NJ District Court issues dismissal of Plaintiff’s suit for insurance claim

Garmany of Red Bank, Inc. v. Harleysville Ins. Co., U.S. District Court for New Jersey, Chief Judge Wolfson. Defendants moved to dismiss plaintiff’s insurance claim based on COVID-19 losses. Plaintiff clothing store had a general liability policy with defendant insurer that included business interruption and civil authority coverage and a virus exclusion. Plaintiff made a claim based on governor’s state of emergency COVID-19 order. Defendants denied the claim because there was no direct physical loss or damage to covered property at an insured premise, the suspension of operations was not caused by a direct physical loss or damage to property other than an insured premises and COVID-19 was not a covered cause of loss based on the virus exclusion. Plaintiff argued the executive orders prohibited access to the insured premises and the virus exclusion was void and unenforceable as violative of New Jersey public policy. Defendant removed the action to federal court. Plaintiff argued the executive orders, not COVID-19, were the proximate cause of its losses. Court found the virus exclusion applied to all coverage under the policy and excluded losses cause “directly or indirectly” by a virus. Court found it undeniable the Executive Orders were issued because of the virus and plaintiff did not demonstrate the virus exclusion was contrary to public policy or void under the principles of regulatory estoppel. The decision was filed on March 18, 2021.