eNotes: Liability – April 2022 – Federal

SIGNIFICANT CASE SUMMARY

FEDERAL CASE SUMMARY

Humans & Res., LLC v. Firstline Nat’l Ins. Co.
United States District Court for the Eastern District of Pennsylvania
No. 20-2152-KSM

Decided: March 4, 2022

In connection with a COVID-19 business interruption claim, Court precludes Plaintiff’s legal expert, rejects Plaintiff’s assertion of the reasonable expectations doctrine, and enters summary judgment for insurer.

Background

Plaintiff Humans & Resources operated a dine-in restaurant located in Philadelphia. According to Plaintiff, the restaurant suffered business income losses due to the COVID-19 pandemic and governmental closure orders designed to mitigate the spread of the virus. On account of those losses, Plaintiff instituted a declaratory judgment action against its insurer, Firstline National Insurance Co., which had issued a business owners’ policy to the Plaintiff. Relying on a virus exclusion in the policy, as well as certain other provisions, Firstline responded to the Complaint with a Motion to dismiss, arguing that the policy precluded coverage. Although the Court agreed that the plain language of the policy clearly and unambiguously barred coverage, the Court declined to preliminarily dismiss the case and allowed the parties to develop the record with regard to the applicability of the reasonable expectations doctrine, which the Plaintiff had raised in response to the Motion to dismiss.

Following the Court’s ruling on the Motion to dismiss, the parties conducted discovery relating to Plaintiff’s assertion of the reasonable expectations doctrine, and Plaintiff produced an expert report from a law professor opining on the issue. Cross-motions for summary judgment were then presented to the Court, as was a Motion to preclude the expert report Plaintiff submitted.

Holding

Ruling on the several Motions before it, the Court precluded Plaintiff’s expert report, denied Plaintiff’s Motion for summary judgment, and entered summary judgment in favor of Firstline. The Court found that Plaintiff’s expert report contained impermissible legal conclusions and would not assist the trier of fact. The Court further concluded that Plaintiff failed to establish that it reasonably expected the policy to cover the losses at issue, and failed to establish that Firstline did something to mislead it into believing coverage applied. Accordingly, with the reasonable expectations doctrine rendered inapplicable, summary judgment was entered in favor of Firstline in accordance with the clear and unambiguous language of the policy.

Questions about this case can be directed to Kevin McNamara at (717) 237-7132 or kmcnamara@tthlaw.com, or to Bernie Kwitowski at (610) 332-7018 or bkwitowski@tthlaw.com.