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Law360 (March 19, 2021, 4:04 PM EDT ) A Michigan federal judge on Friday tossed a winery's lawsuit seeking to force The Cincinnati Insurance Co. to cover its financial losses stemming from the pandemic, following recent jurist consensus that the coronavirus didn't cause any physical loss or damage.
U.S. District Judge Hala Y. Jarbou dismissed the coverage lawsuit brought by St. Julian Wine Co. Inc., finding that while the winery and distillery suffered economic losses due to the presence of COVID-19 in the community and lockdown orders meant to slow the spread of the virus, those obstacles did not lead to physical loss or damage.
Without physical, or tangible, damage to property, there is no coverage available under St. Julian's policy with Cincinnati Insurance, the judge said.
"The coronavirus has not physically altered any property and St. Julian does not plausibly allege that its property became unusable," Judge Jarbou said. "Thus, St. Julian did not suffer a 'loss' as defined by the policy."
The judge also rejected St. Julian's argument that there is a lack of a "virus exclusion" in the policy, saying that absence of such an exclusion doesn't matter if the winery doesn't first allege some sort of physical loss or damage.
Judge Jarbou said the policy language is unambiguous and granted Cincinnati Insurance's motion to dismiss the suit.
In a statement to Law360 on Friday, a spokesperson for Cincinnati Insurance said it agrees with the judge's decision that the coronavirus doesn't constitute a direct physical loss, which is a prerequisite for coverage.
"We recognize the challenges facing many small businesses," the spokesperson said. "We have been, and continue to be, committed to doing our part to support the families and businesses in our agents' communities, including helping them to proactively manage risks and promptly paying covered claims."
Counsel for St. Julian did not immediately respond to a request for comment.
Judges around the country for the most part have tossed coronavirus-related insurance coverage cases, with some cases reaching the appellate realm.
Earlier this month, a Kentucky outdoor sports gear store lost its bid for coverage after a federal judge said the policy's virus exclusion clearly states the insurer won't pay for any losses or damages caused by a virus.
In February, a Florida federal judge tossed a Miami restaurant's suit, saying the "weight of federal court rulings is against" the restaurant's argument that its inability to operate because of the effects of the coronavirus and government responses constitute physical losses under its insurance policy.
A New York state judge ruled that a Great American Insurance unit doesn't have to cover a movie theater's losses, finding that the direct physical loss or damage language at issue in the policy requires a tangible physical alteration to the policyholder's property, which did not occur.
But two Philadelphia federal judges issued differing opinions on a pair of coverage lawsuits, with one judge ruling that a policy's "virus exclusion" bars coverage and the other deferring the issue to state courts.
Last month, Los Angeles restaurant Plan Check asked the Ninth Circuit to reverse a district court's decision to toss its proposed class action seeking coverage from AmGuard Insurance Co. for losses stemming from COVID-19 shutdown orders.
And a group of minor league baseball teams sought to revive their suit against their three Nationwide insurers, after an Arizona federal judge granted a bid by National Casualty Co., Scottsdale Indemnity Co. and Scottsdale Insurance Co. to dismiss the case.
St. Julian is represented by John A. Hubbard and Eric A. Parzianello of Hubbard Snitchler & Parzianello PLC and M. Blake Heath.
Cincinnati Insurance is represented by Dennis M. Dolan of Litchfield Cavo LLP and Bradford S. Moyer of Plunkett Cooney PC.
The case is St. Julian Wine Co. Inc. v. The Cincinnati Insurance Co., case number 1:20-cv-00374, in the U.S. District Court for the Western District of Michigan.
--Additional reporting by Jeff Sistrunk, Matthew Santoni, Daphne Zhang and Mike Curley. Editing by Ellen Johnson.
Update: This story has been updated with a comment from Cincinnati Insurance.
For a reprint of this article, please contact reprints@law360.com.
