Owners Insurance Co. Must Face Retailer's Trimmed Virus Suit

By Lauren Berg
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Law360 (February 17, 2021, 5:44 PM EST) -- A Missouri federal judge on Tuesday agreed with Owners Insurance Co. that a sporting goods business hasn't shown that pandemic stay-at-home orders caused the business physical damage, but refused to toss claims that the presence of COVID-19 rendered the business' property unsafe or unusable.

U.S. District Judge Stephen R. Bough partially granted Owners Insurance's motion to dismiss a coverage suit brought by Play It Again Sports, tossing a claim seeking a declaration that the policy was triggered by physical loss of and damage to the sporting goods company's property due to stay-at-home orders.

"'Stay at home orders and the existence of COVID-19, alone, does not qualify as 'direct physical loss of or damage to' property,'" the judge said, citing the 2020 case BBMS LLC v. Cont'l Cas. Co. out of the Western District of Missouri.

But Judge Bough did find that Play It Again Sports had adequately alleged that COVID-19 was present on its premises, that the virus' presence rendered the business' property unsafe and unusable and that, as a result, the business suffered the physical loss of or damage to its property, according to the order.

Play It Again Sports said the novel coronavirus transmits both through droplets and aerosols, which are suspended in the air before coming to rest on object surfaces, and argued that the presence of the virus on property impairs its value and causes damage to the property.

The judge said it's plausible to allege that an infected person could have been in Play It Again Sports' store and infected its property, making the property unsafe and unusable. He said it's too early at this stage to dismiss the claim and that discovery is needed to determine the nature and extent of the virus at the sporting goods company's store.

Play It Again Sports filed suit late last year against Owners Insurance, a subsidiary of Auto-Owners Insurance Group, after the insurer refused to cover the interruption of its business and loss of income caused by the coronavirus pandemic. As a result of stay-at-home orders in Missouri, Play It Again Sports had to remain closed for more than a month, according to the order.

Owners sought to dismiss the operative complaint last month, arguing that Play It Again Sports can't have coverage just because it was forced to close for a period of time during the stay-at-home orders. The insurer said that the sporting goods business hadn't proven that anyone infected with the virus had actually been in their store.

In his order Tuesday, Judge Bough found that Play It Again Sports has adequately alleged that the suspension of its store was due to the presence of COVID-19 and not just because of the state's stay-at-home orders. The sporting goods business argues that Owners must cover its loss income and its extra expenses.

"Owners's arguments more challenge the nature, scope and scale of plaintiff's alleged loss, which is better resolved at the summary judgment stage, after the parties have had the benefit of discovery," the judge said.

While the judge tossed Play It Again Sports' claim related to the stay-at-home orders, he kept intact the majority of the sporting goods retailer's suit.

Representatives for the parties did not immediately respond to requests for comment Wednesday.

Judges around the country have for the most part been tossing these COVID-19 insurance coverage cases, with many cases going up the ladder to the appellate realm.

Last week, a New York state judge ruled that a Great American Insurance unit doesn't have to cover a movie theater's losses, finding that the direct physical loss or damage language at issue in the policy requires a tangible physical alteration to the policyholder's property, which did not occur.

A Pennsylvania federal judge earlier this month tossed a shuttered South Carolina restaurant's suit against Pennsylvania National Mutual Insurance Co. for much the same reason.

But two Philadelphia federal judges issued differing opinions on a pair of coverage lawsuits, with one judge ruling a policy's "virus exclusion" bars coverage and the other deferring the issue to state courts.

Earlier this month, Los Angeles restaurant Plan Check asked the Ninth Circuit to reverse a district court's decision to toss its proposed class action seeking coverage from AmGuard Insurance Co. for losses stemming from COVID-19 shutdown orders.

And a group of minor league baseball teams sought to revive their suit against their three Nationwide insurers after an Arizona federal judge granted a bid by National Casualty Co., Scottsdale Indemnity Co. and Scottsdale Insurance Co. to dismiss the case.

Play It Again Sports is represented by Dyanna Ballou of Rasmussen Dickey Moore LLC and Daniel I. Schlessinger of Jaszczuk PC.

The insurance company is represented by George F. Verschelden, Todd A. Noteboom and Emily M. Asp of Stinson LLP.

The case is NECO Inc. d/b/a Play It Again Sports v. Owners Insurance Co., case number 2:20-cv-04211, in the U.S. District Court for the Western District of Missouri.

--Additional reporting by Jeff Sistrunk, Daphne Zhang, Matthew Santoni and Mike Curley. Editing by Jay Jackson Jr.

For a reprint of this article, please contact reprints@law360.com.

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Case Information

Case Title

NECO, Inc. v. Owners Insurance Company

Case Number



Missouri Western

Nature of Suit



Stephen R. Bough

Date Filed

October 28, 2020

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