Moderator: SJC-13172: Verveine Corp. et al,
v. Strathmore Insurance Company et al.
-: Thanks. Attorney Zimmerman?
-: Good morning, Your Honors.
May it please the court.
My name is Ben Zimmerman.
I represent the restaurants Coppa, Toro, and Little Donkey
as appellants in this case.
Businesses like these restaurants
buy all-risk insurance policies, like the ones in this case,
to ensure against losses
that they can't otherwise buy insurance against.
The policies provide coverage when an event or a condition
renders a property going from safe and usable
to unsafe and unusable.
The event or condition, so says the case law,
can be something catastrophic like a tornado, obviously,
that destroys the whole property.
It can be something annoying, like odors or fumes or smoke.
Or yes, it can be something deadly and imperceptible
like carbon monoxide or a ubiquitous virus.
Now, I said virus.
-: Mr. Zimmerman, if I could interrupt you for a moment,
I do wanna talk about the case law here.
I agree with you 100% that we don't weigh
how many courts have ruled in the insured's favor
or the insurance company's favor in figuring this out
any more than the fact that there's different outcomes
doesn't in and of itself create ambiguity in the policy.
And I also understand your position
that you don't have the word physical before damages
like you have it before loss.
But I need to ask you for an explanation,
a fundamental flaw in these cases.
In Massachusetts in the United States District Court,
you've got the same policy at play in Legal Sea Foods.
You've got these United States Court of Appeals cases
and cases involving not just restaurants,
but dental practices, the Eighth Circuit,
Salinger's decision in the superior court,
and on and on and on.
What's the fundamental flaw on all of these other decisions?
-: I think the fundamental flaw, Your Honor,
is they're not following the tenets
of the law of contract construction
that have been followed for decades
and that we're supposed to be faithful to in this case.
And that requires, among other things,
that we decide whether a term is defined.
If it's not defined, our case law says
we construe it strictly against the insurance company.
And Strathmore has left this undefined
for decades and decades and decades.
And they have done it for a reason.
And if we look at the amicus brief that's been filed...
-: Counsel, just because something is undefined
doesn't mean you win or that it is ambiguous.
So can you address that part?
How is the forced
pivot of your clients
towards takeout business through the governor's order
a direct physical loss or damage to property?
-: Well, I think you have to,
and I think you've asked the question correctly.
But it's been posed different ways by different courts.
Has a restaurant who has lost use or access of its property,
of its very business property,
and remember there were closures involved here, right,
has a restaurant who's lost use or access to the property
because of a dangerous physical substance...
-: Well, let me try asking the question a different way.
I think your best case law is the fumes,
the carbon monoxide cases.
And when I look at what the superior court judge did
was she said those cases are different
because in those cases,
the fumes were actually in the restaurant.
Can you address why she's wrong in that analysis
in your estimation?
-: Yes, she's wrong for two reasons.
Number one, I do not think that those cases,
including Matzner which Judge Hinkle decided,
turns on whether the substance
emanates from the property, right?
What we have alleged in this case...
-: Well she didn't say that the substance
emanated from the property.
She said that those substances were in the property.
That is, the carbon monoxide was there.
And so therefore, nobody could use the property,
or whatever the fume was, or the asbestos were.
So here, as far as I could tell,
corona was not in the property.
And so she's saying it's different.
-: Yep, well first of all, the complaint does allege
that coronavirus was present in the property
in several places.
It was present in the proportion
that it's present in the population.
It was present before the orders were issued.
And if you take the...
-: I'm sorry to interrupt you, Mr. Zimmerman,
because I do wanna get to that,
about whether the complaint is enough.
But could you just answer just this one question
and then we can go back to what's in the complaint.
Because I have that very same issue I really wanna get to.
-: Which is what?
-: With Justice Hinkle's decision, for instance.
You've got a chimney and it's blocked.
And there's carbon monoxide and it's in the building,
like the E. coli and like the oil fumes and like the Rudd.
So if you could specifically
answer Justice Wendlandt's question
and we can debate what is and isn't in the complaint
in a moment.
-: Right, okay.
Well, I think we have to take at face value
that the presence of coronavirus
is alleged in the complaint.
But even if it wasn't, okay,
let's just say even if it wasn't,
say the carbon monoxide in Matzner
came from outside of the property.
Say it was dangerous to enter the property.
Look at the Oregon Shakespeare Festival case,
which is a very interesting case
as is the Murray versus State Farm case.
In the Oregon Shakespeare case,
you have smoke that comes and goes.
It's not deadly, it's obnoxious.
There wasn't even an order
that they couldn't use the property.
But they couldn't do it.
It would come and it would go.
We have the exact same situation here
where the virus comes in with people.
It goes, and we have to reduce or eliminate
our use of the property to account for that.
And if you look at the Murray versus State Farm case,
a very interesting case,
it involves a rockslide sitting above a totally unharmed,
totally habitable house, right.
But it's dangerous...
-: Mr. Zimmerman though, even in that case,
and I admit that's a good case,
but even in that case, the concern is that
the rocks are a threat to a particular structure.
So again, it's a good case for you, no doubt.
But it doesn't get at the core
of Justice Wendlandt's question.
-: Well, I think one of the problems is,
is that what you're talking about is a threat to health
and human safety at a premises
as well as the premises itself, right?
Because the virus contaminates the premises.
It contaminates people.
It causes illness and death.
So the fact that it's a rockslide or carbon monoxide
or an illness, if it's coming through in waves
and it's hurting and killing people
and it's causing people
not to be able to use their property,
they've suffered a direct physical loss of
or damage to property.
And if you look, in addition to the cases
that are good for me as Your Honor says,
if you look at the tenets of law, it's not defined.
The dictionary definitions all support our position,
which Strathmore and the superior court don't even mention.
We have the decades of case law,
including the rockslide case and the Oregon case, right?
And then we have this tenet
that no one seems to wanna talk about,
which is what would a reasonable insured expect?
They're being told, "Don't use your property
"or your employees and customers
"are gonna get sick and die," right.
And so they don't.
And they look to their policy, their all-risk policy,
and they say, "Geez, it says if I've suffered
"a direct physical loss of or damage to my property,
"I'm covered for my lost income.
"I'm gonna mitigate the heck out of my damages.
"I'm gonna stay open.
"I'm gonna fight for the insurance company's benefit."
But there's no doubt in my mind as an insured
that I've suffered a physical loss of
or damage to my property in that circumstance.
-: Why, why?
-: Why?
'Cause the property's exactly the same.
-: The problem are the people coming into the property,
not the property, and particularly for takeout.
So if there's something wrong with the property,
how could they do takeout?
-: No, no, I understand.
There seems to be, there's always this question of
was the virus present?
When was it present? How long was it present?
Did it do damage to the property?
The problem that you have...
-: Before you leave that, because you just jump over that,
but your allegations are almost exactly
what the Sixth Circuit said was not enough.
-: Well, if the problem is allegations of presence,
if that is the problem,
then a proper result would be to reverse it
or remand it and allow for an amended pleading,
which Judge Sanders did not do.
But what you're gonna find when you hear from Mr. Goldman
is it doesn't matter what you allege,
if you allege virus was present,
if you allege it damaged your property,
if you allege it stuck to surfaces.
They say it's not covered.
And the problem with that,
and this case is unlike almost any case you've read
for this reason.
They sold one policy that purported
to exclude loss or damage caused by virus,
and one policy that did not exclude loss or damage
caused by virus.
And they're asking you to find that both policies
exclude loss or damage caused by virus.
How can that possibly be?
-: I mean, this is property insurance, right.
I mean, there's the Wimbledon case, right.
You could have bought pandemic insurance, right.
There's express type of insurance
to cover this kind of stuff.
It's enormously expensive.
Wimbledon can afford it. No one else can.
-: Your Honor, if I may. -: Go ahead.
-: Strathmore itself, okay,
in the amicus brief filed by United Policyholders
tells the insurance officials in New York,
We want to sell property insurance
without a virus exclusion because quote,
"they, our policyholders, feel that such an event,
"meaning a pandemic
"or a virus contamination at the property,
"is well within the real or possible fortuitous occurrence
"and should be covered when such an event arises."
They have been asked...
-: Mr. Zimmerman, what are you reading from there?
What is it you're reading from?
Is this in our record?
-: [Attorney Zimmerman] Yes.
-: And what is it that you're reading from?
-: This is a filing of Strathmore
to the New York insurance officials,
basically saying they wanna sell policies,
these kinds of policies without virus exclusions.
-: I think you're referring
to the United Policyholders amicus brief
if I'm not mistaken.
-: Yes, I am.
-: But nonetheless, with that amicus brief,
nonetheless to go to Justice Kafker's point,
this is property insurance.
If the insurer wants to put on a belt and suspenders,
it doesn't mean it's not property insurance.
-: Well, I'm glad you use the belt and suspenders analogy,
because I expect that from Mr. Goldman.
-: "Gee, we put a virus exclusion in our policies, right,"
which turns out to be pretty important
as events unfolded, right?
"We put it in, but it's just belt and suspenders.
"We really don't cover for loss or damage
"caused by a virus."
Well, you know what.
The problem with that is going back to,
Your Honor, Judge Lowy,
is that we don't read insurance policies like that.
We're not allowed to read insurance policies
so that exclusions that are added and taken out of policies
by the insurance company at their choice
don't mean anything, right.
And that's what they're asking you to do.
They're saying: "The virus exclusion, don't look at that.
"That doesn't mean anything."
The virus exclusion says,
"We will not pay for loss or damage
"caused by or resulting from any virus."
What loss or damage are they referring to, Your Honors,
if it's not a pandemic
and the spreading virus at the property?
What could it possibly be?
Because I will tell you that we could amend this complaint.
-: Could it be E. coli, some...
I don't know how that works.
But if you've got some contamination that,
you know, comes throughout the property
and they can't sell food anymore.
-: That could be one.
That could be one circumstance.
But we know from Strathmore's filings
that's attached to the amicus brief
that that's not what they meant.
And moreover, we're not here and our job, frankly,
is not to go looking for ways there isn't coverage.
The opposite is true.
We're supposed to be reading this language
as a reasonable insured would.
And we're supposed to be saying,
"Is there a reasonable way to find coverage here?"
And there have been many, many courts that have done so.
And unless they're being totally unreasonable...
-: Can I ask, Mr. Zimmerman, you know, district courts.
Are there any circuit courts, any appellate courts,
and this West Virginia case
I'm highly skeptical is correct, by the way.
But are there any appellate courts
that have taken your position on the meaning of physical?
Any appellate courts?
-: No, and one of the problems that we're here to discuss...
-: Isn't that troublesome when you don't have
a single appellate court in the country adopting this view?
-: I think what we have here, Your Honor,
is we have the insurance industry had a game plan.
They went and got opinions
from a bunch of federal district courts.
The federal district courts cited each other.
-: Hold on a second, Mr. Zimmerman.
We're talking about the Sixth Circuit.
We're talking about the Eighth Circuit.
We're talking about a number of very,
the Seventh Circuit now I believe correctly,
talking about a fairly distinguished number
of federal appellate courts,
federal district court judges acting alone.
It's a much tougher job.
And you're gonna get diverse opinions.
But we don't have one appellate court
adopting your position?
-: They haven't matriculated through the system yet.
And luckily, we're here talking to you.
I mean, the problem is that, you know,
the First Circuit did the right thing, right?
The First Circuit heard argument and said, "Wait a second.
"This is a state law appellate court problem.
"And we're gonna let the state appellate court rule."
And the other circuits didn't do that.
And what they're basically doing
is making federal common law right in front of you.
And it keeps getting submitted to you as authority.
-: Mr. Zimmerman, you've tried three times now
without success to get to the issue of whether or not
you've alleged enough in the complaint
that there was COVID in the restaurant.
So let's just give you a chance to do that.
Because I think what the argument would be,
if it's not there and you amended the complaint,
I'm not saying that how the argument goes
would be that well, COVID-19 in the restaurant
on the surfaces would satisfy arguably the case law
as opposed to being required to distinguish.
And three times, you've tried to tell us why
and got interrupted, including by me.
(Ben laughs)
Or have you alleged enough in the complaint?
Will you tell us?
-: Yeah, sure.
We've alleged, I direct your attention
to paragraph 51, 19, 22 and 38.
We have attached to our complaint a diagram
of how coronavirus spread when people are in the restaurant.
And we allege in paragraph 51
that Strathmore knew at all times that access and use
of the insured's properties were being prohibited
because of an imminent danger
posed by the presence of COVID-19.
Now we could go back and we could say:
presence of COVID-19 on surfaces,
presence of COVID-19 in the air, but we're not.
First of all, we have no disPleading in this Commonwealth.
And secondly, Mr. Goldman will tell you it doesn't matter.
As I said, they're not going to admit
that that causes damage,
even though their own exclusion says it does.
-: As I think about that,
and I think about all the COVID in the restaurant, right,
that you're alleging is there,
what would happen if the takeout clients
came down with COVID and started to sue the restaurant?
-: I think that's an excellent question, Your Honor.
And I think one of the things
that the insureds have done here, to their great credit,
is they have helped the insurance companies
by trying to limit as best as possible their liability
on the third party side,
and to continue to make money
and protect the insurance company
on the first party, all-risk property insurance side.
So they've done everything they can
to mitigate their losses
as they're required to do under the law.
And so without exposing themselves and others
to both danger and legal liability.
And that goes right back to the question
of direct physical loss of or damage.
You're curtailing, not using large portions of your property
to protect your employees and the public.
And if that's not a physical...
-: You know that when Mr. Goldman gets up though,
he's gonna refer to other parts of the policy.
He's gonna talk about the triggering events
of requiring replacement, rebuilding,
-: Yes.
-: return, loss of use, all of that.
And why aren't those points going to be very good points?
-: I would like to address those three
if I might, Your Honor.
One is the period of restoration.
Strathmore has quite audaciously
cited the period of restoration and put a period
at the end of the first clause of that provision.
But the provision, which I'm looking at,
is really it's a measure of loss provision.
It's not a coverage provision, which tells you
how far afield they go to find a lack of coverage.
But the period of restoration says that damages
are gonna start 72 hours from when the loss occurs.
And they're gonna end in one of three ways:
when the property should have been repaired,
rebuilt, or replaced, that's one.
And then they leave out the other two.
And the other two are: when the business has resumed
at a new permanent location,
that is a cause that does not require
any repairing, rebuilding or restoring,
or one year from the date of the loss, which again...
-: That's a good argument on when it ends.
But it doesn't help you on when it's triggered.
-: No, no, no.
No, it's triggered 72 hours
from the direct physical loss of or damage.
It ends the lesser of.
So what they're trying to do,
and they say it several times in their brief, Your Honor:
Well, that means that the policy requires
that you repair the building.
The policy doesn't require that.
It doesn't say that anywhere.
And the coverage language certainly does not say that.
And with respect to the loss of use, if I might,
and the ordinance or law exclusions,
that is, first of all, those weren't used to deny the claim
because they don't apply here.
Because if they applied here,
then there would never be any coverage for business income.
And there's case law.
I would recommend your reading
to the Jussim versus Mass Bay Insurance case
about efficient cause.
Once there's a covered cause of loss,
you can't use loss of use exclusion
to deny coverage for business income.
Business income is by definition
a loss of use of your business property.
That's what it is.
And you can't use...
When there's a fire, there's almost always
an ordinance of law or something that tells you
you can't go into the building, right?
So once there's a covered cause of loss,
then those ordinance of law and loss of use provisions
are of no, they're of no import.
They can't be.
And they've been interpreted that way
consistent with our position by every single court.
And by the way, Strathmore hasn't cited a single case
that supports their position on those two exclusions.
-: Okay, I'm gonna stop you there, Attorney Zimmerman
and turn to Attorney Goldman.
-: Thank you, Madam Chief Justice.
Let me maybe start with the question
of whether the complaint alleges a virus on the premises.
It does not.
We were pointed to paragraph 51.
And paragraph 51 says that, "If the insureds
"were allowed to access and use their premises,
"COVID-19 would appear on the premises,"
not that it does.
-: So they buy this all-risk insurance.
And now they have to sit around and wait
until there's COVID in the building
and people are getting sick
when they purchased all-risk property insurance?
-: Well, that's not...
What the policy insures, Your Honor,
is direct physical loss of or damage to the property,
not the possibility
of whether there's direct physical loss of
or damage to property.
And the Roche case is a perfect example
that's cited by Judge Kaplan where there's snow removal
for on top of a flat roof with heavy snow accumulation.
And Judge Kaplan specifically said it's not.
-: Don't you have to...
I mean, you really don't want us
to have this be based on an amendment, right,
where they're gonna go back and amend their complaint
and say, you know: There's gonna be droplets of COVID
in one of these restaurants if they're open.
Don't you need to come to terms with COVID itself,
I mean, being present in one of these places.
'Cause if they were open,
we'd have some presence, wouldn't we?
I mean, does the case rise or fall
on whether Mr. Zimmerman included
that there were droplets in one of these places?
-: I have two answers to that question.
First, I don't believe the case rises or falls on that
for reasons I can explain.
But this case, this case in itself does rise or fall.
In other words, I don't believe all cases, right?
If it were alleged, the result wouldn't be any different.
But I just wanna be very clear what they are.
-: I'm just worried Mr. Goldman, that, you know,
we need to be realistic and practical.
If these restaurants are open
and we have people circulating with the virus in them,
that's why the governor and everyone shut them,
to prevent that.
So I'm just nervous that the case would depend
on specificity of pleading.
The Sixth Circuit sort of agonizes over that.
Do you win if there are droplets
in one of these restaurants if they're open?
Or do you lose?
'Cause I'd like to understand that.
I'm a practical person.
If those restaurants are open, there are gonna be droplets.
So I'm just trying to get a sense of that.
-: Well, we win if there are droplets of COVID.
We win if there's COVID in the air.
And the reason is several-fold.
First, there's no alteration or physical damage
to any part of the restaurant caused by those droplets.
Second, which is the reason most of these complaints
don't allege that there's COVID on the premises:
The policy specifically requires
that any direct physical loss of or damage to property
must be the cause of the suspension.
And we know and it's from common knowledge now,
and most of the cases mention this, COVID is cleaned.
You open the windows and wipe down the surfaces
and you still use the property.
This restaurant is still being used today
as soon as the orders were lifted.
The only thing that happened to this property
was that the governor said, you can't go in there.
Excuse me, the governor said
you can't use it for indoor dining.
The property kept being used. It wasn't damaged.
There was nothing that damaged the property.
There was no loss of the property.
There was no physical loss of the property.
The plaintiffs continued to use it
and they're still using it today.
It was simply a governmental restriction
for a limited period of time
on how the property could be used.
Now the second point of this is...
-: Counsel, how is that different than
a forced suspension of operations
due to carbon monoxide's presence?
Because once you clear the monoxide, carbon monoxide, out,
the property itself is pristine.
The carbon monoxide is just in the air
like, you know, COVID-19 would be in the air.
-: Right, I assume Your Honor is referring
to the Matzner case.
-: No, I'm not referring to a particular example.
I mean, take whatever.
There's no question in my mind that COVID-19
is a physical thing.
It's not, for example, an intangible substance
like intellectual property would be.
It's just something we can't see.
It's a physical virus.
So it meets the physical aspect of the definition
as would carbon monoxide.
And I'm wondering what the difference in your estimation is.
-: Well, I don't know about carbon monoxide per se.
And that Matzner case suggests
there's been some damage to the chimney.
And Matzner's been widely criticized
as being wrongly decided by a number of judges
both within the Commonwealth and outside the Commonwealth.
But I can say that it's fundamentally different
from a lot of these contamination,
in fact, all these contamination cases
because of the ephemeral nature of COVID.
We know that COVID can be cleaned.
And that if you don't do anything to it at all,
it expires within a few days.
There's nothing other than routine maintenance
essentially needed to clean it.
And you open the windows to air the restaurant out.
That is fundamentally different from a situation
where you've got a large-scale asbestos problem,
where you have a E. coli contamination of well water,
where you have gasoline
that's poured on the foundation of a building, or fuel oil.
-: What about the smoke cases?
I haven't read the Oregon Theater case,
the Shakespeare Theater case.
But there, the smoke from the wildfires
results in property insurance coverage, right?
-: It does.
I think that case really stands by itself.
And I'd submit it's wrongly decided
and not consistent with Massachusetts law,
a large body of Massachusetts law.
But again, even there, there's something physical in smoke
that's happening to the property itself.
Here, there is nothing physical happening to the property.
What's the problem?
The problem is they don't want people next to each other.
And the complaint is clear on that.
They don't want people next to each other,
breathing on one another so that they get sick.
It has nothing to do with damage to the property.
And that's why the damage to the property
can't be the cause of suspending business.
You don't suspend your business
because you've got particulates on the tables or chairs
that you can just wipe off.
-: So your rule is there's some element of physicality
that has to...
I mean, I think maybe it was Judge Stern
who uses the term sort of.
There needs to be a physical change in the property.
It can't just be droplets.
I'm not sure that's what the case is today.
So you define physical as something physically
that's transforming the property
in less than a way that you can wipe it off.
I mean, I'm just not sure what...
-: Yes.
Well, you'd go back to what the basic premise is,
it's property insurance.
If a waitress in one of these restaurants
trips and spills a pitcher of water
or spills some grease on the floor,
you may not be able to use that floor until you clean it up,
but it's a routine clean up event.
We wouldn't consider...
We wouldn't expect a claim for property damage.
We wouldn't expect a claim for loss of business income.
Obviously, COVID's a more serious problem
than a pitcher of water.
But what it does to the property is the same thing.
With the property, you come in, you clean it up
and you can use the property again, as they did.
Remember, people kept coming into this property to use it
for takeout service.
And then they went back to using it again.
-: I just wanna go back because we're sort of
jumping a little bit over the plaintiff's first argument.
And the language of the, for instance,
the United States District Court
for the District of Massachusetts
talking about integrity of the structure
or a material change in the property
or something has happened that's altered the property.
The plaintiff's position, the restaurant's positions are
we're just infusing that into the policy.
It's not in the policy and what they're saying,
they didn't say it this way.
They're saying that there's just a big echo chamber
of decisions that doesn't really get
at the underlying reasoning.
And for instance, the amicus brief talks about
what we have in the American Food System brief
what the definition is of property damage
in the general liability provision.
And it doesn't require that type of physical damage.
So why is the plaintiff wrong?
That all these cases, what they were trying to say
and just to respond to it,
is that this is really one big echo chamber.
And we're all assuming the first principle,
that there has to be some physicality,
something that has happened to the integrity
of the property or has altered the structure.
Why is that?
-: Well, the plaintiff is wrong because you've got
first, the words of the policy
are direct physical loss of property.
So you have to lose the property.
-: It's disjunctive, it's disjunctive: or damage.
-: I understand.
But the question is: What does direct physical loss mean?
Or what does direct physical damage mean?
Or what has happened?
-: You should put physical damage into the policy.
It's not in the policy.
You just said, "or physical damage."
The policy doesn't say "physical damage."
It says "or damage."
I'm not saying you're not 100% right.
I don't know; I have no idea.
But I'm saying that we're jumping over
the plaintiff's first argument.
-: And that, so.
-: And that argument is, if you want me to say it again,
that there's something that has to happen to the property
that alters it, a material change,
that something about the integrity of the property
that gets infused into these decisions.
They say: That's not required.
Just look at the definition in the other part of the policy.
-: Well, the other part of the policy,
the Second Circuit has specifically correctly pointed out
the other part of the policy is the definition
of a specific term, which is property damage,
which is a defined term with the words used
in that sequence.
It's not used here.
And that term's not used here.
-: That's wrong then.
And I wish I hadn't put that tail onto the question.
(several participants speaking at once)
-: I think if you look at the other provisions of the policy,
you look at the loss settlement provisions of the policy
that talk about the cost
of repairing or replacing the property,
you look at the actual
period of restoration provisions and the simple fact
we add a year limitation on by endorsement.
I mean, the basic form
does not have that additional language.
We did miss that when we did our brief.
There's an endorsement that also said,
"but not more than a year."
But that's simply a time limitation.
And the textual clues in the policy
are specifically referring to repairing, rebuilding,
or replacing the property suggests
we're talking about something that requires repairing,
rebuilding or replacing.
There's nothing here to repair, rebuild, and replace.
And we look at the loss settlement provisions in the policy,
which Judge Sanders below noted:
There's nothing here to repair, rebuild, and replace,
and that's with the loss settlement provisions.
-: Mr. Goldman, can I ask one...
Theft is also covered, right, if the property is stolen.
So that doesn't require physical damage, right?
It's a loss without damage, theft, right?
-: That's exactly correct, Your Honor.
So loss of property would mean permanent dispossession,
permanent or indefinite dispossession of property.
And if we had a physical condition that was a permanent
or indefinite condition
that would not go away
without something other than routine maintenance,
then we might have a direct physical loss
in the same way we'd have theft.
And that's where those environmental cases all fit in.
That's where the fuel oil cases fit in.
That's where the gasoline
and the Building Foundation of Colorado fits in
because we have a condition
that makes the building completely uninhabitable
until and unless there is affirmative, complex,
and expensive repairs done.
Not even repairs, remediation done.
That is not the case here.
Here, we have a condition that by its own forces,
if the insured did nothing,
building would be perfectly fine to use within a few days.
If the insured cleans it,
it's ready to be used much more quickly.
There's no better evidence of that
and that's exactly what they did.
They used it initially for takeout dining.
Then later as soon as the government allowed them to,
they used it for in-house dining,
which they're still using it for.
So then nothing happened to the property,
which is fundamentally different from a situation
where you have to spend hundreds of thousands
or millions or tens of thousands of dollars
to remediate a problem
or you will never be able to use the property again.
And that's the difference between the cases
that the plaintiff relies on,
and what the policy language says
and would have interpreted.
Because remember, this is property insurance.
And we're insuring damage to property
and then to the extent that damage causes
a suspension. -: Can I ask then why you...
Mr. Zimmerman points out that you can buy virus exclusions.
If it's so obvious that viruses are not covered,
why do you need an exclusion for viruses?
-: Oh, 'cause these are restaurants and it's food.
In other words, it's exactly what
I think it was Justice Lowy pointed out.
When you look at the submission that's attached
that was submitted to the New York regulators
that's attached to the amicus brief,
that's what they're talking about.
They're talking about two things.
They're talking about contamination of food.
And the other situation which I talked about
which is Legionnaires' disease
where you have to basically dismantle the entire HVAC system
in order to be able to use the building again.
Those, again, are fundamentally different
than this type of loss.
-: So the virus exclusion is limited to...
Okay, so again, I'm having a little trouble why
Legionnaires' disease is so obviously not property.
Legionnaire's disease
gets into the air conditioning units, right?
-: Right.
-: And I will defer to my scientific colleagues here,
but so why isn't that?
Why wouldn't that be property damage?
You get this disease into the air conditioning system
and it's hard to root out.
So that's not property damage?
-: No, I think Your Honor misunderstood me.
We believe that would be property damage
because there's a expensive thing I have to do
with both money and labor involved to repair that problem
in order to be able to use the building at all.
Otherwise, the building
is completely uninhabitable indefinitely.
And that is the difference with this.
-: So Legionnaire's disease would be covered
because it's hard to extricate from the physical.
It contaminates the physical structure
while this thing just hangs in the air
or drops on the tables.
Okay, I think I...
-: Actually, it drops on the table
and goes away in a few days.
I mean, it becomes non-contagious in a few days.
It becomes inert.
I mean, it becomes dust effectively.
Or you can clean it much more (indistinct).
-: With the chief's version, I have one more question.
-: Well, before you do, before you get off that,
I just wanted to understand:
Are you saying that the exclusion would make it so
that Legionnaires' disease was not covered
under the virus exclusion policy?
I mean, under this policy that has a virus exclusion?
-: Under the policy that has a virus exclusion,
Legionnaires' disease would not be covered
because the exclusion applies to both virus and bacteria.
And Legionnaires' diseases is a bacteria, not a virus.
-: Thank you. Justice Wendlandt?
-: [Justice Wendlandt] That was my (indistinct).
-: Oh, I'm sorry, okay.
-: If I may...
-: Well, I think you've gone well over.
And I think you've made all your points very well.
Thank you so much, Attorney Goldman.
-: [Attorney Goldman] Okay, thank you.
-: And we'll have Attorney Ferguson.
You've got two minutes, or maybe a little more.
Everybody else got a little more.
(participants laugh)
-: Thank you, thank you, Madam Chief Justice.
And thank you, Your Honors.
Good morning.
May it please the court,
Andrew Ferguson on behalf of Commercial.
I don't think I'm gonna need much more than my two minutes,
quite frankly, Your Honor.
And the reason for that is the claim against my client
is a simple one.
There's two different policies here.
There was a policy that was issued to Coppa, Toro.
There was a policy that was issued to Little Donkey.
The Little Donkey policy had the virus exclusion
whereas the Coppa, Toro policy did not.
The sole claim against my client is procuring a policy
for Little Donkey that had the virus exclusion.
For Little Donkey in order to be able to succeed
on its claim over and against Commercial,
it has to be able to establish
that it would have had coverage
under the Strathmore policies but for the virus exclusion.
-: And if it did, would there be negligence?
-: If it did, would there be negligence?
Well, I don't necessarily agree that
there would be negligence on the part of Commercial
for procuring a policy for its client
that had the virus exclusion.
No, I don't say that that would necessarily be negligent.
I think what we would have to do then, Your Honor,
is that we'd have to go back and have a factual discovery
as to why there was a virus exclusion on that policy
and how that came to be.
And I don't think that necessarily is dispositive
at this stage.
What I'm saying here at this stage
is that if there is a finding
that the policies do not afford coverage
but for the virus exclusion,
then you don't need to reach that issue.
And that judgment on the pleading
should enter for Commercial.
That's it.
-: Do we have anything in this record that informs us why,
we have common ownership
with these three restaurants, right,
why one has a virus exclusion and the other two don't?
Do we anything that informs us on this?
-: We have nothing on this record, Your Honor,
that would inform you on that issue, no.
So, Your Honors, I would just say on that point,
I would otherwise just...
Oh I'm sorry, Justice Kafker.
-: And nothing in the complaint
that explains the reason for this difference?
There's nothing in the complaint?
-: Well, I think the complaint makes allegations
about that virus exclusion being inserted
by Strathmore under, for lack of a better term,
some nefarious circumstances.
That allegation has been made,
but I don't think there's anything on the record
that truly establishes why that exclusion
was in that policy yet not on the Coppa, Toro policy.
So with that, Your Honor,
I'd otherwise just rest on my brief.
But I would say I would just like to echo, Your Honors,
that I don't think that this complaint
alleges that the virus was present at this property.
I think it alleges that the virus was everywhere.
But it doesn't say it was at this property.
Nor does it say that there was damage done to the property,
physical damage done to this property
as a result of the virus.
-: Your position, Counsel, is that that makes a difference?
-: To be honest with you, Your Honor,
I don't know if it necessarily does make a difference.
Because I do tend to agree with what the case law says.
-: But which is it?
Does it make a difference or doesn't it make a difference?
-: No, I don't think it would make a difference, Your Honor.
And the reason for that, I think,
is because for the reasons we stated
by Attorney Goldman in stating our brief.
-: I understand.
I'm just wondering if it makes a difference.
-: I would submit it would not.
It would not.
With that, Your Honors, I rest on my brief.