Great Northern said Bel Air Auto Auction Inc.'s COVID-19 business interruption coverage suit was "neither novel nor complex" and the Fourth Circuit does not need to burden Maryland's high court with extra tasks when the appellate court itself is well qualified to determine the matter.
"This case is not the rare exception requiring special guidance from a state high court. Just the opposite: as the district court observed, every issue in the case can be resolved through 'a straightforward application of Maryland contract law,'" it said.
In April, U.S. District Judge Richard D. Bennett ruled in favor of Great Northern, saying Bel Air failed to allege COVID-19 physically damaged its property, and "loss of use" of property is not physical damage under Maryland law. The judge pointed out that the auto business never fully lost the use of and access to its facilities, as government orders allowed car dealerships to remain open as essential businesses during the pandemic.
The judge also refused the auction company's request to certify whether COVID-19 causes property loss covered by its policy under Maryland law. Although Maryland courts have not ruled on the meaning of "direct physical loss or damage" in commercial property policies, Maryland's contract law suffices to resolve the issue, Judge Bennett said. Bel Air subsequently appealed.
"As demonstrated by over 400 decisions from other courts in COVID-19 insurance coverage cases interpreting similar or identical policy language and overwhelmingly ruling for insurers, the task before this Court is neither novel, nor complex, nor unprecedented," Great Northern said on Thursday.
The carrier asked the Fourth Circuit to side with the lower court's decision that there is no need to bother Maryland's state court with the auto company's COVID-19 related insurance question. "This Court regularly resolves contract disputes under state law without burdening the state high court with questions on simple matters of contract language," the carrier said.
According to court records, Bel Air of Harford County, Maryland, has said it typically works on over 100,000 cars a year through assignments with car dealers and offers weekly auto auctions for private and public companies and governmental organizations. But it had to stop in-person car showing and live bidding because of government orders in March 2020 and was forced to close its food services at the auction sites as well.
Representatives for the parties could not be immediately reached for comment on Thursday.
Bel Air is represented by Lawrence J. Gebhardt of Gebhardt and Smith LLP.
Great Northern is represented by Gabriela Richeimer, Daren McNally and Matthew Addison Dent Draper of Clyde & Co US LLP.
Bel Air Auto Auction, Inc. v. Great Northern Insurance Company, case number 21-1493, in the U.S. Court of Appeals for the Fourth Circuit.
--Editing by Amy Rowe.
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