Insurance Law

Dist. Ct. did not err in granting defendant-insurance company’s motion for summary judgment, where Dist. Ct. dismissed instant lawsuit, which was filed beyond applicable two-year period set forth in defendant’s policy. While parties negotiated costs of repair throughout relevant two-year period and defendant issued several checks to pay for costs to replace damaged siding on plaintiff’s condominium buildings, record further showed that defendant denied plaintiff’s final request to replace even undamaged sides of condominium buildings after expiration of applicable two-year period for bringing any legal action. Fact that defendant gave last denial outside applicable two-year period did not require different result, since defendant had fully-complied with terms of policy prior to said denial. Ct. rejected plaintiff’s contention that defendant was required to warn that it might rely on policy’s lawsuit limitation, and that failure to do so constituted waiver of said limitation.

Dist. Ct. did not err in granting plaintiff-insurance company’s motion for summary judgment in action seeking declaration that it was not required to either defend or indemnify defendant-insured in underlying wrongful death action concerning infant whom insured was providing day care services. Record showed that: (1) defendant received $25 per day for generally 4 to 5 days per week for providing home day care services for infant; (2) plaintiff’s policy contained exclusion for bodily injury arising out of or connection with business engaged in by insured; and (3) policy further defined “business” under circumstances where insured regularly provided home day care to persons other than insureds and received monetary compensation for such services. Dist. Ct. could properly find that exclusion in policy precluded coverage for underlying wrongful death lawsuit where: (1) language of business exclusion covered circumstances of defendant’s business as home day care provider; (2) defendant received regular monetary compensation for her services; and (3) infant’s death arose out of services provided by defendant as home day care provider. Fact that during final two weeks of infant’s life defendant watched infant less frequently did not require different result.

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.

Dist. Ct. did not err in dismissing plaintiff-insured’s action, seeking declaration that defendant-insurance company’s policy covered claims for lost business that arose out of Governor of North Carolina’s imposition of state-wide closures of plaintiff’s movie theaters in response to COVID-19 pandemic. Dist. Ct. could properly find that instant losses were not covered under defendant’s policy, where plaintiff failed to allege any physical alteration or damages to its property. Moreover, Ct. of Appeals found that mere loss of use of property due to COVID-related closures does not constitute direct physical loss as required under policy when said losses were not accompanied by any physical alteration to property. Ct. also rejected plaintiff’s argument that mere presence of virus on surfaces of plaintiff’s property constituted physical alteration of its property.

Dist. Ct. erred in granting plaintiff-insured’s motion for summary judgment in action under ERISA, seeking declaration that plaintiff was entitled to larger monthly disability benefit under defendant’s group long-term disability insurance policy, under circumstances where plaintiff had heart attack on August 31, 2014 and suffered series of daily physical setbacks that required daily hospitalizations that led up to plaintiff’s application for disability benefits. While plaintiff asserted that start date for his disability was sometime after September 1, 2014, when he received raise in salary that would translate into higher disability benefit, defendant determined that plaintiff was entitled to only lower benefit because onset of his disability started on August 31, 2014, when he incurred his heart attack. Dist. Ct. agreed with plaintiff based, in part, on “active work” definition in policy that suggested that plaintiff could not have become disabled until sometime after September 2, 2014, due to Labor Day holiday that occurred on September 1, 2014 and due to fact that plaintiff was at work on August 31, 2014. Ct. of Appeals, though, found that defendant’s plan administer's contrary interpretation of policy language was entitled to deference and was only subject to stringent arbitrary and capricious review standard, where policy granted to plan administrator discretionary authority to administrate plaintiff’s claim. Moreover, administrator’s construction of policy was not arbitrary and fell within range of reasonable interpretations, where record showed that following his heart attack, plaintiff reviewed and responded to certain work-related emails, but did not perform full duties of his occupation up to date of his application.