A Nj state court has refused to dismiss a COVID-19 business interruption case filed with a university against Factory Mutual Insurance Co., stating the institution has stated in their complaint herpes has caused physical loss “of the kind allegedly taught in policy.”
Rowan University, in Glassboro, Nj, that has 19,600 students, had sought coverage from Factory Mutual under its all-risk commercial property insurance policy, which includes communicable disease response coverage, according to the complaint in Rowan University v. Factory Mutual Co., which charges the insurer with breach of contract.
In denying Factory Mutual's motion to dismiss the complaint, the three-page ruling through the Superior Court of recent Jersey in Woodbury states that under a 1989 New Jersey Supreme Court ruling, Printing Mart v. Sharp Elecs. Corp., a complaint shouldn't be dismissed if your “complaint's facts advise a viable reason for action.”
The ruling says paragraphs within the complaint “all allege physical loss or damage covered,” that COVID-19 is a physical substance and “properly alleges COVID-19's cycle of infection.”
Factory Mutual “attempts to guide the Court to some higher standard of pleading than the usual Motion to Dismiss requires,” the ruling said. “The Court finds Plaintiff must only adequately plead breach of contract to survive this motion” and “is not required to prove every single fact alleged to the Court,” it said, in denying Factory Mutual's motion to dismiss the case.
Factory Mutual said in a statement it “values the long-term relationships we have with this policyholders and we are proud to become leading the for claims service. It is unfortunate when legal matters arise because we strongly believe our insurance coverage is absolutely clear on the policy provided.”
Rowan University's attorneys did not react to a request for comment.
Policyholder attorney Scott D. Greenspan, senior counsel with Pillsbury Winthrop Shaw Pittman LLP in New York, who is not active in the case, said the ruling “is an affirmation that New Jersey's liberal pleading standard as enunciated” through the Printing Mart decision.
“It's an indication to Nj judges that you can't determine facts inside a motion to dismiss under Printing Mart. That comes later along the way after discovery is taken.”
It “sets the table” for a decision by the state appeals court, Mr. Greenspan said, noting other New Jersey state courts have ruled for both and against policyholders in comparable cases.
Mr. Greenspan also said hello “shows the sharp dichotomy between federal and state courts” on the COVID-19 business interruption issue. All federal courts which have issued ruling around the issue to date have ruled against policyholders.
Earlier this month, the government appeals court in Atlanta issued another pro-insurer ruling in a COVID-19 business interruption case, while a New Mexico state court refused an insurer's motion to dismiss another case.
