Midwestern College Drops COVID-19 Coverage Suit

By Daphne Zhang
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Law360 (October 15, 2020, 2:23 PM EDT) -- A Midwestern college told a Kansas federal judge that it's dropping a proposed class action against Zurich American Insurance Co. seeking a declaration that its $100 million policy should cover financial losses amid COVID-19.

Benedictine College of Atchison, Kansas, filed a voluntary dismissal Wednesday, saying it is exiting the entire proposed class action coverage dispute without prejudice. The college's dismissal notice came two weeks after Zurich urged the court to drop the case.

"[Zurich] has not yet filed an answer or a motion for summary judgment in this action. Accordingly, plaintiff is exercising its unilateral right to voluntarily dismiss this action without prejudice," the college said in the notice. 

Attorneys representing the college did not immediately respond to calls and emails seeking information regarding Benedictine's voluntarily terminating the case Thursday. Counsel for Zurich did not immediately respond to requests for comment.

Benedictine, which serves more than 2,300 students, hit Zurich with a proposed class action in July, alleging that the carrier said in May that its $100 million policy does not cover pandemic-related losses. The college said it has suffered significant economic losses from shutting down campus activities and dorms.

Benedictine refunded more than $1 million in room and board fees to students in the spring, according to its proposed class action. The college was seeking to represent a national class and Kansas subclass of all higher education institutions covered by Zurich's policies during COVID-19.

As of Oct. 15, Benedictine has seven active COVID-19 cases out of its total 2,505 campus population, according to the college's website. The school has been holding in-person classes for the fall semester but allows students and faculty to work and study remotely if they are sick.

In late September, Zurich urged the Kansas federal court to toss the suit, saying the school was trying to stretch its property policy to cover pandemic related financial losses, and the court should follow "the overwhelming majority" of rulings across the country that have dismissed such claims.

The insurer said then that the college failed to allege physical damage or the virus ever being present on its campus. Even if COVID-19 existed on Benedictine properties, the policy's contamination exclusion expressly bars coverage for virus loss, the carrier argued.

The government closure orders were issued to curb the spread of the virus but never specifically required the college to decontaminate its properties, so the policy's decontamination cost provision will not apply, Zurich said in its dismissal motion last month.

Benedictine is represented by Patrick J. Stueve, Bradley Wilders, Todd M. McGuire, Abby McClellan and Christopher Curtis Shank of Stueve Siegel Hanson LLP, John J. Schirger, Joseph M. Feierabend and Matthew W. Lytle of Miller Schirger LLC, Dawn Marie Parsons, Richard F. Lombardo, Michael Barzee and Rachael D. Longhofer of Shaffer Lombardo Shurin PC and J. Kent Emison of Langdon & Emison-Lexington.

Zurich is represented by Bradley Joseph LaForge of Hite Fanning & Honeyman LLP, Bronwyn F. Pollock, Douglas A. Smith, Evan T. Tager, Archis A. Parasharami and Debra Bogo-Ernst of Mayer Brown LLP and Patrick Florian Hofer and Gabriela Richeimer of Clyde & Co. LLP

The case is Benedictine College v. Zurich American Insurance Co., case number 2:20-cv-02361, in the U.S. District Court for the District of Kansas.

--Editing by Stephen Berg.

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

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