Court Opinion

ID: 9297435
Source: CourtListenerOpinion
Date Created: 2022-11-30 17:08:10.609541+00
Date Added: 2024-06-11T17:13:26.422351
License: Public Domain

J-E01002-22

                             2022 PA Super 204

TIMOTHY A. UNGAREAN, DMD D/B/A                   IN THE SUPERIOR COURT
SMILE SAVERS DENTISTRY, PC,                         OF PENNSYLVANIA
INDIVIDUALLY AND ON BEHALF OF A
CLASS OF SIMILARLY SITUATED
PERSONS

                         Appellee

                    v.

CNA AND VALLEY FORGE INSURANCE
COMPANY

                         Appellants                No. 490 WDA 2021

                Appeal from the Order Entered March 26, 2021
              In the Court of Common Pleas of Allegheny County
                      Civil Division at No: GD-20-006544

TIMOTHY A. UNGAREAN, DMD D/B/A                   IN THE SUPERIOR COURT
SMILE SAVERS DENTISTRY, PC,                                OF
INDIVIDUALLY AND ON BEHALF OF A                       PENNSYLVANIA
CLASS OF SIMILARLY SITUATED
PERSONS

                         Appellee

                    v.

CNA AND VALLEY FORGE INSURANCE
COMPANY

                         Appellants                No. 948 WDA 2021

                Appeal from the Order Entered March 26, 2021
              In the Court of Common Pleas of Allegheny County
                      Civil Division at No: GD-20-006544

BEFORE: PANELLA, P.J., BENDER, P.J.E., BOWES, J., LAZARUS, J., STABILE,
        J., KUNSELMAN, J., NICHOLS, J., McLAUGHLIN, J., and KING, J.
J-E01002-22

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

       I respectfully dissent. In affirming the trial court, the Majority endorses

a strained construct of the Policy1 that parses individual words under

dictionary meanings to arrive at a disjointed and unreasonable interpretation

of the operative phrase at issue - “direct physical loss or damage to property”.

In doing so, the Majority violates rules relating to contract interpretation that

do not allow individual terms and provisions to be read in isolation. Individual

terms must be considered under the policy as a whole. The Majority decision

now places Pennsylvania as an outlier from the near unanimous conclusions

reached by all state and federal courts to have considered the meaning of

substantially similar language. I would accordingly reverse the trial court and

grant summary judgment in favor of the Appellants, CNA and Valley Forge

Insurance Company, and against the Appellee, Timothy A. Ungarean.

       As the Majority explains, the operative facts are straightforward and not

substantially in dispute. Appellants sold Ungarean an insurance Policy

covering, among other things, “direct physical loss of or damage to Covered

Property”—that Property being buildings in Aliquippa, Pennsylvania, and

Pittsburgh, Pennsylvania, in which Ungarean operates his dentistry practice.

____________________________________________

1 Reference to the “Policy” herein is to the “Businessowners Special Property
Coverage Form” and the “Business Expense and Extra Expense” endorsement
purchased by Ungarean for his business. The Policy appears in the certified
record as Exhibit “B” to Ungarean’s June 5, 2020 complaint and Exhibit “A” to
Appellants’ July 30, 2020 answer and new matter.

                                           -2-
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Policy, Businessowners Special Property Coverage Form, at ¶ A. On March 6,

2020, in response to the spread of the Covid-19 virus, Governor Tom Wolf

issued a Proclamation of Disaster Emergency. Subsequent executive orders

followed, resulting in the temporary closure of many non-essential businesses.

Ungarean’s dental practice was designated a life-sustaining business, thus

permitting him to continue to use his business premises for emergency

procedures only.     Nonetheless, like so many similarly situated parties,

Ungarean suffered a significant disruption of his business activity during the

Covid-19 pandemic.      And like many similarly situated parties, Ungarean

believed his economic losses due to the loss of use of his business premises

were covered under his commercial property insurance. Ungarean filed a claim

under the Policy seeking coverage for the economic losses he sustained from

the inability to provide non-emergency dental care on his business premises.

       Appellants, like many other insurers who have issued polices with

substantially similar terms, denied the claim because Ungarean’s 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 in Pennsylvania. Contrary to the Majority, I would reach the same

result as the almost unanimous majority of jurisdictions to have addressed

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

unaccompanied by physical alteration or other condition present in the

property that renders the property itself unusable or uninhabitable.

                                      -3-
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       The parties dispute whether the Policy covers Ungarean’s claim and, if

so, whether any of the Policy’s exclusions applies. I conclude that no coverage

exists and would reverse and remand for an order entering summary

judgment2 in favor of Appellants.

       Under Ungarean’s Policy, CNA agreed to pay for “direct physical loss or

damage to Covered Property at the premises … caused by or resulting from a

Covered Cause of Loss.”          Coverage Form, at A., p.1. (Emphasis added).

Covered Property includes Buildings and Business Personal Property as defined

in the Policy.    Id. at A.1.     “Covered Causes of Loss” are “Risks of Direct

____________________________________________

2  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 appeal before us presents a question
of law; 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 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.

                                           -4-
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Physical Loss”, unless the loss is excluded under section B, Exclusions, the

loss is limited under paragraph A.4, Limitations, or otherwise excluded

elsewhere under the Policy. Id. at A.3.

      The additional coverage purchased by Ungarean in the form of a

“Business Income and Extra Expense” endorsement, the text of which forms

the dispositive issue in this appeal, provides in pertinent part:

      1. Business Income
         b. We will pay for the actual loss of Business Income
         you sustain due to the necessary “suspension” of your
         “operations during the “period of restoration.” The
         “suspension” must be caused by direct physical loss of
         or damage to property at the described premises. The
         loss or damage must be caused by or result from a
         Covered Cause of Loss. ….

                                   ***
      2. Extra Expense
         a. means reasonable and necessary expenses you incur
         during the “period of restoration” that you would not
         have incurred if there had been no direct physical loss
         of or damage to property caused by or resulting from
         a Covered Cause of Loss.

         b. We will pay Extra Expense (other than the expense to
         repair or replace property) to:

            1. Avoid or minimize the “suspension” of business and
            to continue “operations at the described premises or
            at replacement premises or temporary locations,
            including relocation expenses and costs to equip and
            operate the replacement premises or temporary
            locations; or

            2. Minimize the suspension of business if you cannot
            continue operations.

                                      -5-
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CNA Policy, Business Income and Extra Expense Endorsement, at 1.b., 2a, 2b.

(Emphasis added).

      A “suspension” occurs under the Policy when the insured suffers the

“partial or complete cessation of […] business activities.”     Policy, Business

Owners Special Property Coverage Form, ¶ G.29.

      The Policy defines “period of restoration” in relevant part as a period of

time that:

               a. Begins with the date of direct physical loss or damage
                  caused by or resulting from any Covered Cause of
                  Loss at the described premises; and

               b. Ends on the earlier of:

                        1. The date when the property at the
                           described premises should be repaired,
                           rebuilt, or replaced with reasonable speed
                           and similar quality; or

                        2. The date when business is resumed at a new,
                           permanent location.

Id. at ¶ G.20. (Emphasis added).

      When the Policy is read as a whole, as it must be, it is clear that a claim

for lost business income and extra expenses only will be covered if the

property sustains a tangible loss or damage that causes a suspension of

business activities.   If these conditions are satisfied, then coverage is

provided, but only for the period of restoration during which the property has

to be rebuilt, repaired, or replaced. When the term “direct physical loss or

damage to property” is read within the context of the entire Policy, the

conclusion is inescapable that coverage is not provided for purely economic

                                      -6-
J-E01002-22

loss. The Policy unambiguously ties coverage for insured business income and

extra expense losses to occurrences where there is some tangible damage to

or tangible loss of the property for coverage to apply—a “direct physical loss

of or damage to property”. As will be explained, this is the only reasonable

interpretation of this policy provision.   Construing the reference to “direct

physical loss or damage to property” to pertain to purely economic loss

without property damage, as the Majority concludes, results only from a

strained interpretation of the Policy and does so without giving full effect to

all the Policy provisions.

      Words of common usage in an insurance policy are to be construed in

their natural, plain, and ordinary sense. Madison Const. v. Harleysville

Mut. Ins., 735 A. 2d 100 (Pa. 1999). Language in a policy is ambiguous if it

is susceptible to more than one reasonable interpretation. Kurach v. Truck

Ins. Exch., 235 A.3d 1106, 1116 (Pa. 2020).         A word is not ambiguous,

however, simply because it is undefined. Gemini Ins. Co. v. Meyer Jabara

Hotels LLC, 231 A.3d 839, 849 (Pa. Super. 2020). Instead, courts must read

a policy as a whole and construe its meaning according to its plain language.

Madison, 735 A.2d at 108. Individual terms and provisions cannot be read in

isolation; a policy must be considered as a whole. Pennsylvania Nat. Mut.

Cas. Ins. Co.v. St. John, 106 A.3d 1, 14 (Pa. 2014). Courts cannot distort

the meaning of language or resort to a strained contrivance in order to find

                                     -7-
J-E01002-22

an ambiguity. Madison, 735 A.2d at 106 (citing Steuart v. McChesney,

444 A.2d 659, 663 (Pa. 1982)).

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

to…”, reasoned that the disjunctive “or” between “direct physical loss of” and

“damage to” 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 [Ungarean] 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 [Ungarean], 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 [Appellants contend], merely impose
      economic limitations. Any economic losses were secondary to the
      businesses’ physical losses.

Trial Court Opinion, 6/1/21, at 16-17 (emphasis in original; citation omitted).

Regarding the “period of restoration” provisions, the trial court reasoned that

they “merely impose[] a time limit on available coverage, which ends

whenever any [repairs], if undertaken, would have been completed with

reasonable speed and similar quality.” Id. at 19. 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. The Majority

finds itself in full agreement with the trial court’s reasoning and conclusions,

and affirms the decision below based primarily on the trial court’s opinion.

Majority Opinion, at 2.

                                     -8-
J-E01002-22

      I disagree, and conclude that economic loss unaccompanied by a

physical alteration to the property does not trigger coverage under this

commercial property insurance policy—a result that is overwhelmingly and

persuasively supported by decisions from across the country. In Delaware

Valley Mgmt., LLC v. Continental Cas. Co., 572 F.Supp.3d 119 (E.D.Pa.

2021), for example, 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 125. Plaintiffs argued, as Ungarean

did here, that “physical loss of or damage to property” was reasonably

susceptible of more than one meaning and therefore ambiguous. The Federal

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 129.    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 130. 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

                                       -9-
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policy made no sense unless the damage in question was physical damage.

Id. at 130-31.

      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, 232, 236

(3d Cir. 2002); see also, Round Guys Brewing Co. v. Cincinnati Ins. Co.

2021 LW 4306027 (E.D.Pa. September 22, 2021) (holding that a loss of

business due to governmental orders, unaccompanied by physical property

damage, does not trigger coverage).

      Likewise in Spector Gadon Rosen Vinci P.C. v. Valley Forge Ins.

Co., 2021 Phila. Ct. Com. Pl. LEXIS 16 (June 16, 2021), 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 of language in the policy contemplating a period of

restoration during which physical repairs take place. Id. at *10.

      Throughout the country, courts considering similar policy language in

similar circumstances have found no coverage. In Terry Black’s Barbecue,

L.L.C. v. State Auto. Mut. Ins. Co., 22 F.4th 450 (5th Cir. 2022) the Court

                                     - 10 -
J-E01002-22

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

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

property but not the operations).3

____________________________________________

3  For representative federal cases holding that a physical alteration to the
property is necessary to trigger coverage, 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. ___
(Footnote Continued Next Page)

                                          - 11 -
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       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.

Id. at 735.     Also, like the Majority and trial court instantly, the Northern

District of Illinois relied on the disjunctive “or” in “direct physical loss of or

damage to …” supported 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 has 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

____________________________________________

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).

                                          - 12 -
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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)).4

       Cases cited by Ungarean 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

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

____________________________________________

4  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.

                                          - 13 -
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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 these cases, the condition that caused the loss, though not visible,

was physically present in the insured property, not easily remediable or

removable, and/or not likely to dissipate quickly on its own.5 In contrast, the

case before us arises from restrictions on Ungarean’s use of his property in

response to a highly contagious airborne virus that workers and patrons might

bring in with them and spread to others. Ungarean did not allege that the

Covid-19 virus was present on any surface in his covered property, nor did he

allege that its temporary presence in his covered property was the reason for

his prolonged inability to perform nonemergency dental work.

____________________________________________

5 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, I do not find it helpful. In my view,
neither side of this debate advances its argument by citing or attacking the
conclusions reached in § 148:46.

                                          - 14 -
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       In light of all the foregoing, the proper disposition of this appeal is clear.

The provisions of the Policy at issue here cover commercial property.

Ungarean does not allege that any covered property was destroyed, damaged,

or in need of repair, rebuilding, or replacing. He had access to his business

property at all times; there was no physical alteration to the property itself

that prevented him from using it as normal.            Rather, he was limited to

performing emergency dental procedures so as to limit the number of patients

coming in and thereby limit the potential for person-to-person spread of Covid.

There is no reasonable reading of the phrase “direct physical loss” that applies

to the covered property involved in this case.6 Ungarean’s claim fails for this

reason alone.

____________________________________________

6  The trial court justified its result by relying 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.merriam-webster.com/dictionary/loss
(last visited October 13, 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. This definition does not support a
conclusion that “direct physical loss”, as used in the Policy, encompasses a
mere loss of use.

                                          - 15 -
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      The Majority’s argument from the Policy’s disjunctive language is

unavailing. According to the Majority’s reading of “direct physical loss of or

damage to…”, the phrases on either side of the word “or” must mean

something different.     Indeed, they do, as is evident from the period of

restoration clause (and the extra expense clause, quoted above, which also

ties itself to the period of restoration). The period of restoration is the time

period necessary to “repair, replace, or rebuild” any part of the covered

property that had been “damaged or destroyed.”         Thus, where there is a

“physical loss”—i.e. total loss or destruction of covered property—the period

of restoration is the time necessary to rebuild or replace it. Where there is

partial “damage to” covered property the period of restoration is the time

necessary to make repairs.      Thus, the appropriate, and by far the most

reasonable, distinction between “physical loss” and “damage” is to read the

former as applying in cases of total loss and the latter as applying in cases of

partial damage. The terms “repair, replace, or rebuild” make sense only in

the case of physical damage to or physical destruction (loss) of the property.

They make no sense in a case of pure 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).”).

                                     - 16 -
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      The Majority’s reading—that the “period of restoration” is merely a time

limit for coverage that has no bearing on the meaning of “direct physical

loss”—does not withstand scrutiny. See Majority Opinion, at 12. In addition

to its failure to account for the words “repair, rebuild, or replace,” it is not

clear how the “period of restoration” is to be computed in the case before us,

wherein the insured has alleged neither destruction of or damage to covered

property nor the need to rebuild, repair, or replace any part of it. Rather,

Ungarean alleges a partial loss of use of his property because he was forbidden

to perform non-emergency dental procedures. There simply was no period of

restoration involved in this case.

      The Majority and the trial court have engaged in a strained reading of a

property insurance policy in order to find coverage for a purely economic loss.

The conclusion they reach is unsupportable and unreasonable under the plain

language of the Policy and case law governing the interpretation of insurance

policies. While I sympathize with the plight of the many business owners who

have suffered, and continue to suffer, significant financial hardship because of

the Covid-19 pandemic, this Court must render decisions based on the law

and the facts of each case.      In my view, the applicable law, the Policy

language, and the facts before us lead inexorably to the conclusion that the

trial court erred in granting summary judgment in favor of Ungarean and

denying Appellants’ competing motion for summary judgment.

                                     - 17 -
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      Alternatively, the Majority concludes that none of the Policy exclusions

apply to coverage claimed by Ungarean and therefore, the trial court properly

declared that CNA was obligated to provide business loss and extra expense

coverage. I conclude this alternative analysis to be unnecessary. If there is

no right to coverage under the insuring provision, then it is a non sequitur to

consider if any exclusions apply.

      Likewise, I disagree with the trial court’s conclusion, affirmed by the

Majority, that Ungarean was entitled to coverage under the Civil Authority

Provision of the Policy that provides:

            When the Declarations show that you have coverage for
      Business Income and Extra Expense, you may extend that
      insurance to apply to the actual loss of Business Income you
      sustain and reasonable and necessary Extra Expense you incur
      caused by action of civil authority that prohibits access to the
      described premises. The civil authority action must be due to
      direct physical loss of or damage to property at locations,
      other than described premises, caused by or resulting from a
      Covered Cause of Loss.

CNA Policy, Civil Authority, at 1. (Emphasis added). I conclude that Ungarean

failed to establish a claim for coverage under the Policy’s Civil Authority

provision, which provides in essence that the coverage exists when a civil

authority limits Ungarean’s access to his own covered property because of

direct physical loss of or damage to property at another location. The trial

court found that other properties suffered direct physical loss or damage for

the same reason it found that Ungarean’s business premises were damaged.

I reach a different conclusion for the reasons already explained.

                                     - 18 -
J-E01002-22

      I respectfully dissent, and would reverse the trial court and enter

judgment in favor of Appellants CNA and Valley Forge Insurance Company,

and against Appellee, Timothy A. Ungarean.

      President Judge Emeritus Bender, Judge Bowes, and Judge King join the

dissenting opinion.

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