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Law360 (March 26, 2021, 8:51 PM EDT ) A New Jersey federal judge on Friday tossed the remaining claim in a lawsuit brought by minor league baseball teams over the denial of insurance claims for coronavirus-related business losses, ruling that the pandemic didn't cause the property loss or damage that would trigger business interruption coverage.
U.S. District Judge Susan G. Wigenton granted Federal Insurance Co.'s motion for judgment on the pleadings, rejecting arguments by West Michigan Whitecaps operator Whitecaps Professional Baseball Corp. that the presence of the virus in the team's ballpark rendered it unusable for its intended purpose.
"Even if true, the presence of a virus that harms humans but does not physically alter structures does not constitute coverable property loss or damage," Judge Wigenton wrote in a letter opinion, citing case law to that effect.
"Although this court is sympathetic to the very real losses businesses have suffered during this pandemic, it cannot grant plaintiff the relief it seeks," the opinion said.
The opinion echoed the same reasoning the jurist used in November when she tossed coverage denial claims against Arch Insurance Co. by Everett AquaSox owners, 7th Inning Stretch LLC, and Asheville Tourists owners, DeWine Seeds Silver Dollars Baseball.
Citing the court's dismissal of Arch from the lawsuit, Federal Insurance filed a motion for judgment on the pleadings on Feb. 26.
In opposition, WPBC insisted that it meets the property loss or damage requirement, arguing in a brief earlier this month that the allegations pass muster under Michigan and New Jersey law, and that courts across the country have been denying insurers' motions to dismiss similar claims.
The teams alleged that the pandemic, which prompted government-mandated business limitations starting around March 2020, caused the first 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, and 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.
Counsel for the parties didn't immediately respond to requests 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 dba 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 Regan Estes.
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