J-E01001-22

2022 PA Super 203

MACMILES, LLC D/B/A GRANT STREET 

TAVERN

IN THE SUPERIOR COURT

OF

PENNSYLVANIA

Appellee

v.

ERIE INSURANCE EXCHANGE

Appellant No. 1100 WDA 2021

Appeal from the Order Entered May 25, 2021

In the Court of Common Pleas of Allegheny County

Civil Division at No: GD-20-007753

BEFORE: PANELLA, P.J., BENDER, P.J.E., BOWES, J., LAZARUS, J., 

STABILE, J., KUNSELMAN, J., NICHOLS, J., McLAUGHLIN, J., and 

KING, J.

OPINION BY STABILE, J.: FILED: NOVEMBER 30, 2022

Appellant, Erie Insurance Exchange (“Erie”), appeals from the May 25, 

2021 order granting summary judgment in favor of Appellee, MacMiles, LLC 

d/b/a/ Grant Street Tavern (“MacMiles”) and denying its motion for judgment 

on the pleadings. MacMiles owns and operates the Grant Street Tavern in 

Pittsburgh Pennsylvania. Like many similarly situated parties, MacMiles 

suffered a significant disruption of its business activity during the Covid-19 

pandemic. And like many similarly situated parties, MacMiles believed its 

economic losses due to the loss of use of its business premises were covered 

under its commercial property insurance. Erie, like many other insurers who 

have issued policies with substantially similar terms, denied the claim because 
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MacMiles’ commercial property did not suffer any physical damage. This issue 

has made its way through many of our nation’s federal and state courts, but 

it is an issue of first impression for this Court. Upon review, we reach the 

same result as the near-universal majority of courts to have addressed this 

issue: the policy does not cover mere loss of use of commercial property 

unaccompanied by physical alteration or other condition immanent in the

property that renders the property itself unusable or uninhabitable. We 

therefore reverse the trial court's grant of summary judgment in favor of 

MacMiles and direct that judgment on the pleadings be granted in favor of 

Erie. 

The specifics of the case before us are as follows. Erie sold MacMiles an 

insurance policy (the “Policy”) covering, among other things, “physical loss of 

or damage to Covered Property [....]” Policy, Commercial Property Coverage 

Part, Section I, Coverages/Insuring Agreement.1In relevant part, the covered 

property in this case is the building wherein MacMiles operates the Grant 

Street Tavern. On March 6, 2020, in response to the spread of the Covid-19 

virus, Governor Tom Wolf issued a Proclamation of Disaster Emergency. The 

proclamation was followed by a March 19, 2020 executive order directing the 

temporary closure of non-essential businesses. Restaurateurs such as 

____________________________________________

1

 The Policy appears in the certified record as Exhibit “A” to Erie’s answer and 

new matter. All citations to the Policy in this Opinion will refer to sections and 

paragraphs within the Policy’s commercial property coverage part. 
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MacMiles were limited to offering take out, drive-through, and/or delivery. 

Dine-in service was prohibited. 

MacMiles claimed coverage under the Policy for the loss of use of its 

physical premises due to the Covid-19 pandemic and Governor Wolf’s orders. 

Erie declined coverage and, on September 29, 2020, MacMiles filed a 

complaint for breach of contract and declaratory relief. On December 22, 

2020, MacMiles filed a motion for summary judgment. Erie filed a cross 

motion for judgment on the pleadings on March 10, 2021. On May 25, 2021, 

the trial court entered an interlocutory order2 granting partial summary 

judgment in favor of MacMiles, finding coverage under the business income 

protection portion of the Policy but a triable issue of fact under the civil 

____________________________________________

2

 The trial court certified the order for immediate appeal under 42 Pa.C.S.A. 

§ 702(b): 

(b) Interlocutory appeals by permission.--When a court or 

other government unit, in making an interlocutory order in a 

matter in which its final order would be within the jurisdiction of 

an appellate court, shall be of the opinion that such order involves 

a controlling question of law as to which there is substantial 

ground for difference of opinion and that an immediate appeal 

from the order may materially advance the ultimate termination 

of the matter, it shall so state in such order. The appellate court 

may thereupon, in its discretion, permit an appeal to be taken 

from such interlocutory order.

42 Pa.C.S.A.§ 702(b). This Court has accepted jurisdiction pursuant to 

§ 702(b) and Rules of Appellate Procedure 312 and 1311(a)(1), governing 

interlocutory appeals by permission. 
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authority provision (we discuss these in more detail below) and denying Erie’s

motion for judgment on the pleadings. This timely appeal followed. 

Erie presents two questions:

1. Did the trial court commit an error of law in granting MacMiles’

motion for summary judgment in part, and denying Erie’s

motion for judgment on the pleadings on this record, 

concluding that MacMiles has shown direct physical loss of or 

damage to covered property where there was an alleged mere 

loss of use, absent any harm to the property. 

2. Did the trial court commit an error of law in concluding that the 

Policy’s Ordinance or Law exclusion does not apply to MacMiles’ 

claims. 

Erie’s Brief at 3-4. 

Summary judgment is appropriate where there is no genuine issue of 

fact as to the matter in controversy and the moving party is entitled to 

judgment as a matter of law. Pa.R.Civ.P. 1035.2(1); Summers v. 

Certainteed Corp., 997 A.2d 1152, 1159 (Pa. 2010). The pertinent facts are 

not in dispute. Indeed, MacMiles filed for summary judgment seeking a 

declaration that the Policy provides coverage given the undisputed facts. We 

are therefore called upon to interpret the Policy, a question of law for which 

our standard of review is de novo and our scope of review is plenary. 

Summers, 997 A.2d at 1159-60. 

An insured may invoke the Declaratory Judgments Act, 42 Pa.C.S.A. 

§ 7531, et seq., to determine whether an insurance contract covers an 

asserted claim. Genaeya Corp. v. Harco Nat’l Ins. Co., 991 A.2d 342, 346 

(Pa. Super. 2010). Where the language of the policy is clear, this Court must 
J-E01001-22

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give it effect. Indalex Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 

83 A.3d 418, 420 (Pa. Super. 2013), appeal denied, 99 A.3d 926 (Pa. 2014). 

“Also, we do not treat the words in the policy as mere surplusage and, if at all 

possible, we construe the policy in a manner that gives effect to all of the 

policy’s language.” Id. at 421. We will construe any ambiguity in favor of the 

insured. Id. at 420-21. “Contract language is ambiguous if it is reasonably 

susceptible to more than one construction and meaning.” Pennsylvania 

Nat’l Mut. Cas. Ins. Co. v. St. John, 106 A.3d 1, 24 (Pa. 2014). The insured 

bears the initial burden of establishing that the asserted claim is covered. Erie

Ins. Grp. v. Catania, 95 A.3d 320, 322–23 (Pa. Super. 2014). If the insured 

is successful, the insurer bears the burden of establishing the applicability of 

an exclusion. Id. 

This dispute arises under a portion of the policy titled “Ultrapack Plus 

Commercial Property Coverage Part”. The Policy provides:

We will pay for direct physical “loss” of or damage to Covered 

Property at the premises described in the “Declarations” caused 

by or resulting from a peril insured against. 

Policy, Commercial Property Coverage Part, Section I, Coverages/Insuring 

Agreement. The Policy’s Property Coverage Part provides coverage for 

buildings, business personal property and personal property of others, and 

income protection. It also provides additional coverage for losses resulting 

from certain actions by civil authorities. We first address the income 
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protection coverage, pursuant to which the trial court granted partial summary 

judgment in favor of MacMiles. 

Income Protection means loss of “income” and/or “rental income” 

you sustain due to partial or total “interruption of business” 

resulting directly from “loss” or damage to property on the 

premises described in “Declarations” from a peril insured against. 

Policy, Commercial Property Coverage Part, Section I, Income Protection –

Coverage 3, ¶ A. Section II of the Policy defines perils”. 

This policy insures against direct physical “loss”, except “loss” as

excluded or limited in this policy. 

Policy, Commercial Property Coverage Part, Section II, Perils Insured Against, 

Covered Cause of Loss. 

“Loss” means direct and accidental loss of or damage to covered 

property. 

Policy, Commercial Property Coverage Part, Section XI, Definitions. Finally, 

the following terms govern the amount of insurance available for income 

protection coverage: 

We will pay the actual income protection loss for only such length 

of time as would be required to resume normal business 

operations. We will limit the time period to the shorter of the 

following periods: 

1. The time period required to rebuild, repair, or replace such part 

of the Building or Business Property that has been damaged or 

destroyed as a direct result of an insured peril; or 

2. Twelve (12) consecutive months from the date of loss. 

Policy, Commercial Property Coverage Part, Section I, Income Protection –

Coverage 3, ¶ D.
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As set forth above, MacMiles alleges loss of use of its covered property 

(the building housing the Grant Street Tavern) due to the Covid-19 pandemic 

and the resulting orders from Governor Wolf. Erie denied coverage claiming 

that the Policy provides coverage in the event of total physical destruction 

(loss) of property or partial damage to property. According to Erie, loss of use 

unaccompanied by physical property damage does not trigger coverage. 

The trial court, construing the phrase “direct physical loss of or damage 

to Covered Property”, reasoned that the disjunctive “or” between “direct 

physical loss of” and “damage to Covered Property” supports a reasonable 

reading of the Policy whereby a “direct physical loss” need not necessarily 

result from physical or structural damage. 

The spread of COVID-19, and a desired limitation of the 

same, had a close logical, causal, and/or consequential 

relationship to the ways in which [MacMiles] materially used its 

property and physical space. Indeed, the spread of COVID-19 and 

social distancing measures (with or without the Governor’s orders) 

caused [MacMiles], and many other businesses, to physically limit 

the use of property and the number of people that could inhabit 

physical buildings at any given time, if at all. Thus, the spread of 

Covid-19 did not, as [Erie] contends, merely impose economic 

limitations. Any economic losses were secondary to the 

businesses’ physical losses. 

Trial Court Opinion, 5/25/21, at 14-15 (emphasis in original; citation omitted). 

Regarding the amount of insurance provision, the trial court reasoned 

that it “merely imposes a time limit on available coverage, which ends 

whenever any required building, repairs, or replacements are completed to 

any damaged or destroyed property that might exist, or twelve (12) months 
J-E01001-22

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after the initial date of the loss.” Id. at 17. Because it merely imposes a time 

limit, the trial court found that the amount of insurance provision did not alter 

its interpretation of “physical loss or damage.” Id. In essence, the trial court 

concluded that MacMiles’ claim is covered because MacMiles’ proposed reading 

of the Policy is a reasonable one.3 

We turn now to the judicial precedent on this question, of which there 

is none from the appellate courts of this Commonwealth. But many parties 

similarly situated to MacMiles have claimed coverage for loss of income during 

the Covid-19 pandemic and the resulting economic shutdown under insurance 

contracts substantially similar or identical to the Policy. Court decisions from 

across the country overwhelmingly and persuasively support a conclusion that 

MacMiles’ loss of income claim is not covered. 

First, and most fundamentally, we observe that MacMiles’ claim arises 

under commercial property insurance coverage. Nearly all courts addressing 

____________________________________________

3

 The trial court relied in part on a dictionary definition of loss: “loss is defined 

as DESTRUCTION, RUIN, ... [and/or] the act of losing possession [and/or] 

DEPRIVATION ...” Trial Court Opinion, 8/2/21, at 12 (pagination ours) (citing

https://www.merriam-webster.com/dictionary/loss). Given the disjunctive 

“or” between “loss” and “damage” in the Policy language, the trial court 

concluded that loss must mean something other than destruction. Therefore,

the trial court relied on the portion of the definition defining loss as “the act 

of losing possession [and/or] DEPRIVATION.” Id. We are unable to confirm 

the accuracy of the trial court’s citation. Merriam Webster’s online dictionary 

contains seven entries under “loss.” The first entry, ”DESTRUCTION, RUIN” 

appears exactly as quoted in the trial court’s opinion. https://www.merriamwebster.com/dictionary/loss (last visited June 9, 2022). The remainder of the 

definition as quoted and relied on by the trial court (“the act of losing 

possession [and/or] DEPRIVATION”) appears nowhere. Id. 
J-E01001-22

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this issue have held that economic loss unaccompanied by a physical alteration 

to the property does not trigger coverage under a commercial property 

insurance policy. For example, in Delaware Valley Mgmt., LLC v. 

Continental Cas. Co., ___ F.Supp.3d ___ 2021 WL 5235277 (E.D.Pa. 

November 10, 2021), the plaintiff medical providers were prohibited to offer 

elective surgeries due to the Covid-19 pandemic. They alleged that their 

properties became contamination zones and that their ability to conduct 

business was significantly limited. Id. at *2. Plaintiffs argued, as MacMiles 

did here, that “physical loss of or damage to Covered Property” was 

reasonably susceptible of more than one meaning and therefore ambiguous. 

The District Court disagreed: 

Here, not only was there no physical alteration to the 

Covered Properties, but there was also no loss of utility of the 

buildings. Indeed, Plaintiffs admit that they “could remain open, 

but only for essential surgeries, not elective.” (Am. Compl. at ¶ 

77.) And Plaintiffs’ loss of their ability to perform elective surgeries 

does not render the building “uninhabitable.” Rather, their ability 

to conduct business was limited, which resulted in purely 

economic losses. 

Id. at *5. Likewise, damage to property exists where there is “actual 

structural damage” or where damage “unnoticeable to the naked eye

render[s] the property entirely useless and uninhabitable.” Id. at *6. The 

Delaware Valley Court noted that the amount of insurance was tied to the 

period of physical restoration, and that the period of restoration portion of the 

policy made no sense unless the damage in question was physical damage. 

Id. at *7. 
J-E01001-22

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Similarly, the Third Circuit Court of Appeals, applying the law of New 

York and New Jersey, held that the presence of asbestos does not constitute 

“physical loss or damage” unless it is present in the air in quantities sufficient 

to render the building “uninhabitable and unusable.” Port Authority of New 

York and New Jersey v. Affiliated FM Ins. Co., 311 F.3d 226, 236 (3d Cir. 

2002). In Port Authority, the mere presence of asbestos in the insured 

building was not sufficient to trigger coverage: 

In the case before us, the policies cover “physical loss,” as 

well as damage. When the presence of large quantities of asbestos 

in the air of a building is such as to make the structure 

uninhabitable and unusable, then there has been a distinct loss to 

its owner. However, if asbestos is present in components of a 

structure, but is not in such form or quantity as to make the 

building unusable, the owner has not suffered a loss. The 

structure continues to function—it has not lost its utility. The fact 

that the owner may choose to seal the asbestos or replace it with 

some other substance as part of routine maintenance does not 

bring the expense within first-party coverage.

Id. at 236. (Footnote omitted). 

The Court of Common Pleas in Spector Gadon Rosen Vinci P.C. v. 

Valley Forge Ins. Co., 2021 Phila. Ct. Com. Pl. LEXIS 16 (June 16, 2021),

reached the same conclusion. There, the trial court found that the plaintiff 

law firm’s loss of use of its office space pursuant to Governor Wolf’s orders did 

not trigger coverage under a policy covering direct physical loss of or damage 

to its commercial property. Applying Port Authority, the trial court found 

that physical damage to the insured property is necessary, especially in light 
J-E01001-22

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of language in the policy contemplating a period of restoration during which 

physical repairs take place. Id. at *10. 

Courts outside of Pennsylvania considering similar policy language have 

concluded that the loss of use of a business during the Covid-19 pandemic 

was not covered under policies insuring against physical loss of or damage to 

commercial property. In Terry Black’s Barbecue, L.L.C. v. State Auto. 

Mut. Ins. Co., 22 F.4th 450 (5th Cir. 2022) the Court held that the plaintiff’s 

inability to provide dine-in services was an economic loss unrelated to the 

insured’s property: 

TBB has failed to allege any tangible alteration or 

deprivation of its property. Nothing physical or tangible happened 

to TBB’s restaurants at all. In fact, TBB had ownership of, access 

to, and ability to use all physical parts of its restaurants at all 

times. And importantly, the prohibition on dine-in services did 

nothing to physically deprive TBB of any property at its 

restaurants.

Id. at 456; see also, Santo’s Italian Café LLC v. Acuity Ins. Co., 15 F.4th 

398, 402 (6th Cr. 2021) (noting that direct physical loss and direct physical 

damage are the “North Star of this property insurance policy from start to 

finish”); Real Hosp., LLC v. Travelers Cas. Ins. Co. of Am., 499 F. Supp.3d

288 (S.D. Miss.2020) (holding that insurance against physical loss of or 
J-E01001-22

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damage to commercial property covers damage to the insured’s building and 

personal property but not the operations).

4

Instantly, the trial court relied on In re Soc’y Ins. Co. Covid-19 Bus. 

Interruption Prot. Ins. Litig., 521 F.Supp.3d 729 (N.D. Ill. 2021). There, 

the Federal District Court found a factual issue as to whether the insured

restaurant and hospitality businesses suffered a direct physical loss of their 

property as a result of the loss of in-person dining during the Covid-19 

pandemic. The insureds argued that the presence of Covid-19 on their 

premises was physical damage that created the loss. Id. at 732. The District 

Court reasoned that the policy in question did not contain a virus exclusion. 

____________________________________________

4

 As noted in the main text, nearly all courts addressing commercial property 

insurance policies similar to the one at issue have found that a physical 

alteration to the subject property is necessary to trigger coverage. For 

representative federal cases, See, e.g., 10012 Holdings, Inc. v. Sentinel 

Ins., 21 F.4th 216 (2d Cir. 2021); Crescent Plaza Hotel Owner, L.P. v. 

Zurich Am. Ins. Co., 20 F.4th 303 (7th Cir. 2021); Sandy Point Dental, 

P.C. v. Cincinnati Ins. Co., 20 F.4th 327 (7th Cir. 2021); Oral Surgeons, 

P.C. v. Cincinnati Ins. Co., 2 F.4th 1141 (8th Cir. 2021); Mudpie, Inc. v. 

Travelers Cas. Ins. Co. of Am., 15 F. 4th 885 (9th Cir. 2021); Goodwill 

Indus. of Cent. Okla., 21 F.4th 704 (10th Cir. 2021). 

For representative state court cases, See, e.g., Inns by the Sea v. 

California Mut. Ins. Co., 71 Cal.App.5th 688 (Cal. Ct. App. 2021); Indiana 

Repertory Theatre v. Cincinnati Cas. Co., 180 N.E.3d 403 (Ind. Ct. App. 

2022); Wakonda Club v. Selective Ins. Co. of Am., 973 N.W.2d 545 (Iowa 

2022); Verveine Co. v. Strathmore Ins. Co., 184 N.E.3d 1266 (Mass. 

2022); Gavrilides Mgmt. Co., LLC v. Michigan Ins. Co., ___ N.W. ___ 

2022 WL 301555 (Mich. Ct. App. Feb. 1, 2022); MAC Prop. Grp. v. Selective 

Fire and Cas. Ins. Co., ___ A.3d ___ (N.J. App. Div. June 20, 2022); Nail 

Nook, Inc. v. Hiscox Ins. Co. Inc., 182 N.E.3d 356 (Ohio Ct. App. 2021); 

Collectivo Coffee Roasters Inc. v. Society Ins., 974 N.W.2d 442 (Wis. 

2022). 
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Id. at 735. Also, like the trial court instantly, the Northern District of Illinois 

relied on the disjunctive “or” in “direct physical loss of or damage to Covered 

Property” to support an interpretation of the policy language whereby physical 

loss meant something different from physical damage. Id. at 741. 

In any event, the weight of authority is to the contrary and the Seventh 

Circuit implicitly overruled In re Soc’y, concluding that commercial property 

policies do not provide coverage for business interruptions due to Covid-19. 

Sandy Point Dental, 20 F.4th 327 (7th Cir. 2021). Likewise, in Hair Studio 

1208, LLC v. Hartford Underwriter’s Ins. Co., 539 F.Supp.3d 409 (E.D.Pa. 

2021), the Federal District Court cited Port Authority for the proposition that 

physical loss exists when a structure is “uninhabitable and unusable.” Id. at 

417. Pure economic loss is not property damage. Id. Said another way, 

policy language covering “direct physical loss or damage” unambiguously 

requires that the “claimed loss or damage must be physical in nature.” Id. at 

418 (quoting Philadelphia Parking Auth. v. Fed. Ins. Co., 385 F.Supp.2d 

280, 289 (S.D.N.Y. 2005)).

5

Cases cited by Appellee and various amici do not refute this point. In 

Motorists Mut. Ins. Co. v. Hardinger, 131 Fed. App’x 823, 826 (3d Cir. 

2005), for example, the Third Circuit found a question of fact as to whether 

____________________________________________

5

 In Philadelphia Parking Auth., the Southern District of New York held 

that economic loss stemming from loss of business after the September 11, 

2001 terrorist attacks was not covered. 
J-E01001-22

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an e coli contamination of well water was a “physical loss” under a 

homeowner’s policy. The family alleged they vacated the house because all 

of them experienced persistent illnesses and skin problems upon moving in. 

Id. at 824. Thus, the facts in Hardinger met the test set forth in Port 

Authority of New York, wherein the Third Circuit wrote that invisible 

damage constitutes physical loss where it renders the building unusable or 

uninhabitable. 311 F.3d at 236 The same is true of cases where buildings 

became unusable due to the presence of gas or noxious fumes. See Essex 

Ins. Co. v. BloomSouth Flooring Corp., 562 F.3d 399 (1st Cir. 2009) 

(holding that the presence of an unexplained chemical odor sufficiently alleged 

a physical injury to the insured’s building, thus triggering the insurer’s duty to 

defend); TRAVCO Ins. Co. v. Ward, 715 F.Supp.2d 699, 707 (E.D.Va. 2010)

(holding that a noxious odor emitting from defective drywall constituted a 

direct physical loss), aff’d, 504 Fed. App’x 251 (4th Cir. 2013) Western Fire 

Ins. Co. v. First Presbyterian Church, 437 P.2d 52 (Colo. 1968) (holding 

that the insured suffered a direct physical loss where gasoline accumulated in 

the soil under and around the insured’s building and gasoline vapors rendered 

the building uninhabitable). In cases such as these, the condition that caused

the loss, though not a visible physical alteration to the covered property, was 

physically present in the covered building. Instantly, in contrast, the 

prohibition on in-person dining had nothing to do with any condition, visible 

or invisible, at the Grant Street Tavern. Rather, the prohibition was meant to 
J-E01001-22

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eliminate the possibility of infected patrons spreading an airborne illness to 

uninfected patrons. As MacMiles alleged: "The coronavirus causing COVID19 is thought to spread mainly from person to person, primarily through 

respiratory droplets produced when an infected person coughs or sneezes.” 

Complaint, 9/29/20, at ¶ 9. In previous cases wherein an airborne toxin or 

odor rendered covered property unusable, the toxin or odor was immanent in 

the property. It was not an airborne illness that people brought in with them. 

In a case involving the scope of property insurance coverage, this distinction 

is critical.6 

Ultimately, the question before us is not complicated. The provisions of 

the Policy at issue here cover commercial property. But MacMiles argues, and 

the trial court found, that “direct physical loss of or damage to Covered 

Property” covers pure economic loss caused by MacMiles’ loss of use because 

of the disjunctive “or” between loss and damage. Policy, Commercial Property 

Coverage Part, Section I, Coverages/Insuring Agreement (emphasis added). 

That reading is reasonable if and only if “physical loss” means something

distinct from a loss due to a physical alteration or destruction of the property. 

____________________________________________

6

 Much has been made of the observation in Couch on Insurance that “physical 

alteration” is the most common coverage trigger for a policy insuring against 

“physical loss or damage” to covered property. COUCH ON INSURANCE, § 148:46 

(3d ed. 2000). Because the analysis in § 148:46 neither relied on nor 

anticipated the present circumstances, we do not find it helpful. In our view, 

neither side of this debate advances its argument by citing or attacking the 

conclusions reached in § 148:46. 
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That is, we must conclude it is reasonable to read the Policy as covering mere 

loss of use even though the Policy never expressly says so; even though the 

policy repeatedly uses the word damage; and even though the amount of 

insurance provision references the time period necessary to “repair, replace, 

or rebuild” any part of the covered property that had been “damaged or 

destroyed.” These latter terms make sense only in the context of partial 

physical damage to or total destruction of the covered property. They do not 

make sense in the context of a purely economic loss. See e.g., Dino Drop, 

Inc. v. Cincinnati Ins. Co., 544 F.Supp.3d 789, 798 (E.D.Mich. 2021) 

(holding that physical loss and damage “can only be reasonably be construed 

as extending to events that impact the physical premises completely (loss) or 

partially (damage).”). The trial court’s reading of the Policy is strained, and 

we find that we are constrained to reject that holding. 

Further, MacMiles has failed to allege any physical damage. Dine-in 

service was prohibited, but preparation of meals for takeout or delivery was 

permitted. Thus, MacMiles’ building was not rendered unusable or 

uninhabitable. And Covid-19, a primarily airborne illness, did no physical 

damage to MacMiles’ covered property. In-person dining was prohibited to 

prevent infected diners from spreading the virus to others, not because any 

condition immanent in the Grant Street Tavern rendered the building unusable 

by diners. 
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Ultimately, our analysis, aided by persuasive authority from numerous 

other federal and state jurisdictions, leads us to conclude the trial court erred 

in finding that MacMiles established a valid claim for coverage under the 

business income provisions of the Policy. We will therefore reverse the trial 

court’s order granting summary judgment insofar as it granted summary 

judgment in favor of MacMiles on this issue. Because the pertinent facts are 

undisputed and the question before us is purely one of law, we direct the trial 

court to enter an order granting judgment on the pleadings in favor of Erie on 

this issue. 

Next, we consider whether a material issue of fact exists under the civil 

authority provision of the Policy. Civil Authority coverage is listed under the 

“Additional Coverages” section of the Policy. It reads in pertinent part as 

follows: 

1. Civil Authority

When a peril insured against causes damage to property other 

than property at the premises described in the “Declarations”, 

we will pay for the actual loss of “income” and/or “rental 

income” you sustain and necessary “extra expense” caused by 

action of civil authority that prohibits access to the premises 

described in the “Declarations” provided that both of the 

following apply: 

a. Access to the area immediately surrounding the 

damaged property is prohibited by civil authority as a 

result of the damage, and the premises described in the 

“Declarations” are within that area but are not more than 

one mile from the damaged property; and 

b. The action of civil authority is taken in response to 

dangerous physical conditions resulting from the damage 
J-E01001-22

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or continuation of the peril insured against that caused 

the damage, or the action is taken to enable a civil 

authority to have unimpeded access to the damaged 

property. 

Policy, Commercial Property Coverage Part, Section I, Income Protection –

Coverage 3, ¶ C1. 

The trial court concluded that, under the civil authority provision, mere 

loss of use of a nearby property is not covered. Given that the Civil Authority 

provision expressly requires damage to a property other than the insured 

property, a showing of physical damage is required. The trial court found that 

a question of fact existed as to whether the Covid-19 virus was physically 

present at a nearby property and that its presence constituted covered 

physical damage. MacMiles also would have to show that the applicable 

governor’s orders were taken in response to dangerous physical conditions 

resulting from damage to a nearby property. Trial Court Opinion, 5/25/21, at 

18-19. The trial court therefore denied the competing motions on this issue. 

Upon review, we conclude that the trial court erred in finding a triable 

issue of fact. As discussed above, where the alleged property damage is 

invisible (as is the possible presence of Covid-19 on surfaces), it does not 

qualify as physical damage for purposes of a commercial property insurance 

policy. The Delaware Valley Court allowed for a possible exception to this 

rule where the invisible damage renders a building unusable or uninhabitable, 

but MacMiles has not alleged that any business within a mile of its premises 

was rendered unusable or uninhabitable by the presence of Covid-19. Thus, 
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the threshold damage requirement is not met, and MacMiles cannot recover 

under the civil authority provision of the Policy. The trial court erred in 

denying Erie’s motion for judgment on the pleadings on this issue. 

In its second question presented Erie challenges the trial court’s finding 

that the Policy’s governmental authority exclusion was inapplicable. Because 

we have concluded that MacMiles has failed to establish the existence of 

coverage, we need not assess the applicability of any exclusion. 

For the foregoing reasons, we conclude the trial court erred in granting 

partial summary judgment in favor of MacMiles and in denying Erie’s motion

for judgment on the pleadings. On the undisputed facts before us, Erie is 

entitled to judgment on the pleadings in its favor on the coverage issues. 

Order reversed. Jurisdiction relinquished. 

President Judge Emeritus Bender, Judge Bowes, Judge McLaughlin, and 

Judge King join the opinion.

Judge Lazarus, Judge Kunselman, and Judge Nichols concur in the 

result.

President Judge Panella files a concurring statement in which Judge 

Lazarus, Judge Kunselman, and Judge Nichols join.
J-E01001-22

- 20 -

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 11/30/2022