Insurance coverage

Companies await Maryland High Court ruling on COVID insurance coverage

The Cordish Companies, which owns Live Casino & Hotel Maryland in Hanover and about 30 other Maryland properties, says its losses from Governor Larry Hogan’s pandemic shutdown orders have exceeded tens of millions of dollars. (Submitted)

At least three Maryland companies that have lost business during the pandemic are awaiting a ruling from the state’s highest court on whether their financial hit was insured under the “physical loss or damage” coverage provisions of their insurance policies. insurance under Maryland law.

Two of the companies — Bel Air Auto Auction Inc. and The Cordish Companies Inc. — have petitions for review in the U.S. Supreme Court.

Bel Air and Cordish maintain that the 4e The United States Circuit Court of Appeals wrongfully dismissed their claim for insurance coverage without waiting for the Maryland Court of Appeals to determine whether the forced COVID-19 shutdown of their businesses constituted physical damage covered in under the State Insurance Act.

The suit by the third company, Tapestry Inc., is pending in the US District Court in Baltimore, where Judge George L. Russell III has asked the Maryland High Court to decide the tape issue.

The Court of Appeal heard arguments on September 9 and is expected to issue its decision by August 31. The deal is Tapestry Inc. v. Factory Mutual Insurance, Various. N° 1 September Quarter 2022.

Tapestry operates 15 stores in Maryland and owns several high-end brands, including Coach, Kate Spade New York and Stuart Weitzman.

In the Bel Air and Cordish cases, U.S. district court judges denied their request to ask the Maryland Court of Appeals before deciding on their own that the physical damages provision does not apply to losses virus-related financials. The 4e Circuit upheld the insurance coverage denials, saying the issue was clear and input from Maryland’s highest court was unnecessary.

In their petitions for review by the Supreme Court, Bel Air and Cordish said a Court of Appeal decision was necessary because bodily injury insurance coverage is not defined by Maryland law.

Both companies asked the Supreme Court to stay the 4e The decisions of the Circuit in their cases pending the decision of the Court of Appeals.

“The question of law before the Maryland Court of Appeals in Tapestry and in Bel Air’s appeal are substantially the same and present an issue that is solely a matter of Maryland insurance contract law,” Bel Air’s lead attorney wrote.

“While federal courts have the power to adjudicate cases based on Maryland law as to the parties before it, the fact of a federal court cannot conclusively determine questions of Maryland law that would constitute precedent binding in other cases,” added Lawrence J. Gebhardt of Gebhardt & Smith LLP in Baltimore. “Only the Maryland Court of Appeals can conclusively state what Maryland law is and cause its decision to set binding precedent in all federal or state cases based on Maryland law.”

Cordish’s lead attorney says justice demands that the Supreme Court grant the company’s request and stay the 4e Decision of the circuit.

“It would be grossly unfair for this motion to be dismissed and Cordish’s claim forever dismissed, only to see the merits of Cordish’s case upheld by the Maryland Court of Appeals within weeks, if not days,” said writes Daniel J. Healy, of Anderson Kill PC in Washington. “In this case, another litigant with exactly the same contractual rights as Cordish would be paid, but Cordish would not.”

Bel Air and Cordish insurers have each waived their right to respond to the request for review by the Companies Supreme Court, unless the judges request a response.

Applications pending in the High Court are recorded as Bel Air Auction Inc. c. Great Northern Insurance Co.no. 22-392, and The Cordish Companies Inc. v. Affiliated FM Insurance Co.No. 22-424.

In the case of Bel Air, U.S. District Judge Richard D. Bennett said in April 2021 that the insurance issue involved a simple application of “basic principles of Maryland contract law” that did not require a question. certified in the state high court.

“Simply put, this court is not persuaded that the COVID-19 virus has in any way physically altered the Bel Air Covered Properties or surrounding areas in a way that triggers plain language coverage. politics,” Bennett added. “Mere loss of use of property is not ‘physical damage’ within the meaning of Maryland law.”

Bel Air, which holds a weekly car auction, said its losses came from the cancellation of its live auctions and the closure of its on-site restaurant during stay-at-home and safer orders at the home of Governor Larry Hogan between March 2020 and summer 2021.

In Cordish’s case, U.S. District Judge Ellen L. Hollander said she agreed with Bennett. “Economic loss alone is not sufficient to trigger coverage; physical modification of the property is required,” Hollander wrote last November.

Cordish, which owns Live Casino & Hotel Maryland in Hanover and about 30 other Maryland properties, said its losses due to governor’s orders exceeded tens of millions of dollars.

The 4e Circuit upheld the district court rulings, prompting the companies to seek Supreme Court review.