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CNA Prevails in COVID-19 Insurance Dispute Before the Pennsylvania Supreme Court
- Client News
- September 26, 2024
Paul, Weiss obtained an important victory on behalf of CNA Financial Corporation before the Pennsylvania Supreme Court in an appeal regarding whether business-interruption provisions in commercial property insurance policies should be drastically expanded to cover income lost during the COVID-19 pandemic. In a unanimous decision reversing decisions issued by the state trial and intermediate appellate courts, the Supreme Court, sitting en banc, held that COVID-19 public health orders did not cause physical loss or damage for purposes of a commercial property insurance policy.
The policyholder, a dental practice in Pennsylvania, filed a claim with a CNA subsidiary for coverage of lost business following a state government-ordered shutdown in March 2020. After the claim was denied, the policyholder filed a class action in the Court of Common Pleas, Allegheny County, alleging breach of contract and seeking damages and declaratory relief. The trial court granted summary judgment in favor of the policyholder, and the Superior Court affirmed the decision in a divided opinion.
CNA appealed to the state’s highest court, which reversed. Finding the insurance policy in question unambiguous, the Supreme Court held that there are no facts in the record to suggest that the policyholder’s business property required “a physical alteration … as a result of a direct physical loss or damage necessitating repairs, rebuilding, or entirely replacing the property” in order to trigger coverage under the policy. Rather, the only loss sustained by the policyholder was “pure economic loss” from a “partial closure” due to the government-ordered COVID-19 shutdown. “That partial closure, however, had nothing to do with the physical attributes of the Covered Properties, as required by the CNA Policy for insurance coverage,” the court concluded.
Since 2020, Paul, Weiss has secured victories in over 80 trial-level dispositive motions and in over 20 federal and state appeals for CNA in business interruption cases resulting from the COVID-19 pandemic.
The Paul, Weiss team included litigation partners Christopher Boehning, Kannon Shanmugam (who argued the appeal) and David Friedman, and counsel Daniel Levi.