U.S. District Judge Cynthia M. Rufe said Thursday that RDS Vending's "all-risk policy" with United Insurance Co. didn't cover losses stemming from COVID-19 or government stay-at-home orders. Even if RDS did show physical damage to its warehouse, it still would have been barred from coverage by a virus exclusion, Judge Rufe said.
Citing the need to interpret policies according to their "plain language," Judge Rufe found that RDS showed no physical loss of its warehouse. Operations at the warehouse continued during the pandemic because it was deemed an essential business, court records showed, noting that workers were required to practice new safety measures.
Judge Rufe acknowledged that a building could be rendered useless without any noticeable damage. But she noted that in this case, there was no loss because workers were able to use the warehouse while taking steps to social distance from one another.
RDS, which supplies vending machines, coffee makers and other pantry products, argued in October 2020 that the presence of a virus could cause physical damage to a property. It also asserted that it was unaware of any virus exclusion in its policy.
The vendor added that "social anxiety" and the perception that indoor establishments are unsafe also led to physical loss and damage covered under property insurance.
In tossing the case, Judge Rufe built on the trend of courts largely favoring insurers in pandemic coverage disputes. Over 80% of such cases brought by businesses seeking coverage have been permanently dismissed, according to judicial data compiled by the University of Pennsylvania's Carey School of Law.
United Insurance invoked that favorable record in its September dismissal bid, saying the matter was one of settled law. The insurer had argued that a common sense reading of its policy was enough to show that RDS was not entitled to any coverage.
"No matter how extensive its reach, and how sympathetic its victims, the pandemic can provide no basis to impose on insurers, like Union, obligations for risks they never undertook to write, never collected premium for, and, indeed, expressly excluded," it said.
Last week, another Pennsylvania federal judge freed a State Farm insurance unit from having to pay for a Philadelphia fashion boutique's pandemic losses, also saying the retailer failed to allege property damage and its policy's virus exclusion bars coverage.
Counsel for the parties did not immediately respond to requests for comment.
United Insurance is represented by Eric A. Fitzgerald and Hillary N. Ladov of Goldberg Segalla LLP, and by Antonia B. Ianniello and John F. O'Connor of Steptoe & Johnson LLP.
RDS Vending is represented by Sol H. Weiss, James R. Ronca, Paola Pearson, and Stanford B. Ponson of Anapol Weiss.
The case is RDS Vending LLC v. Union Insurance Company, et al., case number 2:20-cv-03928, before the U.S. District Court for the Eastern District of Pennsylvania.
--Additional reporting by Daphne Zhang. Editing by Haylee Pearl.
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