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Law360 (March 5, 2021, 5:00 PM EST ) The West Michigan Whitecaps minor league baseball team shot back at Federal Insurance Co.'s bid to strike out a lawsuit over the denial of coverage for COVID-19 losses, saying Thursday that the virus rendered its ballparks unusable last spring.
In opposition to the insurer's motion for judgment on the pleadings, team operator Whitecaps Professional Baseball Corp., or WPBC, urged a New Jersey federal court to reject the insurer's contention that the team didn't allege it had endured the "physical loss or damage" required by its policy to trigger coverage.
"Here, the Whitecaps have clearly alleged that the actual and/or threatened presence of the virus rendered their ballparks unusable for their intended function and, thus, the Whitecaps have adequately alleged physical loss or damage," the team's brief said.
The allegations pass muster under Michigan and New Jersey law, WPBC said, and pointed to "cases across the country denying insurers' motions to dismiss similar claims."
The team acknowledged that the court did allow Arch Insurance Co., a former defendant in the lawsuit, to escape coverage for the virus-cancelled seasons of former plaintiffs Everett AquaSox and Asheville Tourists' because they didn't allege the requisite property loss or damage.
But WPBC said the court should consider an Eastern District of Michigan court's recent ruling in Salon XL Color & Design Group LLC w. West Bend Mutual Insurance Co.
, in which a hair salon sued its insurer over the denial of coverage for virus-related losses.The Salon XL court ruled Feb. 4 that the salon plausibly alleged that coronavirus particles infected its premises and rendered it unusable for its intended purpose, and therefore survived a dismissal motion, according to the brief.
The Michigan cases cited by Federal Insurance involved insureds that didn't allege that the actual and/or threatened presence of the virus rendered properties unusable for their intended purposes.
The team also pointed out that at least one New Jersey court has rejected an insurer's motion to toss a case over the denial of coverage for virus-related losses, invoking a Bergen County Superior Court's August decision in Optical Services USA/CI v. Franklin Mutual Insurance Co.
The teams' July lawsuit asserted claims of breach of contract against Federal Insurance and anticipatory breach of contract against Arch Insurance, and sought a declaration against each insurer that coverage was triggered by the pandemic.
The teams alleged the pandemic, which prompted government-mandated business limitations starting around March 2020, caused the first ever shutdown of a minor league baseball season.
The Federal Insurance policy at issue provided coverage to WPBC from March 1, 2020, to March 1, 2021, according to court records. The policy required WPBC to "demonstrate that its losses constitute, were caused by, or resulted from 'direct physical loss or damage' to property," court records show.
Federal Insurance denied the team's coverage claim in May on the grounds that there was no evidence of the direct physical loss or damage to property that was required to trigger coverage.
In November, U.S. District Judge Susan D. Wigenton trimmed from the suit claims by Everett AquaSox owners 7th Inning Stretch LLC and Asheville Tourists owners DeWine Seeds Silver Dollars Baseball against Arch Insurance Co.
Judge Wigenton said in her ruling that the teams hadn't alleged the required "direct physical loss or damage to property" to trigger coverage.
An attorney for the team declined to comment Friday. Counsel for the insurer didn't immediately respond to a request for comment.
WPBC is represented by Andrew L. Sandler, Stephen M. LeBlanc and Rebecca Guiterman of Mitchell Sandler LLC and Robin L. Cohen and Orrie Levy of Cohen Ziffer Frenchman & McKenna LLP.
Federal Insurance Co. is represented by Daren S. McNally, Barbara M. Almeida, Meghan C. Goodwin and Nicholas S. Pradaxay of Clyde & Co. LLP.
The case is 7th Inning Stretch LLC d/b/a Everett AquaSox et al. v. Arch Insurance Co. et al., case number 2:20-cv-08161, in the U.S. District Court for the District of New Jersey.
--Additional reporting by Mike Curley. Editing by Stephen Berg.
For a reprint of this article, please contact reprints@law360.com.
