MAC PROPERTY GROUP ET AL. VS. SELECTIVE FIRE AND CASUALTY INSURANCE CO. PRECIOUS TREASURES LLC VS. MARKEL INS. ET AL. (L-2629-20, L 2630-20, L-2631-20, CAMDEN COUNTY and L-0820-20 and L-0892-20, MERCER COUNTY AND STATEWIDE) (CONSOLIDATED) (A-0714-20/A-0962-20/A-1034-20/A-1110-20/A-1111-20/A-1148-20)
These six back-to-back appeals arising from Law Division orders in two vicinages have been consolidated for the issuance of a single opinion. They require the court to consider an issue of first impression –– whether in the context of Rule 4:6-2(e) motions to dismiss with prejudice, insurance policies issued by defendants did not cover business losses incurred by plaintiffs that were forced to close or limit their operations as a result of Executive Orders issued by Governor Philip Murphy to curb the COVID-19 global health crisis.
We affirm because we conclude the motion judges were correct in granting Rule 4:6-2(e) dismissals of plaintiffs' complaints with prejudice for failure to state a claim on the basis that plaintiffs' business losses were not related to any "direct physical loss of or damage to" as required by the terms of their insurance policies. We conclude plaintiffs' business losses were also not covered under their insurance policies' civil authority clauses, which provided coverage for losses sustained from governmental actions forcing closure or limiting business operations under certain circumstances. We further conclude defendants' denial of coverage was not barred by regulatory estoppel. In the alternative, we conclude that even if plaintiffs' business losses otherwise satisfied the requirements of the relevant clauses, coverage was barred by their insurance policies' virus exclusions and endorsements because the Executive Orders were a direct result of COVID-19.
