Paradigm Care & Enrichment Center, LLC v. West Bend Mutual Ins. Co.

Dist. Ct. did not err in granting defendant-insurance company’s motion to dismiss plaintiff-insured’s action seeking benefits under defendant’s all-risk commercial property policy, where plaintiff’s claim was based on lost business income arising out of COVID-19 pandemic, under circumstances where Governor Pritzker and Michigan Gov. Whitmer entered orders that required all persons to stay home except essential workers and ordered plaintiff’s child-care facilities to remain closed except under circumstances where plaintiff could obtain special license to take care of essential workers’ children. Relevant provisions of defendant’s policy required plaintiff to show that plaintiff incurred “direct physical loss of or damages to its property,” and plaintiff’s complaint did not plausibly allege such direct physical loss, where: (1) plaintiff only asserted that COVID-19 virus was present in air of plaintiff’s facilities and had attached to surface of its property; (2) virus itself ultimately leaves property physically unaltered; and (3) plaintiff did not assert that its facilities were physically altered, such that said facilities had to be repaired, rebuilt or replaced. Also, plaintiff did not qualify for benefits under communicable disease section of policy, where plaintiff failed to link shutdown order with communicable disease outbreak at plaintiff’s facilities.