THE UNITED STATES DISTRICT COURT 

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA 

ANTHONY DECARLI DBA ANTHONY 

DECARLI, DMD, DECARLI DENTRISTRY, 

Plaintiff, 

V. 

HARLEYS~LLEPREFERRED 

INSURANCE COMPANY, NATIONWIDE 

MUTUAL INSURANCE COMPANY, 

Defendants. 

3:22-CV-01183 

(JUDGE MARIANI) 

MEMORANDUM OPINION 

I. INTRODUCTION AND PROCEDURAL HISTORY 

Plaintiff filed this civil action for declaratory judgment and breach of contract in the 

Court of Common Pleas of Lackawanna County on July 22, 2022. (Doc. 1-1.) Defendants 

Nationwide and Harleysville removed the action to this Court on July 29, 2022, on the basis 

of diversity of citizenship. (Doc. 1.) Defendants now move for dismissal of the Complaint. 

(See Doc. 3.) 

II. STANDARD OF REVIEW 

A complaint must be dismissed under Rule 12(b )(6) if it does not allege "enough 

facts to state a claim to relief that is plausible on its face." Bell At/. Corp. v. Twombly, 550 

U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). The plaintiff must assert "factual 

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content that allows the court to draw the reasonable inference that the defendant is liable for 

the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed. 

2d 868 (2009). 

"Though a complaint 'does not need detailed factual allegations, ... a formulaic 

recitation of the elements of a cause of action will not do."' Oe/Rio-Mocci v. Connolly Prop. 

Inc., 672 F.3d 241, 245 (3d Cir. 2012) (citing Twombly, 550 U.S. at 555). In other words, 

"factual allegations must be enough to raise a right to relief above the speculative level." 

Covington v. Int'/ Ass'n of Approved Basketball Officials, 710 F.3d 114, 118 (3d Cir. 2013) 

(internal citations and quotation marks omitted). A court "take[s] as true all the factual 

allegations in the Complaint and the reasonable inferences that can be drawn from those 

facts, but .. . disregard[s] legal conclusions and threadbare recitals of the elements of a 

cause of action, supported by mere conclusory statements." Ethypharm S.A. France v. 

Abbott Laboratories, 707 F.3d 223, 231 n.14 (3d Cir. 2013) (internal citations and quotation 

marks omitted). 

Twombly and Iqbal require [a district court] to take the following three steps to 

determine the sufficiency of a complaint: First, the court must take note of the 

elements a plaintiff must plead to state a claim. Second, the court should 

identify allegations that, because they are no more than conclusions, are not 

entitled to the assumption of truth. Finally, where there are well-pleaded factual 

allegations, a court should assume their veracity and then determine whether 

they plausibly give rise to an entitlement for relief. 

Connelly v. Steel Valley Sch. Dist. , 706 F.3d 209, 212 (3d Cir. 2013). "[W]here the wellpleaded facts do not permit the court to infer more than the mere possibility of misconduct, 

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the complaint has alleged-but it has not show[n]-that the pleader is entitled to relief." 

Iqbal, 556 U.S. at 679 (internal citations and quotation marks omitted). This "plausibility" 

determination will be a "context-specific task that requires the reviewing court to draw on its 

judicial experience and common sense." Id. 

In considering a Rule 12(b)(6) motion to dismiss, the Court generally relies on the 

complaint, attached exhibits, and matters of public record. See Sands v. McCormick, 502 

F.3d 263 (3d Cir. 2007). The Court may also consider "undisputedly authentic document[s] 

that a defendant attaches as an exhibit to a motion to dismiss if the plaintiffs claims are 

based on the [attached] documents." Pension Benefit Guar. Corp. v. White Consol. Indus., 

998 F.2d 1192, 1196 (3d Cir. 1993). Moreover, "documents whose contents are alleged in 

the complaint and whose authenticity no party questions, but which are not physically 

attached to the pleading, may be considered." Pryor v. Nat'/ Collegiate Athletic Ass'n, 288 

F.3d 548, 560 (3d Cir. 2002). However, the Court may not rely on other parts of the record 

in determining a motion to dismiss under Rule 12(b)(6). See Jordan v. Fox, Rothschild, 

O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994). 

Ill. . ANALYSIS 

Plaintiff alleges that it is entitled to coverage under its insurance policy as a result of 

the closure of its dentistry practice due to an emergency disaster declaration on March 6, 

2020, by Pennsylvania Governor Tom Wolf and the issuance of an order by the Governor 

on March 19, 2020, requiring that non-life sustaining businesses cease operations and 

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close physical locations until further notice. (Campi., Doc. 1-1 at 27-31.) In their Brief in 

Support of their Motion to Dismiss (Doc. 4 at 12), Defendants note that the applicable 

insuring agreement stipulates that "[the insurer] will pay for direct physical loss of or damage 

to Covered Property at the premises ... caused by or resulting from any Covered Cause of 

Loss." (Businessowners Coverage Form; Doc. 1-1 at 113.) A Covered Cause of Loss is 

defined as "risks of direct physical loss unless the loss is excluded or limited. (Id. at 114.) 

The Policy confers coverage for "actual loss of 'business income' you sustain due to the 

necessary suspension of your 'operations' during the 'period of restoration." (Id. at 118.) 

"The suspension must be caused by direct physical loss of or damage to the property ... ". 

(Id.) 

The Court finds that the Third Circuit's recent decision in Wilson v. US/ Insurance 

Service LLC, 57 F.4th 131 (3rd Cir. 2023) governs this case. In Wilson, the Third Circuit 

predicted how the Supreme Court of Pennsylvania would rule as to the coverage of various 

insurance policies that are akin to the insurance policy at issue in this case: 

We predict how the Supreme Courts of Pennsylvania and New Jersey would 

decide the issues before us and hold that the loss of use of a property's 

intended business purpose is not a physical loss of property covered by the 

businesses' insurance policies. Because the policies do not cover the 

businesses' losses, we need not reach the issue of whether the virus exclusions 

or any other exclusions apply. We will therefore affirm the judgments and 

orders of the District Courts. 

Central to this challenge is whether the businesses' inability to use their 

properties for their intended business purposes constitutes "physical loss of" 

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property as that phrase is used in the policies. Predicting how the Supreme 

Courts of Pennsylvania and New Jersey would decide this issue and following 

our decision in Port Authority of New York and New Jersey v. Affiliated FM 

Insurance Company, 311 F.3d 226 (3d Cir. 2002), we hold that it does not. 

Wilson, 57 F.4th at 138, 140. 

In light of the Third Circuit's decision in Wilson, 57 F .4th 131, Plaintiffs contention 

that it sustained a physical loss of or damage to' its property because of the Closure Orders 

is without merit.1 Plaintiff specifically alleges that it "sustained a 'physical loss of or damage 

to' its property because of the Closure Orders which excluded Plaintiff from using its 

property." (Doc 9 at 10.) To establish coverage under Plaintiffs insurance policy, Plaintiff 

must show that their operations were suspended because of "direct physical loss of or 

damage to" its property. In Wilson, the Third Circuit examined the plain meaning of "physical 

loss of or damage," and concluded that: 

Physical damage to property therefore typically means "'a distinct, 

demonstrable, and physical alteration' of its structure." Port Auth. of N.Y. & N.J., 

311 F.3d at 235 (quoting 10 Couch on Ins. § 148.46 (3d ed. 1998)). And 

1 Similarly, Plaintiff's contention that dismissal is not warranted because it successfully alleges that 

it is entitled to coverage under the insurance policy's "period of restoration" provisions is without merit. 

(Doc. 9 at 14-15.) In Wilson, 57 F.4th 131, the Third Circuit addressed these restoration provisions and 

concluded that: 

Other terms in the policies support our conclusion that loss of use must involve some 

physicality. For instance, coverage exists only during the "period of restoration," which ends 

when the property should be "repaired, rebuilt or replaced" or is moved to a new location. 

[ .. . ] [T]here is nothing to repair, rebuild, or replace in any of these cases. The businesses' 

loss of use would be - and was - cured by an end to the closure orders, and not by the 

rebuilding or repairing of any property. We must read the policies as a whole and give effect 

to the whole policy, including the "period of restoration" language. 

Wilson, 57 F.4th at 143. 

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physical loss of property means a failure to maintain tangible possession of the 

structure. 

In Port Authority, however, we explained that "[p]hysical damage to a building 

as an entity by sources unnoticeable to the naked eye must meet a higher 

threshold." Id. We held that in the case of asbestos contamination, physical 

loss or damage to property occurred 

only if an actual release of asbestos fibers from asbestos 

containing materials has resulted in contamination of the 

property such that its function is nearly eliminated or destroyed, 

or the structure is made useless or uninhabitable, or if there 

exists an imminent threat of the release of a quantity of asbestos 

fibers that would cause such loss of utility. 

Id. at 236 (emphasis added). 

We applied New Jersey and New York law in Port Authority, but nothing unique 

about those states' laws dictated the result. For that reason, and because there 

is no substantive law in Pennsylvania at odds with our decision, we predict that 

the Supreme Court of Pennsylvania would adopt a similar principle as Port 

Authority and hold that Port Authority applies in a case where sources 

unnoticeable to the naked eye - here, the coronavirus and resultant closure 

orders - have allegedly reduced the use of the property to a substantial 

degree. This standard ensures that an insured will have lost tangible 

possession of property sufficient to constitute physical loss or damage. 

The businesses therefore must show that the functionalities of their properties 

were nearly eliminated or destroyed, that the structures were made useless or 

uninhabitable, or that there was an imminent risk of either of those things 

happening. 

The businesses argue that their loss of the ability to use their properties for 

their intended business purposes meets this standard. We disagree. The 

businesses' argument is completely divorced from the physical condition of the 

premises. The businesses lost the ability to use their properties for their 

intended business purposes because the governors of the states in which they 

operate issued orders closing or limiting the activities of nonessential 

businesses, not because there was anything wrong with their properties. The 

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properties were not destroyed in whole or in part; their structures remained 

intact and functional. 

Wilson, 57 F.4th at 142. 

Because Plaintiff, like those in Wilson, 57 F.4th 131, alleges that its loss of the 

ability to use its property for its intended business purpose constitutes "physical loss or 

damage to" its property, the Court concludes that Plaintiff does not allege sufficient "facts to 

state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. Therefore, 

Defendants' Motion to Dismiss (Doc. 3) will be granted. 

IV. CONCLUSION 

For the reasons set forth herein, Defendants' Motion to Dismiss (Doc. 3) will be 

granted.2 

Robert 1 

United States District Judge 

2 Because the Court finds that granting leave to amend would be futile in light of Wilson, 57 F.4th 

131 , Plaintiffs Complaint (Doc. 1-1) will be dismissed with prejudice. 

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