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Law360 (December 18, 2020, 10:56 PM EST) -- Philadelphia Indemnity Insurance Co. won't "play ball" when it comes to recouping the money minor league baseball teams lost after their season was canceled in light of the coronavirus pandemic, three teams said Thursday.
The Pennsylvania and New Jersey teams are suing the insurance company for not covering the "catastrophic losses" they faced when the season was canceled for the first time in 100 years, the suit says.
The teams — the Lehigh Valley IronPigs in in Allentown, Pennsylvania, the Trenton Thunder in Trenton, New Jersey, and the Erie SeaWolves in Erie, Pennsylvania — say they paid Philadelphia Indemnity specifically for a "business-interruption" insurance policy that would have covered the loss of funds the teams experienced from a canceled season, but the insurer said it was not liable because of a virus exclusion in the policy, the suit says.
The teams are demanding a trial by jury and asking that the court instruct the insurance company to pay the teams what they say is owed to them under the policy.
With a complete loss of ticket sales and the million-dollar leases they each still had to pay to ballpark owners, the teams all filed for coverage from Philadelphia Indemnity in May, the complaint says. But the insurance provider pointed to an exclusion in the policy that says it will not cover "loss or damage caused by or resulting from any virus."
However, the teams argue that this exclusion is "inapplicable and unenforceable."
"No one would expect a Virus Exclusion to apply to a global, once-in-a-lifetime pandemic, especially given the availability of various Pandemic Exclusions," the complaint said.
This is just the latest in a series of suits from minor league baseball teams arguing their insurers should pay for business losses due to COVID-19. An Arizona judge threw out a similar suit against Scottsdale Insurance Co., determining that the insurance company's virus exclusion did apply to the pandemic.
In that complaint, minor league teams argued that it was not the virus itself that caused their loss of business, rather the government regulations and other factors that forced games to be canceled. However, in the complaint against Philadelphia Indemnity Insurance, the teams also question whether virus exclusions are legal in general.
The teams argue that when the insurance industry sought approval of virus exclusions from state regulators in 2006, they lied to regulators, saying that their policies were never intended to recover the kind of losses a virus might bring about, including replacement of property and business loss.
"The existence of coverage the insurers were newly excluding had already been confirmed by the courts long before and was part of the risks all property insurers previously contemplated when writing coverage, which policyholders reasonably expect and would never willingly part with," the complaint says.
Representatives for the teams declined to comment, and Philadelphia Indemnity did not return a request for comment.
The teams are represented by Andrew L Sandler, Stephen LeBlanc and Rebecca Guiterman of Mitchell Sandler LLC, and Robin Cohen, John Briody and Patrick Pijs of McKool Smith PC.
Counsel for the insurer was not immediately known.
The case is Lehigh Valley Baseball LP et al. v. Philadelphia Indemnity Insurance Co. in the Court of Common Pleas of Philadelphia County, Pennsylvania. A case number was not immediately available.
--Editing by Breda Lund.
For a reprint of this article, please contact reprints@law360.com.
