The court denied both parties' motions for partial judgment on the pleadings seeking clarification of the policy's contamination exclusion. Thor Equities, LLC v. Factory Mut. Ins. Co., 2021 U.S. Dist. LEXIS 62967 (S.D. N.Y. March 31, 2021).
Thor was a commercial landlord, renting properties across the country to hundreds of tenants, for use in a variety of businesses, including office space, retail stores, restaurants, and bars. When state governments began shutting down businesses and issuing stay-at-home orders in March 2020, many of Thor's tenants had to close shop and sought abatements or other accommodations. Thor alleged it suffered significant business interruption as a result of the pandemic.
When coverage was denied, Thor filed suit. The parties filed cross-motions for partial judgment on the pleadings to determine the meaning of the Contamination Exclusion. The policy barred coverage for "contamination, and any cost due to contamination including the inability to use or occupy property or any costs of making property safe or suitable for use or occupancy." Contamination was defined in the policy to include "virus." The parties agreed that the inclusion of "virus" in the definition of contamination covered COVID-19.
Thor argued that the exclusion's failure to mention any loss "due to contamination, while explicitly referencing "any cost due to contamination," indicated that the exclusion did not bar coverage for Thor's business interruption losses. The insurer, on the other hand, contended that the exclusion's mention of "inability to use or occupy property" unambiguously excluded losses due to contamination caused by COVID-19, including Thor's loss of rental income.
The court found the provision was susceptible more than one interpretation, and potentially compatible with either party's interpretation. Therefore, the exclusion was ambiguous and judgment on the pleadings as to the applicability of the exclusion was inappropriate at this stage. Both motions were denied.
