Following its earlier decision, the federal district court rejected the insurer's motion to dismiss claims for business interruption due to closure orders caused by COVID-19. Blue Spring Dental Care, LLC v. Owners Ins. Co., 2020 U.S. Dist. LEXIS 172639 (W.D. Mo. Sept. 21, 2020).
Plaintiffs were four dental clinics impacted by Stay at Home Orders issued by state and local officials. Plaintiffs alleged that COVID-19 and the orders forced them to suspend most of their business operations and deprived them of the use of their dental clinics, thus causing them to suffer "a direct physical loss."
Plaintiffs submitted claims for business interruption to Owners, who denied the claims. Plaintiffs sued and Owners moved to dismiss.
The court relied upon its prior decision in Studio 417, Inc. v. Cincinnati Ins. Co. [post here]. As in Studio 417, plaintiffs adequately pled a claim for direct physical loss. They alleged that "it is likely customers to the insured properties over the recent month were infected with the coronavirus," they "suspended operations due to COVID-19 to prevent physical damage to the premises by the presence or proliferation of the virus and the physical harm it could cause persons present there" and that "customers cannot access the property due to the Stay at Home Orders for fear of being infected with or spreading COVID-19." Plaintiffs plausibly alleged that COVID-19 physically attached itself to their dental clinics, thereby depriving them of the possession and use of the insured properties.
Nevertheless, Owners contended that even if plaintiffs could demonstrate direct physical loss, they did not suspend their dental clinic operations because they continued to see patients on an emergency basis. The court found that plaintiffs' allegations that three of their four dental clinics totally ceased all clinical operations satisfied their pleading burden.
The court also found plaintiffs adequately pled claims for Extra Expense and Civil Authority. Owner's motion to dismiss was denied in its entirety.
