogan, 461 F. Supp. 3d 214,

223 (D. Md. 2020). As of August 16, 2021, COVID-19 has

infected more than 36 million Americans and caused over

620,000 deaths in this country. See COVID-19 Dashboard,

The Johns Hopkins Univ., https://bit.ly/2WD4XU9 (last

accessed August 16, 2021). 2

The pandemic has impacted almost every aspect

of our lives. As mitigation efforts began to take hold

beginning in March 2020, efforts to thwart the spread

of the virus included social distancing and avoidance of

indoor spaces and public places. Many businesses limited

their operations or shut their doors entirely, often because

of governmental orders of civil authority. These efforts

to stem the spread of COVID-19 took a huge “toll on

businesses across the United States.” Hair Studio 1208,

LLC v. Hartford Underwriters Ins. Co., No. 20-2171, 2021

U.S. Dist. LEXIS 91960, 2021 WL 1945712, at *1 (E.D.

Pa. May 14, 2021). This included many of the commercial

properties operated by Cordish. 3

Coronavirus Disease and the Virus that Causes It, World Health

Org., https://bit.ly/2UMC6uW (last accessed June 15, 2020).

2. Under F.R.E. 201, the Court may take judicial notice of

publicly available data.

3. The Cordish Companies, Inc.” is merely “a trade name or

holding company” that “owns no assets and operates no businesses.”

ECF 4 at 7 n.1. But, it is the First Named Insured under the

insurance policy in issue.

Appendix B

As a result of the losses that Cordish suffered during

the pandemic, Cordish submitted a claim to its insurer,

defendant Affiliated FM Insurance Company (“AFM” or

“FM”), pursuant to an “all risk” business interruption

insurance policy that it had purchased from AFM at a

cost of about $2 million. ECF 4, ¶ 8.4 The policy covered

97 commercial properties. AFM denied Cordish’s claim.

This suit followed. See ECF 4 (“Complaint”).5 Cordish

asserts a claim for breach of contract and seeks a

declaration that AFM “has a duty to indemnify Cordish

under the Policy for the business interruption losses at

the Covered Properties.” Id. ¶ 140. Cordish appended

several exhibits to the suit. These include a copy of the

insurance policy in issue and related correspondence

(ECF 4-2 at 1-125, the “Policy”) as well as copies of various

governmental emergency orders. ECF 4-2 at 126-130;

ECF 4-3 at 1-56.

AFM answered the Complaint. ECF 9. Several

months later, AFM moved to dismiss the Complaint for

4. An all-risk insurance policy is one that allocates risk to the

insurer by covering all risks, except those specifically excluded. 7

Steven Plitt et A l., Couch on Insurance § 101:7 (3d ed. 2021);

see also Goodman v. Fireman’s Fund Ins. Co., 600 F.2d 1040, 1042

(4th Cir. 1979) (describing “all-risk” policies as those that cover all

fortuitous losses “absent express exclusion”).

5. Cordish filed suit in the Circuit Court for Baltimore City.

ECF 4. AFM removed the case to federal court on the basis of

diversity jurisdiction, pursuant to 28 U.S.C. §§ 1332 and 1446. ECF

1 (“Notice of Removal”). Cordish is a Maryland corporation with its

principal place of business in Baltimore, and AFM is incorporated

in Rhode Island. ECF 4, ¶¶ 22, 23.

Appendix B

failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6).

ECF 24. The motion is supported by a memorandum. ECF

24-3 (collectively, the “Motion” or “Motion to Dismiss”).

Plaintiff opposes the Motion (ECF 28), supported by 16

exhibits. Defendant has replied. ECF 31. Plaintiff filed

a “Motion for Leave to File a Surreply” (ECF 32), along

with the proposed surreply. ECF 32-1 (collectively, the

“Motion for Surreply”). Defendant opposes the Motion

for Surreply. ECF 34.

In resolving the Motion to Dismiss, the Court does

not write on a clean slate. This case is one of many

brought throughout the country by businesses against

their insurance companies, alleging that the losses

suffered during the pandemic are covered under business

interruption insurance contracts. Indeed, since the

filing of the reply, both sides have filed many notices of

supplemental authority, bringing to the Court’s attention

decisions of other courts in some of these cases. See ECF

42; ECF 43; ECF 44; ECF 48; ECF 49; ECF 50; ECF

51; ECF 52; ECF 53. After plaintiff responded to one

of defendant’s notices of supplemental authority (ECF

45), defendant moved to strike plaintiff’s response. ECF

46 (“Motion to Strike”). Plaintiff opposes the Motion to

Strike. ECF 47.

No hearing is necessary to resolve the motions. See

Local Rule 105.6. For the reasons that follow, I shall grant

the Motion for Surreply and the Motion to Strike. And, I

shall construe the Motion as a motion for judgment on the

pleadings under Fed. R. Civ. P. 12(c) and grant it.

Appendix B

I. Factual Background6

A. The Pandemic

Affiliates of Cordish develop and operate numerous

entities throughout the United States, including casinos,

dining and entertainment venues, retail malls, hotels,

meeting and conference venues, and office and residential

buildings. ECF 4, ¶ 2. As events began to unfold in March

2020 with regard to the coronavirus, many governmental

authorities across the country issued orders prohibiting

“customers, patrons, suppliers, vendors and employees”

from accessing business properties, including many of

Cordish’s properties. Id. ¶ 10; see id. ¶ 42. In particular,

Cordish alleges that the pandemic led to the issuance

of “numerous orders of civil authority” that “prohibited

access” to the covered Properties or closure of its

properties. Id. ¶ 12; see id. ¶ 13.

For example, on March 5, 2020, Maryland Governor

Lawrence Hogan, Jr. issued a Proclamation declaring a

state of emergency due to the spread of SARS-Cov-2, the

6. Given the posture of the case, I must assume the truth of

all factual allegations in the Complaint. See Fusaro v. Cogan, 930

F.3d 241, 248 (4th Cir. 2019). However, the Court may “take judicial

notice of ‘matters of public record’ and other information that,

under Federal Rule of Evidence 201, constitute ‘adjudicative facts.’”

Goldfarb v. Mayor & City Council of Baltimore, 791 F.3d 500, 508

(4th Cir. 2015).

In this Memorandum Opinion, I cite to the Court’s electronic

pagination. The electronic pagination does not always correspond to

the page numbers that appear on the parties’ written submissions.

Appendix B

virus causing the COVID-19 disease. Id. ¶ 43; see ECF

4-2 at 126-27 (“State of Emergency Order”). Ten days

later, in connection with the State of Emergency Order,

Governor Hogan issued an order closing to the public 13

gaming and racing facilities, including casinos, racetracks,

and simulcast betting facilities. ECF 4-2 at 129. This

order pertained to some of Cordish’s Covered Properties,

including Live! Casino & Hotel in Hanover, Maryland and

“Live! Casino Hotel” at “Horseshoe Casino Baltimore.” Id.

at 130. Governor Hogan subsequently issued additional

orders closing, inter alia, bars, restaurants, theaters,

and malls. See ECF 4-3 at 1-31. And, on March 30,

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

that directed all persons in the State of Maryland to

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

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 20-03-30-01 (Mar. 30, 2020).

In sum, plaintiff claims that the damage caused by the

virus and these executive orders “resulted in hundreds

of millions of dollars in business interruption losses for

Cordish....” ECF 4, ¶ 1. As a result of these losses, plaintiff

submitted a claim for business interruption losses under

its Policy with AFM. Id. ¶ 112.7 By letter of May 6, 2020,

AFM denied coverage. Id. ¶ 114. In that letter, AFM

averred, among other things, that the Contamination

7. Cordish did not include a copy of its claim or specify the date

that it submitted the claim(s).

Appendix B

Exclusion bars coverage for losses claimed under the

business interruption extensions. Id. ¶ 115. The parties

then exchanged additional letters about the applicability

of the Contamination Exclusion. Id. ¶¶ 116-118.

B. The Policy

Cordish purchased an “‘all-risk’ insurance policy”

from AFM that provides up to $1,000,000,000 in coverage

for business interruption losses and property damage with

respect to 97 properties located throughout the country,

including approximately 33 in Maryland (“Covered

Properties”). Id. ¶ 4; see ECF 4-2. Coverage under the

Policy was issued on March 10, 2020, for the period of

February 28, 2020 to February 28, 2021. ECF 4-2 at 24.

As noted, the premium was almost $2 million. ECF 4, ¶ 8.

The Policy provides coverage for losses from the

interruption of Cordish’s business, which is commonly

known as business interruption coverage. Broadly, the

Policy provides for a limit of liability of $1,000,000,000, and

“covers property . . . against ALL RISKS OF PHYSICAL

LOSS OR DAMAGE,” except as otherwise excluded. ECF

4-2 at 26, 45 (capitals in original). Specifically, the Policy

provides, id. at 26 (bold in original):

This Company’s total limit of liability, including

any insured Business Interruption loss, will

not exceed the Policy Limit of $1,000,000,000

as a result of any one occurrence subject to

the respective sub-limits of liability shown

elsewhere in this Policy.

10a

Appendix B

Under the Policy, an occurrence is defined as “the sum

total of all loss or damage of the type insured, including

any insured Business Interruption loss, arising out of or

caused by one discrete event of physical loss or damage

....” Id. at 87.

Further, the Policy states, id. at 63-66 (emphasis in

original):

BUSINESS INTERRUPTION

The Business Interruption loss, as provided

in the Business Interruption Coverage and

Business Interruption Coverage Extensions

of this section, is subject to all the terms and

conditions of this Policy including, but not

limited to, the limits of liability, deductibles and

exclusions shown in the Declarations section.

A. LOSS INSURED

This Policy insures Business Interruption

loss, as provided in the Business Interruption

Coverage, as a direct result of physical loss or

damage of the type insured:

1. To property as described elsewhere in this

Policy and not otherwise excluded by this

Policy;

2. Used by the Insured;

11a

Appendix B

3. While at a location or while in transit as

provided by this Policy; and

4. During the Period of Liability as described

elsewhere in this Policy.

Notably, the Policy does not define “physical loss or

damage.”

The “Business Interruption Coverage” includes

coverage for rental income losses, id. at 65-66:

B. BUSINESS INTERRUPTION COVERAGE

***

3. Rental Income

The recoverable Rental Income loss is the

actual loss sustained by the Insured of the

following during the Period of Liability:

a) The fair rental value of any portion of the

property occupied by the Insured;

b) Income reasonably expected from the

rentals of unoccupied or unrented portions

of such property;

c) The rental income from the rented portions

of such property, according to bona fide

leases, contracts or agreements, in force at

the time of loss....

12a

Appendix B

The Policy also includes sixteen “BUSINESS

INTERRUPTION COVERAGE EXTENSIONS,” of

which three are relevant here: 1) the “Attraction Property”

coverage; 2) the “Civil or Military Authority” coverage;

and 3) the “Supply Chain” coverage. Id. at 68-75.

The “Attraction Property” coverage provides, id. at

68 (emphasis added):

This Policy covers Business Interruption

Coverage loss incurred by the Insured during

the Period of Liability directly resulting from

physical loss or damage of the type insured

to property of the type insured that attracts

business to a described location and is within

one (1) statute mile of the described location.

The provision on “Civil or Military Authority”

coverage states, id. (emphasis added):

This Policy covers the Business Interruption

Coverage loss incurred by the Insured during

the Period of Liability if an order of civil or

military authority prohibits access to a location

provided such order is the direct result of

physical damage of the type insured at a

location or within (5) statute miles of it.

And, the “Supply Chain” coverage provides,

id. at 75 (emphasis added):

This Policy covers the Business Interruption

Coverage loss incurred by the Insured during

13a

Appendix B

the Period of Liability directly resulting from

physical loss or damage of the type insured to

property of the type insured at the premises

of any of the following within the Policy’s

Territory:

a) Direct suppliers, direct customers

or direct contract service providers

to the Insured;

b) Any company under any royalty,

l i c e n s i n g fe e o r c o m m i s s i o n

agreement with the Insured; or

c) Any company that is a direct or

indi rect supplier, customer or

contract service provider of those

described in a) above...

Business Interruption Coverage loss recoverable

under this Business Interruption Coverage

Extension is extended to include the following

Business Interruption Coverage Extensions:

a) Civil or Military Authority...

In addition, the Policy provides coverage for losses

caused by “Communicable Diseases.” Id. at 51, 69; see ECF

4, ¶ 38. The communicable disease provisions are subject

to $500,000 sub-limits, for a combined total of $1,000,000.

ECF 4-2 at 28, 29. Although Cordish has not asserted

any claims in this suit under either of these provisions,

14a

Appendix B

it asserts that the inclusion of the provision in the Policy

evidences that “FM knows that viruses and communicable

diseases result in physical loss or damage . . . .”

Of relevance here, the Policy contains various

exclusions, including: 1) a contamination exclusion

(“Contamination Exclusion”); and 2) a loss of market or

loss of use exclusion (“Loss of Market Exclusion” or “Loss

of Use Exclusion”), both of which apply to and limit the

coverage of the provisions throughout the Policy. ECF

4-2 at 46-49. In the subsection titled “EXCLUSIONS,” it

states, in part, id. at 46-49:

In addition to the exclusions elsewhere in this

Policy, the following exclusions apply unless

otherwise stated:

GROUP I: This Policy excludes loss or damage

directly or indirectly caused by or resulting

from any of the following regardless of any

other cause or event, whether or not insured

under this Policy, contributing concurrently or

in any other sequence to loss or damage:

***

GROUP II: This Policy excludes the following,

however, if physical damage not excluded by

this Policy results, then only the resulting

damage is insured:

***

15a

Appendix B

GROUP III: This Policy excludes:

***

3. Loss of market or loss of use.

***

8. Contamination, and any cost due to

contamination including the inability to use

or occupy property or any cost of making

property safe or suitable for use or occupancy.

If contamination due only to the actual

not suspected presence of contaminant(s)

directly results from other physical damage

not excluded by this Policy, then only physical

damage caused by such contamination may

be insured.

In the “Definitions” section of the policy, both

contamination and contaminant are explicitly

defined, id. at 86 (emphasis in original):

contaminant means anything that causes

contamination.

contamination means any condition of property

due to the actual or suspected presence of

any foreign substance, impurity, pollutant,

hazardous material, poison, toxin, pathogen or

pathogenic organism, bacteria, virus, disease

causing or illness causing agent, fungus, mold,

or mildew.

16a

Appendix B

II. Motion for Surreply and Motion to Strike

As noted, plaintiff filed a Motion for Surreply

(ECF 32), along with the proposed surreply. ECF 32-1.

Defendant opposes the Motion for Surreply. ECF 34.

Local Rule 105.2(a) provides that a party is not

permitted to file a surreply without permission of the

court. The filing of a surreply “is within the Court’s

discretion, see Local Rule 105.2(a), but they are generally

disfavored.” EEOC v. Freeman, 961 F. Supp. 2d 783, 801

(D. Md. 2013), aff’d in part, 778 F.3d 463 (4th Cir. 2015);

see also, e.g., Chubb & Son v. C & C Complete Servs.,

LLC, 919 F. Supp. 2d 666, 679 (D. Md. 2013). A surreply

is ordinarily permitted when the party seeking to file the

surreply “would be unable to contest matters presented

to the court for the first time” in the opposing party’s

reply. Clear Channel Outdoor, Inc. v. Mayor & City

Council of Baltimore, 22 F. Supp. 3d 519, 529 (D. Md. 2014)

(quotations and citations omitted). Conversely, a surreply

is usually not permitted if the content is merely responsive

to an issue raised in the opposition. See Khoury v. Meserve,

268 F. Supp. 2d 600, 605-06 (D. Md. 2003).

In the Motion for Surreply, plaintiff contends that a

surreply is necessary because defendant “raised for the

first time another case against FM in this Court that

involves a different FM insurance policy and relies on the

findings in that case as if the facts...are the same in both

cases.” ECF 32 at 1. Thus, it asserts that it “will have no

opportunity to contest FM’s erroneous and misleading

statements unless it is permitted to file a surreply.” Id.

17a

Appendix B

In my view, plaintiff is entitled to file the Surreply

because defendant introduced a new case that it alleges

is directly applicable to this case to support its argument

as to sublimit caps. ECF 31 at 20 (citing David S. Brown

Enters. v. Affiliated FM Ins. Co., 509 F. Supp. 3d 460 (D.

Md. Dec. 18, 2020). In particular, AFM argues that its

exact position as to the sublimit cap “was adopted by”

the court in David S. Brown Enters., 509 F. Supp. 3d 460.

Although defendant’s averments are largely consistent

with the allegations in the Motion, its introduction of this

new case and the emphasis on the similarities between the

two cases entitle Cordish to respond. Therefore, I shall

grant the Motion for Surreply.

I shall also grant defendant’s Motion to Strike

plaintiff’s response to a notice of supplemental authority.

ECF 46. About two months after the briefing concluded

on the motion to dismiss, defendant filed ECF 42, titled

“Notice Of Supplemental Authority.” In substance, it is one

paragraph in length. Notably, defendant merely brought to

the Court’s attention a relevant decision issued on March

19, 2021, i.e., after the briefing was completed with regard

to the motion to dismiss. Id. For the convenience of the

Court, defendant submitted a copy of the relevant opinion.

However, the submission was not substantive in any way. It

included no analysis or interpretation. Thereafter, plaintiff

also filed a notice of supplemental authority in the same

style. ECF 43. And, defendant filed another notice, also

in the same style. ECF 44.

Nevertheless, plaintiff responded to defendant’s

notices (ECF 42; ECF 44) with substantive argument,

18a

Appendix B

addressing the cases defendant brought to the Court’s

attention. ECF 45. Plaintiff’s submission sparked the filing

by defendant of a Motion to Strike ECF 45. See ECF 46.

In its Motion to Strike, defendant asserts that ECF 45

is “an improper surreply” rather than merely a notice of

supplemental authority. ECF 46 at 1.

In its opposition to the Motion to Strike (ECF 47),

plaintiff claims that in ECF 42 and ECF 44, defendant

“submitted supplemental letters to the Court to support its

motion to dismiss” and thus plaintiff “appropriately filed

a response, showing that FM’s contention is incorrect.”

ECF 47 at 1. That is not entirely accurate, however.

Defendant was entirely appropriate in the way it

brought the relevant cases to my attention in both ECF

42 and ECF 44. The submissions were short, simple, and

to the point, much like plaintiff’s submission in ECF 43.

Plaintiff escalated the matter by wading into the waters,

addressing the merits of the cases — a step that defendant

never undertook. Accordingly, I shall grant the Motion

to Strike.

III. Standards of Review

A. Fed. R. Civ. P. 12

As noted, AFM originally filed an answer to the

Complaint. ECF 9. Months later, it filed a motion to

dismiss under Fed. R. Civ. P. 12(b)(6). ECF 24. A Rule 12(b)

(6) motion must be filed “before pleading if a responsive

pleading is allowed.” However, pursuant to Fed. R. Civ. P.

12(h)(2)(B), which governs the waiving and preserving of

19a

Appendix B

defenses, a defendant may also assert “[f]ailure to state a

claim upon which relief can be granted” in “a motion under

Rule 12(c).” And, in its reply (ECF 31), defendant asserts

that the Court may consider its Motion to Dismiss under

Rule 12(c), seeking judgment on the pleadings. Plaintiff

seems to agree. ECF 28 at 17-18.

Regardless of whether failure to state a claim for

relief is asserted by way of a Rule 12(b)(6) motion or a

Rule 12(c) motion, courts apply “the same standard for

Rule 12(c) motions as for motions made pursuant to Rule

12(b)(6).” Burbach Broadcasting Co. of Del. v. Elkins

Radio Corp., 278 F.3d 401, 406 (4th Cir. 2002). A motion

pursuant to Rule 12(b)(6) constitutes an assertion by the

defendant that, even if the facts alleged by the plaintiff

are true, the complaint fails as a matter of law “to state

a claim upon which relief can be granted.” A defendant

may test the legal sufficiency of a complaint by way of a

motion to dismiss under Rule 12(b)(6). In re Birmingham,

846 F.3d 88, 92 (4th Cir. 2017); Goines v. Valley Cmty.

Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016); McBurney

v. Cuccinelli, 616 F.3d 393, 408 (4th Cir. 2010), aff’d sub

nom., McBurney v. Young, 569 U.S. 221, 133 S. Ct. 1709,

185 L. Ed. 2d 758 (2013); Edwards v. City of Goldsboro,

178 F.3d 231, 243 (4th Cir. 1999). A Rule 12(b)(6) motion

constitutes an assertion by a defendant that, even if the

facts alleged by a plaintiff are true, the complaint fails

as a matter of law “to state a claim upon which relief can

be granted.”

Whether a complaint states a claim for relief is

assessed by reference to the pleading requirements of

20a

Appendix B

Fed. R. Civ. P. 8(a)(2). It provides that a complaint must

contain a “short and plain statement of the claim showing

that the pleader is entitled to relief.” The purpose of the

rule is to provide the defendants with “fair notice” of the

claims and the “grounds” for entitlement to relief. Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 555-56, 127 S. Ct.

1955, 167 L. Ed. 2d 929 (2007).

To survive a motion under Rule 12(b)(6), a complaint

must contain facts sufficient to “state a claim to relief

that is plausible on its face.” Twombly, 550 U.S. at 570;

see Ashcroft v. Iqbal, 556 U.S. 662, 684, 129 S. Ct. 1937,

173 L. Ed. 2d 868 (2009) (citation omitted) (“Our decision

in Twombly expounded the pleading standard for ‘all

civil actions’ . . . .”); see also Fauconier v. Clarke, 966

F.3d 265, 276 (4th Cir. 2020); Paradise Wire & Cable

Defined Benefit Pension Plan v. Weil, 918 F.3d 312,

317 (4th Cir. 2019); Willner v. Dimon, 849 F.3d 93, 112

(4th Cir. 2017). To be sure, a plaintiff need not include

“detailed factual allegations” in order to satisfy Rule 8(a)

(2). Twombly, 550 U.S. at 555. Moreover, federal pleading

rules “do not countenance dismissal of a complaint for

imperfect statement of the legal theory supporting the

claim asserted.” Johnson v. City of Shelby, Miss., 574

U.S. 10, 10, 135 S. Ct. 346, 190 L. Ed. 2d 309 (2014) (per

curiam). But, mere “‘naked assertions’ of wrongdoing” are

generally insufficient to state a claim for relief. Francis

v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (citation

omitted).

In other words, the rule demands more than bald

accusations or mere speculation. Twombly, 550 U.S. at

21a

Appendix B

555; see Painter’s Mill Grille, LLC v. Brown, 716 F.3d

342, 350 (4th Cir. 2013). If a complaint provides no more

than “labels and conclusions” or “a formulaic recitation

of the elements of a cause of action,” it is insufficient.

Twombly, 550 U.S. at 555. “[A]n unadorned, thedefendant-unlawfully-harmed-me accusation” does not

state a plausible claim of relief. Iqbal, 556 U.S. at 678.

Rather, to satisfy the minimal requirements of Rule 8(a)

(2), the complaint must set forth “enough factual matter

(taken as true) to suggest” a cognizable cause of action,

“even if . . . [the] actual proof of those facts is improbable

and . . . recovery is very remote and unlikely.” Twombly,

550 U.S. at 556 (internal quotation marks omitted).

In reviewing a Rule 12(b)(6) motion, a court “must

accept as true all of the factual allegations contained in

the complaint” and must “draw all reasonable inferences

[from those facts] in favor of the plaintiff.” E.I. du Pont

de Nemours & Co., 637 F.3d at 440 (citations omitted);

see Semenova v. Md. Transit Admin., 845 F.3d 564, 567

(4th Cir. 2017); Houck v. Substitute Tr. Servs., Inc., 791

F.3d 473, 484 (4th Cir. 2015); Kendall v. Balcerzak, 650

F.3d 515, 522 (4th Cir. 2011), cert. denied, 565 U.S. 943,

132 S. Ct. 402, 181 L. Ed. 2d 257 (2011). But, a court is

not required to accept legal conclusions drawn from the

facts. See Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct.

2932, 92 L. Ed. 2d 209 (1986); Glassman v. Arlington Cty.,

628 F.3d 140, 146 (4th Cir. 2010). “A court decides whether

[the pleading] standard is met by separating the legal

conclusions from the factual allegations, assuming the

truth of only the factual allegations, and then determining

whether those allegations allow the court to reasonably

22a

Appendix B

infer” that the plaintiff is entitled to the legal remedy

sought. A Society Without a Name v. Virginia, 655 F.3d

342, 346 (4th. Cir. 2011), cert. denied, 566 U.S. 937, 132 S.

Ct. 1960, 182 L. Ed. 2d 772 (2012).

Courts ordinarily do not “‘resolve contests surrounding

the facts, the merits of a claim, or the applicability of

defenses’” through a Rule 12(b)(6) motion. Edwards, 178

F.3d at 243 (quoting Republican Party v. Martin, 980

F.2d 943, 952 (4th Cir. 1992)). However, “in the relatively

rare circumstances where facts sufficient to rule on an

affirmative defense are alleged in the complaint, the

defense may be reached by a motion to dismiss filed

under Rule 12(b)(6).” Goodman v. Praxair, Inc., 494

F.3d 458, 464 (4th Cir. 2007) (en banc); accord Pressley v.

Tupperware Long Term Disability Plan, 553 F.3d 334,

336 (4th Cir. 2009). Because Rule 12(b)(6) “is intended

[only] to test the legal adequacy of the complaint,”

Richmond, Fredericksburg & Potomac R.R. Co. v. Forst,

4 F.3d 244, 250 (4th Cir. 1993), “[t]his principle only applies

. . . if all facts necessary to the affirmative defense ‘clearly

appear[ ] on the face of the complaint.’” Goodman, 494

F.3d at 464 (quoting Forst, 4 F.3d at 250) (emphasis added

in Goodman).

“Generally, when a defendant moves to dismiss a

complaint under Rule 12(b)(6), courts are limited to

considering the sufficiency of allegations set forth in the

complaint and the ‘documents attached or incorporated

into the complaint.’” Zak v. Chelsea Therapeutics Int’l,

Ltd., 780 F.3d 597, 606 (4th Cir. 2015) (quoting E.I. du

Pont de Nemours & Co., 637 F.3d at 448). Ordinarily, the

23a

Appendix B

court “may not consider any documents that are outside

of the complaint, or not expressly incorporated therein

. . . .” Clatterbuck v. City of Charlottesville, 708 F.3d 549,

557 (4th Cir. 2013); see Bosiger v. U.S. Airways, Inc., 510

F.3d 442, 450 (4th Cir. 2007).

But, under limited circumstances, when resolving

a Rule 12(b)(6) motion, a court may consider documents

beyond the complaint without converting the motion to

dismiss to one for summary judgment. Goldfarb v. Mayor

& City Council of Balt., 791 F.3d 500, 508 (4th Cir. 2015).

In particular, a court may properly consider documents

that are “explicitly incorporated into the complaint by

reference and those attached to the complaint as exhibits.”

Goines, 822 F.3d at 166 (internal citation omitted); see also

Six v. Generations Fed. Credit Union, 891 F.3d 508, 512

(4th Cir. 2018); Anand v. Ocwen Loan Servicing, LLC,

754 F.3d 195, 198 (4th Cir. 2014); U.S. ex rel. Oberg v. Pa.

Higher Educ. Assistance Agency, 745 F.3d 131, 136 (4th

Cir. 2014); Am. Chiropractic Ass’n v. Trigon Healthcare,

Inc., 367 F.3d 212, 234 (4th Cir. 2004), cert. denied, 543

U.S. 979, 125 S. Ct. 479, 160 L. Ed. 2d 356 (2004); Phillips

v. LCI Int’l Inc., 190 F.3d 609, 618 (4th Cir. 1999).

However, “before treating the contents of an attached

or incorporated document as true, the district court

should consider the nature of the document and why the

plaintiff attached it.” Goines, 822 F.3d at 167 (citing N. Ind.

Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d

449, 455 (7th Cir. 1998)); see USA Eng. Language Ctr. v.

Accrediting Council for Continuing Educ. & Training,

Inc., F. App’x , 2021 U.S. App. LEXIS 22247, 2021 WL

24a

Appendix B

3162671, at *2 (4th Cir. July 27, 2021). Of import here,

“[w]hen the plaintiff attaches or incorporates a document

upon which his claim is based, or when the complaint

otherwise shows that the plaintiff has adopted the

contents of the document, crediting the document over

conflicting allegations in the complaint is proper.” Goines,

822 F.3d at 167. In other words, the “general rule” is that

“the exhibit prevails in the event of a conflict between

an attached exhibit and the allegations of a complaint.”

Id. at 165. But, “in cases where the plaintiff attaches

or incorporates documents for purposes other than the

truthfulness of the document, it is inappropriate to treat

the contents of the document as true.” Id. at 167.

As noted, plaintiff included two exhibits with the

Complaint. ECF 4-2; ECF 4-3. Cordish also submitted

16 exhibits with its opposition to the Motion to Dismiss.

ECF 28-2 to ECF 28-18. These exhibits include AFM’s

filings in several other federal cases (ECF 28-2, ECF

28-3; ECF 28-9); the cases that plaintiff cites in its

opposition (ECF 28-4); the “COVID-19 Property &

Casualty Business Interruption Data Call” report issued

by the National Association of Insurance Commissioners

(ECF 28-5); various articles from insurance trade

publications describing insurance rate changes in light

of the pandemic (ECF 28-6); a report published by the

Consumer Federation of America, dated February

11, 2011 (ECF 28-7); an excerpt from a treatise titled

“Commercial Property Coverage Guide” (ECF 28-8); and

various scientific articles on the transmission of COVID-19

(ECF 28-10 – ECF 28-18).

25a

Appendix B

The exhibits are all referenced in the Complaint or

publicly available documents. Moreover, defendant has not

contested the materiality or the authenticity of plaintiff’s

exhibits. Accordingly, at this juncture, I may consider

the exhibits, without converting the Motion to one for

summary judgment.

B. Choice of Law

The parties assume, w ithout discussion, that

Maryland law applies to plaintiff’s claims. ECF 24-3; ECF

28. “When choosing the applicable state substantive law

while exercising diversity or supplemental jurisdiction, a

federal district court applies the choice of law rules of the

forum state.” Ground Zero Museum Workshop v. Wilson,

813 F. Supp. 2d 678, 696 (D. Md. 2011); see Hartford Fire

Ins. Co. v. Harleysville Mut. Ins. Co., 736 F.3d 255, 261

n.3 (4th Cir. 2013); Colgan Air, Inc. v. Raytheon Aircraft

Co., 507 F.3d 270, 275 (4th Cir. 2007); Baker v. Antwerpen

Motorcars, Ltd., 807 F. Supp. 2d 386, 389 n.13 (D. Md.

2011).

“[I]nterpretation of private contracts is ordinarily

a question of state law.” Volt Info. Scis., Inc. v. Bd. of

Trustees of Leland Stanford Junior Univ., 489 U.S. 468,

474, 109 S. Ct. 1248, 103 L. Ed. 2d 488 (1989); accord

James v. Circuit City Stores, Inc., 370 F.3d 417, 421-22 (4th

Cir. 2004). Because Maryland is the forum state, I must

apply Maryland substantive law, including its choice of law

rules, to determine which state’s substantive law applies

to the agreement. Small v. WellDyne, Inc., 927 F.3d 169,

173 n.3 (4th Cir. 2019); Francis v. Allstate Ins. Co., 709

26a

Appendix B

F.3d 362, 369 (4th Cir. 2013); CACI Int’l, Inc. v. St. Paul

Fire & Marine Ins. Co., 566 F.3d 150, 154 (4th Cir. 2009).

As to the contract claim, Maryland applies the law

of the state in which the contract was formed (“lex loci

contractus”), unless the parties to the contract agreed to

be bound by the law of another state. See, e.g. Cunningham

v. Feinberg, 441 Md. 310, 326, 107 A.3d 1194, 1204 (2015);

Erie Ins. Exch. v. Heffernan, 399 Md. 598, 618, 925 A.2d

636, 648 (2007); Am. Motorists Ins. Co. v. ARTRA Grp.,

Inc., 338 Md. 560, 573, 659 A.2d 1295, 1301 (1995); TIG

Ins. Co. v. Monongahela Power Co., 209 Md. App. 146, 161,

58 A.3d 497, 507 (2012), aff ’d, 437 Md. 372, 86 A.3d 1245

(2014). “For choice-of-law purposes, a contract is made

where the last act necessary to make the contract binding

occurs.” Konover Prop. Tr., Inc. v. WHE Assocs., 142 Md.

App. 476, 490, 790 A.2d 720, 728 (2002) (citing Commercial

Union Ins. Co. v. Porter Hayden Co., 116 Md. App. 605,

672, 698 A.2d 1167, 1200 (1997), cert. denied, 348 Md.

205, 703 A.2d 147 (1997)). The parties have not specified

precisely where this last act occurred.

Plaintiff is a Maryland corporation with its principal

place of business in Baltimore, Maryland. ECF 4, ¶ 22.

AFM is a Rhode Island corporation. Id. ¶ 23. Cordish

alleges that the Policy was sold to Cordish in Maryland.

Id. ¶ 24. And, plaintiff claims that the “alleged wrongs

occurred, in part, in Baltimore.” Id. ¶ 25. Accordingly,

I shall apply Maryland law with respect to plaintiff’s

claims. Porter Hayden, 116 Md. App. at 673, 698 A.2d at

1200 (observing that “[t]ypically, ‘[t]he locus contractus

of an insurance policy is the state in which the policy is

27a

Appendix B

delivered and the premiums are paid’”) (emphasis and

citation omitted).

C. Principles of Contract Construction in Maryland

Maryland law is well settled that “the interpretation

of an insurance policy is governed by the same principles

generally applicable to the construction of other contracts.”

Mitchell v. AARP, 140 Md. App. 102, 116, 779 A.2d 1061,

1069 (2001); see Connors v. Gov’t Emps. Ins. Co., 442 Md.

466, 480, 113 A.3d 595, 603 (2015); Moscarillo v. Prof’l

Risk Mgmt. Servs., Inc., 398 Md. 529, 540, 921 A.2d 245,

251 (2007); State Farm Mut. Ins. Co. v. DeHaan, 393 Md.

163, 193, 900 A.2d 208, 225-26 (2006); MAMSI Life &

Health Ins. Co. v. Callaway, 375 Md. 261, 279, 825 A.2d

995, 1005 (2003); see also Travelers Indemnity Co. of Am.

v. Jim Coleman Auto. of Columbia, LLC, 236 F. Supp. 2d

513, 514 (D. Md. 2002). Accordingly, “‘ordinary principles

of contract interpretation apply.’” Megonnell v. United

Servs. Auto. Ass’n, 368 Md. 633, 655, 796 A.2d 758, 772

(2002) (citation omitted); see Dutta v. State Farm Ins.

Co., 363 Md. 540, 556, 769 A.2d 948, 957 (2001); Cheney v.

Bell Nat’l Life Ins. Co., 315 Md. 761, 766, 556 A.2d 1135,

1138 (1998).

Principles of contract law govern the Policy at issue.

Therefore, the rights and obligations of the parties are

determined by the terms of that contract, “unless a

statute, regulation or public policy is violated thereby.”

Columbia Town Ctr. Title Co. v. 100 Inv. Ltd. P’ship., 203

Md. App. 61, 97, 36 A.3d 985, 1006 (2012).

28a

Appendix B

The insured party bears the burden of proving that

coverage exists. See Prop. & Cas. Ins. Guar. Corp. v.

Beebe-Lee, 431 Md. 474, 490, 66 A.3d 615, 624 (2013); White

Pine Ins. Co. v. Taylor, 233 Md. App. 479, 497, 165 A.3d

624, 633 (2017). If coverage is established, the burden

shifts to the insurer to establish that a certain claimed loss

falls within a policy exclusion. Beebe-Lee, 431 Md. at 490,

66 A.3d at 624; see Finci v. Am. Cas. Co. of Reading, 323

Md. 358, 394, 593 A.2d 1069, 1087 (1991); White Pine Ins.,

233 Md. App. at 497, 165 A.3d at 633. Because “‘exclusions

are designed to limit or avoid liability, they will be

construed more strictly than coverage clauses and must

be construed in favor of a finding of coverage.’” Megonnell,

368 Md. at 656, 796 A.2d at 772 (citation omitted).

In “‘deciding the issue of coverage under an insurance

policy, the primary principle of construction is to apply

the terms of the insurance contract itself.’” Universal

Underwriters Ins. Co. v. Lowe, 135 Md. App. 122, 137,

761 A.2d 997, 1005 (2000) (quoting Bausch & Lomb, Inc.

v. Utica Mut. Ins. Co., 330 Md. 758, 779, 625 A.2d 1021

(1993)). The insurance policy, including endorsements,

“must be construed as a whole and ‘the character of the

contract, its purpose, and the facts and circumstances of

the parties at the time of execution’ must be examined.”

United Servs. Auto. Ass’n v. Riley, 393 Md. 55, 79, 899

A.2d 819, 833 (2006) (quoting Chantel Assocs. v. Mt.

Vernon Fire Ins. Co., 338 Md. 131, 142, 656 A.2d 779, 784

(1995)); see United Capitol Ins. Co. v. Kapiloff, 155 F.3d

488, 495 (4th Cir. 1998); Pacific Indem. Co. v. Interstate

Fire & Cas. Co., 302 Md. 383, 388, 488 A.2d 486, 488

(1985). “In general, the main insurance policy and an

endorsement constitute a single insurance contract, and

29a

Appendix B

an effort should be made to construe them harmoniously.”

Prince George’s Cty. v. Local Gov’t Ins. Trust, 388 Md.

162, 173, 879 A.2d 81, 88 (2005).

The court bears responsibility for ascertaining the

scope and limitations of an insurance policy. See Fister

v. Allstate Life Ins. Co., 366 Md. 201, 210, 783 A.2d 194,

199 (2001); Mitchell v. Md. Cas. Co., 324 Md. 44, 56, 595

A.2d 469, 475 (1991). As the Maryland Court of Appeals

has explained, judicial “interpretation of insurance

contracts to determine the scope and limitations of the

insurance coverage, like any other contract, begins with

the language employed by the parties.” Callaway, 375 Md.

at 279, 825 A.2d at 1005.

Generally, Maryland courts “analyze the plain

language of [an insurance] contract according to the words

and phrases in their ordinary and accepted meanings as

defined by what a reasonably prudent lay person would

understand them to mean.” Universal Underwriters

Ins. Co., 135 Md. App. at 137, 761 A.2d at 1005; see Litz v.

State Farm Fire & Cas. Co., 346 Md. 217, 224, 695 A.2d

566, 569 (1997); accord Capital City Real Estate, LLC v.

Certain Underwriters at Lloyd’s, 788 F.3d 375, 379 (4th

Cir. 2015). In other words, when interpreting an insurance

policy’s terms, the court interprets the 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.” Kapiloff, 155 F.3d at 495. The

test for that “usual, everyday sense” is “what meaning a

reasonably prudent layperson would attach to the term.”

See Pacific Indem. Co., 302 Md. at 387, 488 A.2d at 488.

30a

Appendix B

Where the insurance policy is unambiguous, the

meaning of the terms is determined by the court as a

matter of law. Clendenin Bros. Inc. v. U.S. Fire Ins. Co.,

390 Md. 449, 459, 889 A.2d 387, 393 (2006); see Pa. Nat.

Mut. Cas. Ins. Co. v. Roberts, 668 F.3d 106, 118 (4th Cir.

2012). “‘If the policy’s language is clear and unambiguous,

the Court will assume the parties meant what they said.’”

Capital City, 788 F.3d at 379 (quoting Perini/Tompkins

Joint Venture v. Ace Am. Ins. Co., 738 F.3d 95, 101 (4th

Cir. 2013)). And, “‘a court has no alternative but to enforce

those terms.’” Megonnell, 368 Md. at 655, 796 A.2d at 772

(quoting Dutta, 363 Md. at 557, 769 A.2d at 957).

A contract is not ambiguous merely because the

parties do not agree on its meaning. Fultz v. Shaffer,

111 Md. App. 278, 299, 681 A.2d 568, 578 (1996). A

policy term is considered “ambiguous if, to a reasonably

prudent person, the term is susceptible to more than

one meaning.” Cole v. State Farm Mut. Ins. Co., 359 Md.

298, 306, 753 A.2d 533, 537 (2000); see Auction & Estate

Representatives, Inc. v. Ashton, 354 Md. 333, 340, 731

A.2d 441, 444-45 (1999); see also Cochran v. Norkunas,

398 Md. 1, 17, 919 A.2d 700, 710 (2007); Nationwide Mut.

Ins. Co. v. Regency Furniture, Inc., 183 Md. App. 710,

723, 963 A.2d 253, 260 (2009).

If a contractual term is ambiguous, the court may

consult “extrinsic sources” to ascertain the meaning.

Cole, 359 Md. at 305, 753 A.2d at 537. Maryland courts

“‘will ordinarily avoid interpreting contracts in a way that

renders its provisions superfluous.’” Calomiris v. Woods,

353 Md. 425, 442, 727 A.2d 358, 366 (1999) (quoting State

31a

Appendix B

Highway v. Bramble, 351 Md. 226, 237, 717 A.2d 943,

948 (1998)). Nor may the court “accept an interpretation

that would nullify” one phrase “to substitute it with a

contradictory formulation.” Calomiris, 353 Md. at 442,

727 A.2d at 366. And, the court should give effect to

each contract 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., 246 Md. App. 349, 364,

228 A.3d 1170, 1179 (2020) (citation omitted), cert. denied,

471 Md. 81, 238 A.3d 273 (2020).

In the absence of “an indication that the parties

intended to use words in the policy in a technical sense,

they must be accorded their customary, ordinary, and

accepted meaning.’” Md. Cas. Co. v. Blackstone Intern.

Ltd., 442 Md. 685, 695, 114 A.3d 676, 681 (2015) (quoting

Mitchell, 324 Md. at 56, 595 A.2d at 475). However, if

there is evidence that the parties intended to ascribe

a special or technical meaning to certain words used

in an insurance contract, those words are construed in

accordance with that understanding. Valliere v. Allstate

Ins. Co., 324 Md. 139, 142, 596 A.2d 636, 638 (1991) (“When

a policy defines a term in a manner which differs from the

ordinary understanding of that term, the policy definition

controls.”); see also Dutta, 363 Md. at 556, 769 A.2d at 957.

Notably, “‘unlike the majority of other states,

Maryland does not follow the rule that insurance policies

are to be most strongly construed against the insurer.’”

Capital City, 788 F.3d at 379 (quoting Empire Fire &

32a

Appendix B

Marine Ins. Co. v. Liberty Mut. Ins. Co., 117 Md. App.

72, 97, 699 A.2d 482, 494 (1997)); see Megonnell, 368 Md.

at 655, 796 A.2d at 771; Bushey v. N. Assurance Co. of

Am., 362 Md. 626, 632, 766 A.2d 598, 601 (2001); Collier

v. MD-Individual Practice Ass’n, 327 Md. 1, 5, 607 A.2d

537, 539 (1992). But, “if ambiguity is determined to remain

after consideration of extrinsic evidence, ‘it will ordinarily

be resolved against the party who drafted the contract,’

where no material evidentiary factual dispute exists.”

Clendenin Bros., 390 Md. at 459-60, 889 A.2d at 394; see

Callaway, 375 Md. at 280, 825 A.2d at 1005-06 (“[W]hen

a term in an insurance policy is found to be ambiguous,

the court will construe that term against the drafter

of the contract which is usually the insurer.”). In other

words, where ambiguous language remains, the court

“construe[s] that language ‘liberally in favor of the insured

and against the insurer as drafter of the instrument.’”

Connors, 442 Md. at 481-83, 113 A.3d at 603-05 (emphasis

in original) (quoting Megonnell, 368 Md. at 655, 796 A.2d

at 772); see Columbia Town Center Title Co., 203 Md. App.

at 97, 36 A.3d at 1006.

IV. Discussion

In order to recover, Cordish must establish that it is

entitled to coverage under the terms of the Policy. See

Beebe-Lee, 431 Md. at 490, 66 A.3d at 624. Cordish asserts

coverage under the “Rental Income coverage” provision

and three business interruption coverage extensions: 1)

Attraction Property; 2) Civil Authority; 3) Supply Chain.

33a

Appendix B

AFM has moved to dismiss the suit, claiming that

Cordish’s claimed losses are not subject to coverage

under the Policy. According to defendant, the business

int er r uption coverage is ba r red by the pol icy ’s

“Contamination Exclusion” and “Loss of Use Exclusion.”

ECF 24-3 at 3. AFM maintains that Cordish’s business

interruptions were not the direct result of physical loss

or damage, which is a requirement for coverage under

the Policy. Id.

Cordish vigorously disputes AFM’s position. Plaintiff

contends that COVID-19 causes physical loss or damage

to property, so it is entitled to coverage for business

interruption losses. ECF 28 at 44-47. According to

Cordish, neither the “Contamination Exclusion” nor the

“Loss of Use Exclusion” applies. Id. at 19-37.

Both the Rental Income coverage and the Attraction

Property extension are triggered by “loss incurred...

directly resulting from physical loss or damage of the

type insured to property.” ECF 4-2 at 65-66, 68. Thus,

both provisions unambiguously limit coverage to losses

incurred “directly” as a result of “physical loss or damage”

to the insured properties. Accordingly, the Court must

determine whether plaintiff’s allegations, based on

COVID-19 and the related closure orders, constitute

“physical loss or damage” under the Policy.

According to plaintiff, the SARS-CoV-2 virus is a

“physical substance” that “causes physical loss or damage

34a

Appendix B

to property.” ECF 4, ¶ 26; see also id. ¶¶ 27-32. “In addition

to being transmitted by interpersonal contact,” plaintiff

claims that the virus can “remain on surfaces of objects

or materials” for up to twenty-eight days, suggesting that

individuals can contract COVID-19 through contact with

such surfaces. ECF 4, ¶ 28; see Coronavirus Disease

2019 (COVID-19), How COVID-19 Spreads, CTRS. FOR

DISEASE CONTROL & PREVENTION (updated July

14, 2021), https://bit.ly/2XoiDDh. 8 Further, according to

plaintiffs, there “have been hundreds of thousands of

confirmed cases of COVID-19 in proximity to the Covered

Properties, and the number of cases and geographic

presence” of the virus “continues to grow and spread.”

Id. ¶ 32.

8. At this juncture, the Court must assume the truth of the

allegations in the Complaint. Nevertheless, the contention that

surfaces are a serious source of spreading the virus has been largely

debunked. The Centers for Disease Control and Prevention has

explained: “People can be infected with SARS-CoV-2 through contact

with surfaces. However, based on available epidemiological data and

studies of environmental transmission factors, surface transmission

is not the main route by which SARS-CoV-2 spreads, and the risk

[of surface transmission] is considered to be low. The principal

mode by which people are infected with SARS-CoV-2 is through

exposure to respiratory droplets carrying infectious virus. In most

situations, cleaning surfaces using soap or detergent . . . is enough

to reduce risk.” Science Brief: SARS-CoV-2 and Surface (Fomite)

Transmission for Indoor Community Environments, CDC (Apr.

5, 2021), https://www.cdc.gov/coronavirus/2019-ncov/more/scienceand-research/surface-transmission.html.

Even assuming the truth of the allegation, however, plaintiff’s

claim does not fall within the scope of the Policy, for the reasons

discussed, infra.

35a

Appendix B

AFM insists that the presence of COVID-19 does not

constitute “physical loss or damage” because the virus

does not cause physical alteration of property. ECF 24-3

at 20. Further, defendant contends that “no business

interruption was a ‘direct result’ of physical loss or

damage.” Id. at 26.

Cordish counters that case law establishes that “there

need not be structural damage for there to be ‘physical loss

or damage.’” ECF 28 at 35 (citing Nat’l Ink & Stitch, LLC

v. State Auto Prop. & Cas. Ins. Co., 435 F. Supp. 3d 679, 681

(D. Md. 2020)). According to plaintiff, contamination of a

structure by the virus may qualify as a physical loss even

if it does not physically alter the structure of the building.

ECF 28 at 35. Thus, argues plaintiff, communicable

diseases like COVID-19 can cause physical damage. ECF

28 at 35, 41 (citing ECF 4, ¶¶ 13-14, 32-33, 53-54, 56, 8386, 89, 92, 95, 98-99, 105-6, 108, 110-11).

As noted, the Policy does not define “physical loss

or damage” and, to my knowledge, no Maryland State

court has opined on the meaning of this precise phrase

in a reported opinion. However, in a recent case in this

District involving a business interruption claim arising

from the pandemic, Judge Bennett construed the phrase

“direct physical loss or damage.” He observed: “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.”

Bel Air Auto Auction, Inc. v. Great N. Ins. Co., 534 F.

Supp. 3d 492, 2021 U.S. Dist. LEXIS 72154, 2021 WL

36a

Appendix B

1400891, at *7 (D. Md. Apr. 14, 2021). Relying on that

guidance, I conclude that the phrase is unambiguous and

bars coverage here.

As mentioned, the analysis of a contract begins with

its plain language. The inclusion of the modifier “physical”

in the phrase “physical loss or damage” unambiguously

requires some form of material alteration to the property

that has experienced “loss or damage.” See 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”); Black’s Law Dictionary

(10th ed., 2014) (defining “physical” as “of, relating to,

or involving material things; pertaining to real, tangible

objects”; “of, relating to, or involving someone’s body as

opposed to mind”); 10A Steven Plitt et al, Couch On

Insurance § 148:46 (3d ed. 2021) (“Couch”) (stating that

the “requirement that the loss be ‘physical,’ given the

ordinary definition of that term, is widely held to exclude

[from coverage] alleged losses that are intangible or

incorporeal”).

The term “physical,” as used in the Policy, “clearly

indicates that the damage must affect the good itself,

rather than the Plaintiff’s use of that good.” M Consulting

and Export, LLC v. Travelers Cas. Ins. Co. of Am., 2

F. Supp. 3d 730, 736 (D. Md. 2014). In Bel Air Auto Auction,

Inc., 2021 U.S. Dist. LEXIS 72154, 2021 WL 1400891, at

*7, Judge Bennett concluded that under Maryland law

“[d]irect physical loss or damage to property does not

include loss of use unrelated to tangible, physical damage.”

37a

Appendix B

He added that “the phase requires tangible, physical losses

to property, or, at the very least, permanent dispossession

of the property rendered unfit or uninhabitable by physical

forces.” Id.

Indeed, physical damage is “‘a distinct, demonstrable,

physical alteration of the property.’” Newchops Restaurant

Comcast LLC v. Admiral Indem. Co., 507 F. Supp. 3d 616,

623 (E.D. Pa. 2020) (citation omitted). Direct physical loss

occurs when a structure has been rendered “uninhabitable

and unusable.” Port Auth. of New York and New Jersey v.

Affiliated FM Ins. Co., 311 F.3d 226, 235 (3rd Cir. 2002).

See, e.g., Bluegrass Oral Health Ctr. v. Cincinnati Ins. Co.,

No. 1:20-CV-00120-GNS, 2021 U.S. Dist. LEXIS 50639,

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

that “the great weight of decisions recently considering”

the meaning of “direct physical loss or damage” in “the

midst of the current pandemic have reached the same

conclusion,” i.e., that the phrase requires some physical

damage, rather than mere loss of use).

Economic loss alone is not sufficient to trigger

coverage; physical alteration to the property is necessary.

See Couch § 148:46 (explaining that property insurance

claims are precluded “when the insured merely suffers a

detrimental economic impact unaccompanied by a distinct,

demonstrable physical alteration of the property”);

Hartford Ins. Co. of Midwest v. Mississippi Valley

Gas Co., 181 F. App’x 465, 470 (5th Cir. 2006) (“The

requirement that the loss be ‘physical,’ given the ordinary

definition of that term is widely held to exclude alleged

losses that are intangible or incorporeal, and, thereby,

38a

Appendix B

to preclude any claim against the property insurer when

the insured merely suffers a detrimental economic impact

unaccompanied by a distinct, demonstrable, physical

alteration of the property.” (citation omitted)); see also

Mudpie, Inc. v. Travelers Cas. Ins. Co. of Am., 487 F. Supp.

3d 834, 841 (N.D. Cal. 2020) (noting that “numerous courts

outside the Ninth Circuit have found that some outside

physical force must have induced a detrimental change in

the property’s capabilities before a plaintiff alleging loss

of use can establish a “direct physical loss of property”);

Turek Enters., Inc. v. State Farm Mut. Auto. Ins. Co.,

484 F. Supp. 3d 492, 502 (E.D. Mich. 2020) (concluding

that “direct physical loss” is unambiguous and requires

a showing of “tangible damage” to property).

Construing the phrase “physical loss or damage” in

the broader context of the Policy further supports the

position that the covered property must have suffered some

tangible harm to qualify for coverage. For example, the

“Period of Liability for Business Interruption Coverage”

runs “from the time of physical loss or damage of the type

insured” to when the “lost or damaged property could

be repaired or replaced and made ready for production

or business operations or services . . .” ECF 4-2 at 67

(emphasis added). The idea that the property may be

“repaired or replaced” is consistent with the view that

the damage contemplated by the Policy must be physical

in nature. See Tria WS LLC v. American Automobile

Ins. Co., 530 F. Supp. 3d 533, 540, 2021 U.S. Dist. LEXIS

60500, 2021 WL 1193370, at *5 (E.D. Pa. Mar. 30, 2021)

(“The terms ‘repair,’ ‘rebuild,’ and ‘replace’ strongly

suggest that the insured property must have suffered

39a

Appendix B

some negative change in its physical condition rendering

the property unsatisfactory and requiring restoration.”);

Michael Cetta, Inc. v. Admiral Indem. Co., 506 F. Supp. 3d

168, 177 (S.D.N.Y. 2020) (“The idea that the premises will

be ‘repaired, rebuilt or replaced’ suggests the occurrence

of material harm that then requires a physical fix.”); see

also Hair Studio 1208, LLC, 2021 U.S. Dist. LEXIS 91960,

2021 WL 1945712, at *9 (“‘If there is no requirement that

physical loss of or physical damage to the property be

involved, the definition of the time for paying the claim

makes no sense.’”) (quoting Real Hospitality LLC v.

Travelers Cas. Ins. Co. of Am., 499 F.Supp.3d 288, 295

(S.D. Miss. 2020)).

As mentioned, Cordish also maintains that plaintiff is

entitled to coverage due to contamination of its properties.

Here, the Complaint alleges that “SARS-CoV-2...and

COVID-19 cause physical loss or damage of the type

insured under the Policy.” ECF 4, ¶ 9. According to the

Complaint, the virus can remain viable on surfaces for

up to twenty-eight days, “making property impacted by

SARS-CoV-2 dangerous and potentially fatal,” id. ¶ 28,

and not functional “for the purpose of generating business

income.” Id. ¶ 36. Cordish also states that there “have been

hundreds of thousands of confirmed cases of COVID-19

in proximity to the Covered Properties...” Id. ¶ 32. Based

on those allegations, plaintiff maintains that its Covered

Properties suffered “business interruption losses directly

resulting from physical loss or damage caused by” the

virus. See, e.g., id. ¶ 83.

40a

Appendix B

But, for plaintiff to recover under the Attraction

Property and Rental Income coverage provisions, the

properties must have been physically or structurally

altered or rendered uninhabitable and unusable by the

virus. To be sure, plaintiff was not allowed to operate

certain businesses during the pandemic. Nevertheless,

Cordish does not allege that the properties were

physically or structurally altered or rendered unusable.

Contamination qualifies as physical loss or damage only if

it renders the subject property unusable or uninhabitable.

See Port Auth. of N.Y. & N.J., 311 F.3d at 235-36.

The Third Circuit’s decision in Port Auth. of N.Y. & N.J.,

311 F.3d 226, is instructive. There, the plaintiffs sought

to recover from their insurers, alleging the property was

contaminated by asbestos. The court addressed whether

the presence of asbestos constituted “direct physical loss

or damage,” as required under the first-party policies. The

court explained that, “[i]n ordinary parlance and widely

accepted definition, physical damage to property means

‘a distinct, demonstrable, and physical alteration’ of its

structure.” Id. at 235 (quoting Couch, § 148:46). It noted

that damage by “sources unnoticeable to the naked eye,”

such as fire, water, and smoke, may trigger coverage, but

“must meet a higher threshold” to do so. Id. at 235. The

court concluded that the “mere presence” of asbestos did

not render the structures unusable or uninhabitable, nor

was there any indication of an imminent threat of asbestos

contamination. Id. at 236. It reasoned, id.:

When the presence of large quantities of

asbestos in the air of a building is such as to

41a

Appendix B

make the structure uninhabitable and unusable,

then there has been a distinct loss to its owner.

However, 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.

See also Brian Handel D.M.D., P.C. v. Allstate Ins. Co.,

499 F. Supp. 3d 95, 100 (E.D. Pa. 2020) (concluding that

there was no direct physical loss of or damage to property

from the virus where the property remained “inhabitable

and usable”).

Western Fire Ins. Co. v. First Presbyterian Church,

165 Colo. 34, 437 P.2d 52 (1968), is also noteworthy. There,

the Supreme Court of Colorado determined that a direct

physical loss had occurred when the insured, acting

upon the orders of the fire department, closed the church

building because gas had infiltrated the soil underneath

it. Id. at 37-38, 437 P.2d at 54-55. The court clarified that

“the so-called ‘loss of use’ of the church premises, standing

alone, d[id] not in and of itself constitute a ‘direct physical

loss.’” Id. at 39, 437 P.2d at 55. Rather, the direct physical

loss resulted from the “accumulation of gasoline around

and under the church building,” which made further use

of the building highly dangerous. Id.

Plaintiff relies on Nat’l Ink & Stitch, LLC v. State

Auto Prop. & Cas. Ins. Co., 435 F. Supp. 3d 679, 681 (D. Md.

2020), to support its argument that a virus can constitute

physical loss or damage. But, the facts of that case are

42a

Appendix B

distinguishable. There, the court held that a ransomware

attack constituted physical damage because the plaintiff

“sustain[ed] a loss of its data and software,” was “left

with a slower system, which appear[ed] to be harboring

a dormant virus,” and was “unable to access a significant

portion of software and stored date.” Id. at 686. In other

words, the “software was rendered entirely unusable by

the ransomware attack.” Id. at 685 (emphasis added). In

contrast, the Complaint does not allege that Cordish’s

properties sustained any alteration or change, much less

one that rendered them unusable as a result of the virus.

Indeed, plaintiff does not allege that the virus was

actually present at any of its properties; that anything

about its properties has changed since March 2020; or that

its properties were rendered uninhabitable or unusable

by the virus. Nor does Cordish allege the need to make

repairs or changes to its properties as a result of damage

caused by the virus. In other words, even if the virus was,

in fact, present at the Covered Properties, the Complaint

does not allege any facts supporting the conclusion that

the coronavirus compromised the physical integrity

of the structures or otherwise harmed the structures

or destroyed or nearly eliminated their functionality.

Compare Motorists Mut. Ins. Co. v. Hardinger, 131

F. App’x 823, 826-27 (3rd Cir. 2005) (reversing summary

judgment in favor of the insurer as to a property claim

under a homeowners’ insurance policy, because of a

dispute of material fact as to whether a water well

contaminated by bacteria rendered the property useless

or uninhabitable, or otherwise nearly eliminated or

destroyed its functionality). As the Court observed in

43a

Appendix B

Ralph Lauren Corp. v. Factory Mut. Inc. Co., No. 2010167, 2021 U.S. Dist. LEXIS 90526, 2021 WL1904739,

at *3 n.6 (D. N.J. May 12, 2021): “Although the Virus can

harm humans, it does not physically alter structures and

therefore does not result in coverable property loss or

damage.”

To be sure, “factual allegations drive the analysis of

a motion to dismiss, [but] courts are not required to set

aside common sense.” Uncork & Create LLC v. Cincinnati

Ins. Co., 498 F. Supp. 3d 878, 883 (S.D.W. Va. 2020); see 15

Oz Fresh & Healthy Food LLC v. Underwriters at Lloyd’s

London Known as Syndicates AML 2001, 20-23407, 521

F. Supp. 3d 1232, 2021 U.S. Dist. LEXIS 34585, 2021

WL 896216, at *6 (S.D. Fla. Feb. 22, 2021) (“Plaintiff also

alleges that its losses are attributable, at least in part, to

the ‘presence of COVID-19.’ Such conclusory allegations

are insufficient.”) (citation omitted). Here, the structures

are intact. Surfaces exposed to the virus can be cleaned.

Numerous courts have rejected claims similar to

what Cordish has advanced, explaining that the virus

does not cause physical alteration of property because it

can be cleaned and eliminated from surfaces. See, e.g.,

Barbizon Sch. of San Francisco, Inc. v. Sentinel Ins. Co.

LTD, 20-cv-08578-TSH, 530 F. Supp. 3d 879, 2021 U.S.

Dist. LEXIS 62796, 2021 WL 1222161, at *9 (N.D. Cal.

Mar. 31, 2021) (noting that the “virus does not threaten

the structures covered by property insurance policies, and

can be removed from surfaces with routine cleaning and

disinfectant”); Kevin Barry Fine Art Assocs. v. Sentinel

Ins. Co., 513 F. Supp. 3d 1163, 1171 (N.D. Cal. 2021) (noting

44a

Appendix B

that “[e]ven if KBFA had included allegations regarding

the virus being present on and damaging the property,

they would not be plausible” and citing cases in which there

was no coverage because the coronavirus can be cleaned

from surfaces and surfaces can be disinfected); Terry

Black’s Barbeque, LLC v. State Auto. Mut. Ins. Co., 514 F.

Supp. 3d 896, 907 (W.D. Tex. 2020) (determining that the

presence of the virus alone does not constitute physical

loss or damage to property “because the virus can be

eliminated” and “does not threaten the structures covered

by property insurance policies”); Uncork & Create LLC,

498 F. Supp. 3d at 883 (noting that “even when present,

COVID-19 does not threaten the inanimate structures

covered by property insurance policies, and its presence

on surfaces can be eliminated with disinfectant”);

Promotional Headwear Int’l v. Cincinnati Ins. Co., 504

F. Supp. 3d 1191, 1202 (D. Kan. 2020) (“[E]ven assuming

that the virus physically attached to covered property,

it did not constitute the direct, physical loss or damage

required to trigger coverage because its presence can

be eliminated.”); Pappy’s Barber Shops, Inc. v. Farmers

Grp., Inc., 491 F. Supp. 3d 738, 740 (S.D. Cal. 2020) (holding

that “the presence of the virus itself, or of individuals

infected [with] the virus, at Plaintiffs’ business premises

or elsewhere do not constitute direct physical losses of

or damage to property”); Mama Jo’s, Inc. v. Sparta, No.

17-cv-23362-KMM, 2018 U.S. Dist. LEXIS 201852, 2018

WL 3412974, *9 (S.D. Fla. 2018) (presence of construction

debris and dust from road work did not constitute physical

loss of or damage to covered property; “[t]he fact that the

restaurant needed to be cleaned more frequently does not

mean Plaintiff suffered a direct physical loss or damage”),

aff’d, 823 F. App’x 868 (11th Cir. 2020).

45a

Appendix B

Further, Cordish argues that the coverage provision

for “Communicable Disease – Property Damage” indicates

that a loss from virus contamination constitutes physical

loss or damage. ECF 28 at 35. However, the inclusion of

a separate provision on damage caused by communicable

diseases actually supports the insurer’s argument. If the

Policy provided that communicable diseases cause physical

loss or damage, then it would not have had to include a

separate provision for coverage based on communicable

disease. Moreover, the modifier “property damage” used

in the provision’s heading is distinguishable from the

phrase “physical loss or damage” used in the business

interruption provision. In particular, “property damage”

omits the modifier “physical,” which, as discussed supra,

imposes a requirement of some form of material or

tangible alteration in order to trigger coverage. Without

that modifier, “property damage” denotes coverage for

a broader range of damage. As mentioned, Maryland

law requires the 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, 246 Md.

App. at 364, 228 A.3d at 1179 (citation omitted).

Analogizing SARS-CoV-2 to hazardous substances,

see ECF 28 at 37-40, does not alter the Court’s conclusion.

Compare, e.g., Moody v. Hartford Fin. Grp., Inc., 513

F. Supp. 3d 496, 506 (E.D. Pa. 2021) (“Neither the presence

of the virus nor an imminent threat thereof ... has ‘nearly

eliminated or destroyed’ the property’s functionality or

rendered it ‘useless or uninhabitable.’”) with TRAVCO Ins.

46a

Appendix B

Co. v. Ward, 715 F. Supp. 2d 699, 701, 708-09 (E.D. Va.

2010) (finding that a building suffered a “direct physical

loss” because it had been rendered uninhabitable by toxic

gases released by a product), aff’d, 504 F. App’x 251 (4th

Cir. 2013). Moreover, even if the presence of the virus

destroyed the functionality of Cordish’s properties, those

claims would be barred by the Policy’s Contamination

Exclusion, as discussed infra.

Numerous cases have rejected contamination by the

virus as a basis to trigger insurance coverage that is

subject to a requirement of physical damage. See, e.g.,

Bel Air, 2021 U.S. Dist. LEXIS 72154, 2021 WL 1400891,

at *11 (“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.”); Rococo Steak, LLC v. Aspen Specialty

Ins. Co., 515 F. Supp. 3d 1218, 1223 (M.D. Fla. 2021)

(granting motion to dismiss, stating that “like the coating

of 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”); Compare Hardinger, 131 F. App’x at 825

(indicating that the presence of E. coli in a residential

water well could constitute a direct physical loss where

the “functionality” of the property is “nearly eliminated

or destroyed,” or when the bacteria renders the property

“useless or uninhabitable”); Oregon Shakespeare Festival

Ass’n v. Great Am. Ins. Co., No. 15-01932, 2016 U.S. Dist.

LEXIS 74450, 2016 WL 3267247 (D. Or. June 7, 2016)

(finding physical loss or damage to property when wildfire

smoke infiltrated a theater and rendered it unusable for its

47a

Appendix B

intended purpose); Gregory Packaging, Inc. v. Travelers

Prop. Cas. Co. of Am., No. 12 Civ. 4418, 2014 U.S. Dist.

LEXIS 165232, 2014 WL 6675934, at *8 (D.N.J. Nov.

25, 2014) (holding that a juice plant incurred “physical

loss of or damage to” its facility when ammonia gas was

discharged into the plant’s air and rendered the facility

“unfit for occupancy”).

Nor do the executive orders mandating closure

constitute physical loss or damage. The overwhelming

majority of federal courts to consider similar claims have

concluded that neither the presence of the virus in the

buildings, nor the governmental orders associated with

COVID-19, caused or constitute physical loss or damage

to property for purposes of insurance coverage. See,

e.g., Kim-Chee LLC v. Philadelphia Indem. Ins. Co., 535

F. Supp. 3d 152, 2021 U.S. Dist. LEXIS 78241, 2021 WL

1600831, at *3 (W.D.N.Y. Apr. 23, 2021) (“In an unbroken

line of trial court decisions, federal courts applying New

York law have ruled that the closure of businesses due to

the suspected presence of the virus or due to New York

State executive orders do not qualify as direct physical

loss or damage.”); Rococo Steak, 515 F. Supp. 3d at 1225

(“[N]either physical contamination by COVID-19 nor

a decrease in business constitutes direct physical loss

or damage.”); Mohawk Gaming Enterprises, LLC v.

Affiliated FM Ins. Co., 534 F. Supp. 3d 216 , 2021 U.S. Dist.

LEXIS 72724, 2021 WL 1419782, at *5 (N.D.N.Y Apr. 15,

2021) (“Indeed, numerous courts around the country—

including those that have applied New York law—have

routinely held that the mere presence or spread of the

novel coronavirus is insufficient to trigger coverage when

48a

Appendix B

the policy’s language requires physical loss or physical

damage.”); Protégé Rest. Partners LLC v. Sentinel Ins.

Co., Ltd., 517 F. Supp. 3d 981, 2021 U.S. Dist. LEXIS

24835, 2021 WL 428653, at *4 (N.D. Cal. Feb. 8, 2021)

(“Every California court that has addressed COVID-19

business interruption claims to date has concluded that

government orders that prevent full use of a commercial

property or that make the business less profitable do not

themselves cause or constitute “direct physical loss of or

physical damage to” the insured property.”) (collecting

cases); O’Brien Sales & Mktg., Inc. v. Transp. Ins. Co.,

512 F. Supp. 3d 1019, 1024 (N.D. Cal. 2021) (stating

that “‘the presence of the virus itself, or of individuals

infected with the virus, at [plaintiff’s] business premises

or elsewhere [does] not constitute direct physical loss of

or damage to property.’”) (citation omitted); see also, e.g.,

Northwell Health, Inc. v. Lexington Ins. Co., F. Supp. 3d

2021 U.S. Dist. LEXIS 138794, 2021 WL 3139991, at *5

(S.D.N.Y. July 26, 2021); Nguyen v. Travelers Cas. Ins.

Co. of Am., F. Supp. 3d , 2021 U.S. Dist. LEXIS 101772,

2021 WL 2184878, at *11 (W.D. Wash. May 28, 2021); Out

W. Rest. Grp. Inc. v. Affiliated FM Ins. Co., 527 F. Supp.

3d 1142, 2021 U.S. Dist. LEXIS 52462, 2021 WL 1056627,

at *4 (N.D. Cal. Mar. 19, 2021); Moody, 513 F. Supp. 3d at

505-06; Promotional Headwear Int’l, 504 F. Supp. 3d at

1202; but see Studio 417, Inc. v. Cincinnati Ins. Co., 478

F. Supp. 3d 794, 799-801 (W.D. Mo. 2020) (concluding that

plaintiffs had “plausibly alleged that COVID-19 particles

attached to and damaged their property, which made their

premises unsafe and unusable”); Elegant Massage, LLC

v. State Farm Mut. Auto. Ins. Co., 506 F. Supp. 3d 360,

378 (E.D. Va. 2020) (same).

49a

Appendix B

As indicated, plaintiff also asserts coverage under the

Civil Authority and Supply Chain coverage extensions.

In particular, the Civil Authority coverage extension

provides coverage when an “action of civil authority ...

prohibits access” to Covered Property, “provided such

order is the direct result of physical damage of the type

insured at [plaintiff’s property] or within (5) statute

miles of it.” ECF 4-2 at 68. The Civil Authority coverage,

therefore, does not require Cordish to have suffered direct

physical loss. However, it is still dependent upon physical

damage to surrounding property.

The Supply Chain coverage extension covers losses

“directly resulting from physical loss or damage of the

type insured to property...at the premises of,” among

other things, “[d]irect suppliers, direct customers or direct

contract service providers....” Id. at 75. The coverage is

“extended to include” Civil Authority coverage. Id. Thus,

it is triggered by physical loss or damage to suppliers and

others. Id.

Cordish asserts, ECF 28 at 21-22:

Although Cordish’s Properties have been

impacted and damaged by COVID-19, that is

not the predominant cause of the company’s

business interruption losses. Cordish’s losses

are not from a spill resulting in contamination

at its properties, or the “cost” due to such

contamination. Rather Cordish’s losses are

50a

Appendix B

caused by the impact of the coronavirus away

from the insured premises and the resulting

orders of civil authority that have prohibited

access to the Properties.

The Complaint includes a list of its properties that

were required to close as a result of governmental orders.

But, it does not allege with any specificity what nearby

locations or vendors actually suffered physical loss or

damage, so as to bar access to Cordish’s properties.

Nevertheless, plaintiff posits that it suffered losses that

are covered under both provisions because, “as a direct

result of physical damage from [the virus] either at or

within five miles of Covered Properties,” government

orders prohibited access to Covered Properties. ECF 4,

¶ 89. However, these provisions depend on physical loss or

damage to some property, and COVID-19 did not cause

such loss or damage. See Nguyen, 2021 U.S. Dist. LEXIS

101772, 2021 WL 2184878, at *14 (noting that “where the

Civil Authority provision incorporates the requirement

for physical loss or damage to a neighboring building,

there is no coverage because the Court has already found

COVID-19 does not cause such loss or damage”).

Other courts considering similar civil authority

provisions have come to the same conclusion. See, e.g.,

Aggie Invs., LLC v. Cont’l Cas. Co., 21-cv-0013, 2021 U.S.

Dist. LEXIS 75160, 2021 WL 1550479, at *5 (E.D. Tex.

Apr. 20, 2021) (“But the civil authority actions here were

taken to prevent the anticipated threat of COVID-19—

not because there was structural alterations or property

damage at other premises.”); Select Hospitality, LLC v.

Strathmore Ins. Co., 533 F. Supp. 3d 31, 2021 U.S. Dist.

51a

Appendix B

LEXIS 68343, 2021 WL 1293407, at *4 (D. Mass. Apr. 7,

2021) (denying coverage under civil authority provision

because “the mere presence of the COVID-19 virus does

not constitute property damage and Select does not

identify any specific property to have been damaged”);

Chief of Staff, LLC v. Hiscox Ins. Co. Inc., 532 F. Supp. 3d

598, 2021 U.S. Dist. LEXIS 62623, 2021 WL 1208969, at

*1-*2 (N.D. Ill. Mar. 31, 2021) (finding no coverage under

the civil authority section because the “other property,”

like the premises covered by the policy, had not suffered

physical damage, as required by the plain language of the

policy); Selery Fulfillment, Inc. v. Colony Ins. Co., 525

F. Supp. 3d 771, 2021 U.S. Dist. LEXIS 47483, 2021 WL

963742, at *8 (E.D. Tex. Mar. 15, 2021) (“The ‘causal link’

between property damage and the civil authority action

is too attenuated or even nonexistent. Therefore, Selery

cannot use the Civil Authority provision to plausibly state

a claim.”); Toppers Salon & Health Spa, Inc. v. Travelers

Prop. Cas. Co. of Am., 503 F. Supp. 3d 251, 257 (E.D.

Pa. 2020) (stating that plaintiff “did not close because of

damage to a nearby premise or because there was some

dangerous physical condition at another nearby premise.

It closed because the Shutdown Orders applied to its own

operations. Its shutdown and resulting losses fall outside

the scope of the Civil Authority coverage.”); Gerleman

Mgmt., Inc. v. Atlantic States Ins. Co., 506 F. Supp. 3d

663, 671 (S.D. Iowa 2020) (concluding that civil authority

provision was not triggered because plaintiffs failed to

allege direct physical loss or damage to another property).

In sum, plaintiff has not plausibly alleged “physical

loss or damage” to its property or to nearby property, so

52a

Appendix B

as to trigger coverage under any of the asserted provisions

of the Policy.

The conclusion that the requirement of “physical

loss or damage” forecloses coverage is determinative.

See, e.g., Geragos & Geragos Engine Co. No. 28, LLC

v. Hartford Fire Ins. Co., CV 20-4647-GW-MAAx, 2020

U.S. Dist. LEXIS 237547, 2020 WL 7350413, at *4 (C.D.

Cal. Dec. 3, 2020) (“Because the Court finds that G&G

has not suffered any ‘direct physical loss of or physical

damage to’ its property, the Court ... does not reach

the issue of whether the virus exclusion applies.”); First

Watch Rests., Inc. v. Zurich Am. Ins. Co.,519 F. Supp. 3d

1056, 2021 U.S. Dist. LEXIS 21303, 2021 WL 390945, at

*4 (M.D. Fla. Feb. 4, 2021) (“Since First Watch cannot

show coverage ... the Court does not address whether the

contamination exclusion, or any exclusion, is applicable.”).

But, in addition, defendant argues that by “its plain and

unambiguous text, the contamination exclusion [in the

Policy] excludes” Cordish’s business interruption claims.

ECF 24-3 at 6. Cordish counters that the exclusion does

not apply, claiming that AFM is attempting to “re-write

the Policy.” ECF 28 at 19. Because the parties spend

extensive time contesting the applicability of the Policy’s

Contamination Exclusion, I shall briefly consider their

contentions.

The Contamination Exclusion provides, in part, ECF

4-2 at 49: “This Policy excludes . . . Contamination, and

any cost due to contamination including the inability to

use or occupy property or any cost of making property

53a

Appendix B

safe or suitable for use or occupancy.” “Contamination,”

in turn, is defined as “any condition of property due to

the actual presence of any foreign substance, impurity,

pollutant, hazardous material, poison, toxin, pathogen or

pathogenic organism, bacteria, virus, disease causing or

illness causing agent, Fungus, mold or mildew.” Id. at 86.

Among other things, the parties vigorously disagree

over the significance in the provision of the word “cost” as

opposed to “loss.” Cordish posits that the Contamination

Exclusion applies only to “cost” due to contamination,

“such as the rental of alternate space.” ECF 28 at 22-24.

Thus, argues Cordish, the Contamination Exclusion does

not apply to its claims because it “is seeking coverage for

the business interruption ‘loss’ measured mainly by its

revenue shortfalls.” Id. at 23. In contrast, AFM contends

that the exclusion’s reference to the “inability to use or

occupy property” unambiguously excludes losses due to

contamination caused by COVID-19, including Cordish’s

loss of income. ECF 31 at 8.

Again, starting with the plain reading of the provision,

it is clear that plaintiff’s interpretation does not hold up. In

particular, plaintiff’s focus on the word “cost” as limiting

the applicability of the entire exclusion would require the

Court to ignore other portions of the provision. See Thor,

531 F. Supp. 3d 802, 2021 U.S. Dist. LEXIS 62967, 2021

WL 1226983, at *4 (“Plaintiff’s reading of the exclusion

could tend to render certain aspects of the exclusion

meaningless.”); see also Ralph Lauren, 2021 U.S. Dist.

LEXIS 90526, 2021 WL 1904739, at *4 n.8 (citing Thor

to make the same point).

54a

Appendix B

The Policy excludes “[c]ontamination, and any cost

due to contamination.” ECF 4-2 at 49 (emphasis added).

The first two words of the exclusion—“[c]ontamination,

and”—must be given effect. Calomiris, 353 Md. at 442, 727

A.2d at 366 (noting that Maryland courts “will ordinarily

avoid interpreting contracts in a way that renders its

provisions superfluous”) (internal citation omitted); see

also Stanley v. State, 390 Md. 175, 183-84, 887 A.2d 1078,

1082-83 (2005) (explaining that the use of the word “and”

between requirements unambiguously commands that

all of the requirements must be established) Therefore,

the exclusion must be read to encompass more than just

“any cost due to contamination.” And, contamination

must mean something more than contamination-related

“costs.” Indeed, the Policy defines “contamination” as

“any condition of property due to the actual or suspected

presence of any...bacteria, virus, disease causing or illness

causing agent, fungus, mold or mildew.” ECF 4-2 at 86.

In addition, following the phrase “contamination, and

any cost due to contamination,” the provision provides

two examples of losses that fall within its purview: 1) “the

inability to use or occupy property”; and 2) “any cost of

making property safe or suitable for use or occupancy.” Id.

at 49. Plaintiff’s interpretation would render meaningless

the phrase “the inability to use or occupy property.”

Although these examples might be “illustrative, not

exclusive,” as plaintiff argues, ECF 28 at 23, that does

not render them meaningless. And, “inability to use or

occupy property” is precisely the claim for which Cordish

seeks coverage.

55a

Appendix B

In my view, regardless of any other costs that may be

excluded under the provision, the exclusion can only be

read as barring plaintiff’s claims. See Boscov’s Department

Store, Inc., v. American Guarantee & Liability Ins. Co.,

No. 5:20-CV-03672-JMG, 2021 U.S. Dist. LEXIS 122265,

2021 WL 2681591, at *9 (E.D. Pa. June 30, 2021) (finding

that identical contamination exclusion unambiguously

barred plaintiff’s business interruption claims due to

COVID-19).

V. Conclusion

In Uncork and Create, 498 F. Supp. 3d at 884, the

court aptly stated:

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 business interruption

coverage in the Policy do not provide coverage

for solely economic losses unaccompanied by

physical property damage.

See also Johnson v. Hartford Fin. Servs. Grp., Inc., 510

F. Supp. 3d 1326, 2021 WL 37573, at *7 (N.D. Ga. 2021)

(“COVID-19 hurts people, not property.”).

56a

Appendix B

For the foregoing reasons, the Motion (ECF 24)

is granted. An Order follows, consistent with this

Memorandum Opinion.

Date: August 31, 2021

/s/

Ellen L. Hollander

United States District Judge

57a

AppendixOF

C REHEARING OF

APPENDIX C — DENIAL

THE UNITED STATES COURT OF APPEALS FOR

THE FOURTH CIRCUIT, FILED JUNE 6, 2022

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 21-2055

(1:20-cv-02419-ELH)

FILED: June 6, 2022

THE CORDISH COMPANIES, INC.,

Plaintiff-Appellant,

AFFILIATED FM INSURANCE COMPANY,

Defendant-Appellee.

UNITED POLICYHOLDERS,

Amicus Supporting Appellant.

ORDER

The court denies the petition for rehearing and

rehearing en banc and motion for stay of mandate. No

judge requested a poll under Fed. R. App. P. 35 on the

petition for rehearing en banc.

58a

Appendix C

Entered at the direction of the panel: Judge Wynn

and Judge Quattlebaum acting as a quorum pursuant to

28 U.S.C. § 46(d).

For the Court

/s/ Patricia S. Connor, Clerk

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.