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Law360 (September 30, 2020, 9:45 PM EDT ) Zurich American Insurance Co. urged a Kansas federal judge to toss a proposed class action from a Midwestern college seeking COVID-19 related coverage of its $100 million policy, arguing that the school failed to allege physical damage or the virus ever being present on its campus.
Zurich said Tuesday that Benedictine College of Atchison, Kansas, made an "unsupported conclusory allegation" that its millions in financial losses because of COVID-19 constitute physical damage, and failed to show it had to repair or replace any properties.
"Benedictine does not even allege that the virus was present on campus; it only speculates that the virus's presence was 'more likely than not,'" the carrier said. "Like numerous other insureds across the country, Benedictine has failed to plausibly allege physical loss or damage."
The insurer said that even if COVID-19 existed on Benedictine properties, the policy's contamination exclusion expressly bars coverage for virus loss. The government closure orders were issued to curb the spread of the virus but never specifically required the college to decontaminate its properties, so the policy's decontamination cost provision will not apply, Zurich added.
Benedictine, which serves over 2,300 students, hit Zurich with a proposed class action in July, alleging that the carrier said in May that its $100 million policy does not cover pandemic-related losses. The college said it has suffered significant economic losses from shutting down campus activities and dorms. Benedictine refunded over $1 million in room and board fees to students, according to its proposed class action.
On Tuesday, Zurich said the school is trying to stretch its property insurance policy to cover financial losses because of the paramedic, and this court should follow "the overwhelming majority of" rulings across the country that have dismissed such claims.
The insurer said Benedictine is seeking to override the policy's virus exclusion by claiming that a Louisiana state amendatory endorsement applies to its alleged losses from closing its campus in Kansas. But the endorsement only applies to properties in Louisiana, not Kansas, Zurich said.
"As many courts have held, state-specific endorsements apply only to property in the state at issue. There is no basis to apply a Louisiana endorsement here given that the insured property is in Kansas," Zurich said in the dismissal motion.
Benedictine previously argued that although its policy excludes "contamination due to the presence of virus," the policy's "amendatory endorsement" specifically cut the word "virus" from the definition of "contamination" and that of "contaminant."
Additionally, the policy's decontamination costs coverage only applies when a "law or ordinance regulating contamination" requires the policyholder to incur a cost to decontaminate or remove a property, Zurich said. But the government closure orders never required the college to decontaminate its campus and facilities, it added.
Because the orders were not carried out as a result of direct physical loss or damage on the college's property, the policy's civil authority coverage would not apply either, Zurich said.
Representatives from the parties could not be immediately reached for comment.
Benedictine is represented by Patrick J. Stueve, Bradley Wilders, Todd M. McGuire, Abby McClellan and Christopher Curtis Shank of Stueve Siegel Hanson LLP, John J. Schirger, Joseph M. Feierabend and Matthew W. Lytle of Miller Schirger LLC, Dawn Marie Parsons, Richard F. Lombardo, Michael Barzee and Rachael D. Longhofer of Shaffer Lombardo Shurin PC, and J. Kent Emison of Langdon & Emison — Lexington.
Zurich is represented by Bradley Joseph LaForge of Hite, Fanning & Honeyman LLP, Bronwyn F. Pollock, Douglas A. Smith, Evan T. Tager, Archis A. Parasharami and Debra Bogo-Ernst of Mayer Brown LLP, and Patrick Florian Hofer and Gabriela Richeimer of Clyde & Co. US LLP.
The case is Benedictine College v. Zurich American Insurance Co., case number 2:20-cv-02361, in the U.S. District Court for the District of Kansas.
--Editing by Amy Rowe.
For a reprint of this article, please contact reprints@law360.com.
