On July 1, Michigan Circuit Court Judge Joyce Draganchuk heard a motion by teleconference via Zoom. However, the hearing and the summary judgment rendered on the bench were broadcast live on YouTube on behalf of Judge Draganchuk. It is therefore a first and it will be interesting to see if our Quebec Courts will admit the video format, the recording of which is still available on YouTube, to plead precedents.
In this case (Gavrilides Management Co. v. Michigan Insurance Co., j. Joyce Draganchuk, July 1, 2020, Mason, 30th Circuit, Michigan, USA, https://youtu.be/Dsy4pA5NoPw), the insured, owner of two restaurants, claimed from its insurer the loss of business interruption since it had to close the restaurants following the orders of the authorities in the context of the pandemic linked to the coronavirus. The insurer brought a motion to dismiss this claim for which this judgment was rendered. It claimed that there was no direct physical damage as required by the terms of the insurance cover, namely that there would be coverage if the commercial activities were suspended but only if the suspension was caused by physical damage to the insured property. Finally, the insurer argued in the alternative that the virus exclusion applied.
The insured claimed that its losses were covered under public authority coverage, saying that the government order, which prevented customers from entering the restaurants, resulted in physical losses. Furthermore, it argued that the virus exclusion was ambiguous.
The judge dismissed the insured’s argument that there was physical damage since the virus was never present on the premises and nothing physically damaged the insured property. Thus, since there had been no tangible damage to property, the judge granted the insurer’s motion and dismissed the insured’s claim. In addition, the judge considered that the virus exclusion would have excluded this claim from coverage.
Note that this decision seems to be the first that was rendered for coverage claims for business interruption related to the coronavirus. However, according to our research, multiple lawsuits have been brought against insurers, both in Canada and in the United States. We will follow this file for you and report in due course.