By Matthew Santoni

Law360 (March 31, 2021, 5:18 PM EDT ) Erie Insurance Exchange urged a Pennsylvania state judge Wednesday to treat the state's pandemic-related closure orders like indoor smoking bans, mandatory last-call times or noise ordinances, and bar a Pittsburgh tavern from making a claim for lost income because of state-imposed limits.

In video arguments Wednesday, Robert T. Horst of Timoney Knox, representing Erie, told Allegheny County Court of Common Pleas Judge Christine Ward that the company running the Grant Street Tavern in downtown Pittsburgh should be excluded from seeking coverage for business lost to the government-mandated coronavirus closures the way it would be excluded from seeking coverage for patrons who left due to an indoor smoking ban or local limitations on live music.

"They could claim 'loss of use,' Horst said. "But if this policyholder had submitted that claim, it would have been denied. … If this claim had been submitted before the pandemic, it would have been dismissed out of hand."

Erie had asked the court for judgment on the pleadings denying coverage for the business's losses, while Macmiles LLC, operating as the Grant Street Tavern, had sought summary judgment in favor of coverage.

Horst said the loss of use of the property due to laws or government ordinances was not covered under the tavern's policy, and the coronavirus closure orders were no different from other laws limiting how a business can operate. The loss of use of a property due to the government orders was not the same as physical loss, he argued.

"The trigger is whether the plaintiff has demonstrated direct 'physical loss of or damage to' the insured property," he said. "The plaintiffs … ask you to insert words into the policy: 'of use' after 'loss.'"

Judge Ward had recently found in favor of coverage for a Pennsylvania dental practice, ruling that the pandemic and its associated closures were indeed a "direct" and "physical" loss of use of insured property, and said language in its CNA Financial Corp. insurance policy did not limit coverage to actual, physical damage. But other courts in Pennsylvania and elsewhere have made different rulings, with the majority going in insurers' favor, including courts in New York, North Carolina and Washington, D.C., that had ruled for Erie, Horst said.

Grant Street Tavern attorney John P. Goodrich of Jack Goodrich & Associates said the judge should essentially repeat her ruling for the tavern and Erie, arguing Wednesday that Erie's policy language and exemptions were even more liberal than CNA's.

If Judge Ward were consistent with her ruling in the earlier case, the burden shifted to Erie to prove that an exemption applied, Goodrich said. And he said the law-and-ordinance exemption Erie cited was intended to deny coverage for unauthorized businesses, like an unlicensed basement hair salon or an adult entertainment business opening in an area where it wasn't allowed by local zoning.

"This is not a law or ordinance, it is a natural disaster, one we've not had since 1918," Goodrich said.

Judge Ward said she would take the arguments under consideration.

Macmiles LLC/Grant Street Tavern is represented by John P. Goodrich and Lauren Nichols of Jack Goodrich & Associates PC, James C. Haggerty of Haggerty Goldberg Schleifer & Kupersmith PC, Jonathan Shub and Kevin Laukaitis of Shub Law Firm LLC and Scott B. Cooper of Schmidt Kramer PC.

Erie is represented by Robert T. Horst, Robert M. Runyon III and Matthew B. Malamud of Timoney Knox LLC, Richard W. DiBella, Tara L. Maczuzak and Jason H. Peck of DiBella Geer McAllister Best PC and William Pietragallo II of Pietragallo Gordon Alfano Bosick & Raspanti LLP.

The case is Macmiles v. Erie Insurance Exchange, case number GD-20-007753, in the Court of Common Pleas for Allegheny County, Pennsylvania.

--Editing by Bruce Goldman.

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