Hartford Fire Ins. Co. v. Moda, LLC ( 2023 )

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HARTFORD FIRE INSURANCE COMPANY v.
MODA, LLC, ET AL.
(SC 20678)
Robinson, C. J., and McDonald, D’Auria, Mullins,
Ecker and Alexander, Js.
Syllabus
The plaintiff insurance company sought a judgment declaring that it was
not obligated to cover certain business losses suffered by the defendants,
related companies that sell footwear to retailers throughout the country,
during the COVID-19 pandemic. Prior to the pandemic, the defendants
purchased two insurance policies from the plaintiff, a package policy
that covered specified premises and business personal property, and a
marine policy that covered the defendants’ inventories while in transit
and storage. The package policy specifically provided coverage for
‘‘direct physical loss of or direct physical damage to . . . [c]overed
[p]roperty’’ caused by or resulting from a covered cause of loss. It also
included a provision obligating the plaintiff to pay for the loss of business
income incurred by the defendant from ‘‘the necessary interruption of
. . . business operations’’ and an exclusion for loss or damage caused
by the presence, growth, proliferation, or spread of a virus. The marine
policy, which was controlled by New York law pursuant to its choice
of law provision, likewise insured ‘‘against all risks of direct physical
loss or direct physical damage to’’ insured property, subject to specific
exclusions. As a result of various governmental orders temporarily clos-
ing nonessential businesses at the beginning of the COVID-19 pandemic,
the defendants’ retail customers cancelled orders, causing the defen-
dants’ warehouses to overflow with inventories, which, due to the sea-
sonal nature of the retail business, became effectively unsellable. After
the plaintiff commenced the present action, the defendants filed a coun-
terclaim, alleging, inter alia, breach of the package and marine policies
and breach of the implied covenant of good faith and fair dealing. The
plaintiff thereafter moved for summary judgment on the complaint and
the counterclaim, arguing that neither the package policy nor the marine
policy covered the claimed business losses because the defendants had
not suffered a ‘‘direct physical loss of or direct physical damage to’’
insured property. Alternatively, the plaintiff claimed that the claimed
losses were subject to the package policy’s virus exclusion. In opposing
summary judgment, the defendants claimed to have suffered three forms
of direct physical loss of or damage to property, namely, contamination
of their property, loss of use of their property, and loss of value of
their inventories. The trial court concluded that neither policy provided
coverage. The court reasoned, with respect to the package policy, that
the defendants’ losses were subject to the virus exclusion and, therefore,
exempted from coverage. With respect to the marine policy, the trial
court reasoned that, under New York law, the words ‘‘direct’’ and ‘‘physi-
cal’’ in an insurance policy limited coverage obligations to physical
damage to the property itself and, therefore, that the defendants’ claims
regarding the loss of use of and access to their property were unavailing.
Finding no allegations in the counterclaim or evidence in the record
that the defendants’ shoes had somehow been infected with the coronavi-
rus, the trial court also rejected the defendants’ contamination claim.
Accordingly, the trial court granted the plaintiff’s motion for summary
judgment and rendered judgment for the plaintiff on its claim and on
the defendants’ counterclaim, and the defendants appealed.
Held that the defendants’ claimed business losses were not covered under
either the package policy or the marine policy, and, accordingly, this
court affirmed the trial court’s judgment:
1. The defendants failed to establish a genuine issue of material fact as to
whether they suffered a covered loss under the package policy, and,
because the defendants’ businesses losses were not covered by that
policy, this court did not need to address whether those losses were
subject to the policy’s virus exclusion:
The defendants’ claim that the package policy provided coverage for the
loss of the value and use of their insured property when retailers were
forced to close during the pandemic was resolved in the companion case
of Connecticut Dermatology Group, PC v. Twin City Fire Ins. Co. (346
Conn. 33), in which this court interpreted a policy with almost identical
language and held that, under Connecticut law, the plain meaning of the
phrase ‘‘direct physical loss of . . . property’’ did not include the suspen-
sion of business operations on a physically unaltered property in order
to prevent the transmission of the coronavirus, as the ordinary usage of
that phrase clearly and unambiguously required some physical, tangible
alteration to or deprivation of the property that renders it physically
unusable or inaccessible.
Moreover, with respect to the defendants’ claim that their property sus-
tained direct physical damage because it was contaminated with the
coronavirus, the defendants did not explain how the alleged contamina-
tion contributed to their business losses, and, as this court explained in
Connecticut Dermatology Group, PC, even if the defendants could prove
that their property was contaminated with the coronavirus, that was not
sufficient to establish that the property was physically lost or damaged
within the meaning of the provisions of the package policy.
2. The trial court correctly concluded that, under New York law, the marine
policy plainly and unambiguously did not cover the defendants’ claimed
business losses:
New York courts consistently have held that language providing coverage
only for ‘‘direct physical loss or direct physical damage,’’ like that in the
marine policy, does not describe business income losses incurred as a
result of COVID-19 related closures when the insured property itself was
not alleged or shown to have sustained direct physical loss or physical
damage, and there was no reason to disregard the substantial body of
precedent, uniformly followed by New York courts and federal courts
applying New York law, interpreting ‘‘direct physical loss’’ to require
some fault in the physical substance of the insured property.
3. In deciding in favor of the plaintiff on the defendants’ counterclaim, the
trial court reasoned that, because the plaintiff had properly denied the
defendants’ insurance claims, the defendants’ counterclaim failed as a
matter of law, and the defendants did not ask this court to question
that reasoning on appeal.
Argued September 15, 2022—officially released January 27, 2023*
Procedural History
Action for a judgment declaring that the plaintiff is
not obligated to provide coverage under certain insur-
ance policies for the defendants’ alleged business losses
as a result of the COVID-19 pandemic, and for other
relief, brought to the Superior Court in the judicial dis-
trict of Hartford, where the defendants filed a counter-
claim; thereafter, the case was transferred to the judicial
district of Waterbury, Complex Litigation Docket,
where the court, Bellis, J., granted the plaintiff’s motion
for summary judgment and rendered judgment thereon,
from which the defendants appealed. Affirmed.
Christine A. Montenegro, pro hac vice, with whom
were Tony Miodonka and, on the brief, Joshua A. Siegel
and Jerold Oshinsky, pro hac vice, for the appellants
(defendants).
Jonathan M. Freiman, with whom were Anjali S.
Dalai, pro hac vice, and, on the brief, Mark K. Ostrow-
ski, Sarah E. Dlugoszewski, Sarah D. Gordon, pro hac
vice, James E. Rocap III, pro hac vice, and Johanna
Dennehy, pro hac vice, for the appellee (plaintiff).
Brian E. Spears and John N. Ellison, pro hac vice,
filed a brief for United Policyholders as amicus curiae.
Wystan M. Ackerman and Denis J. O’Malley filed
a brief for the American Property Casualty Insurance
Association as amicus curiae.
Opinion
ECKER, J. This is one of two cases decided today
in which we must determine whether business losses
suffered during the COVID-19 pandemic are covered by
insurance for ‘‘direct physical loss of or direct physical
damage to . . . [p]roperty . . . .’’ See Connecticut
Dermatology Group, PC v. Twin City Fire Ins. Co.,
346 Conn. 33, A.3d (2023) (Connecticut Derma-
tology). The plaintiff is Hartford Fire Insurance Com-
pany (Hartford Fire). Before the pandemic, Hartford
Fire sold two insurance policies to the defendants,
Moda, LLC, and its affiliates (collectively, Fisher).1 The
parties brought their claim and counterclaim to deter-
mine whether those policies provide coverage for losses
suffered by Fisher during the pandemic. We agree with
the trial court that Fisher’s losses are not covered by
the relevant policies, and we therefore affirm the grant-
ing of summary judgment in favor of Hartford Fire.
The record reflects the following facts. Fisher sells
shoes to department stores and other retailers across
the country. In the first months of 2020, disaster struck
at Fisher, as it did around the world, in the form of the
COVID-19 pandemic. To slow the spread of the SARS-
CoV-2 virus, state governments issued orders temporar-
ily closing all nonessential businesses. Fisher’s ‘‘major
retail customers . . . shuttered their storefronts [and]
canceled . . . orders, placed months prior, from [Fish-
er’s] spring lines.’’ (Internal quotation marks omitted.)
As a result, Fisher’s warehouses ‘‘overflow[ed] with
spring inventory, which, due to the seasonal nature of
the retail business, [was] effectively unsellable.’’ (Inter-
nal quotation marks omitted.) Fisher alleged that it has
‘‘suffered immense financial injuries’’ and may ‘‘have
no choice but to liquidate’’ unless its losses are insured.
(Internal quotation marks omitted.)
Before the pandemic, Fisher purchased two insur-
ance policies from Hartford Fire, which were in effect
from October, 2019, to October, 2020: (1) a multi-flex
business policy (package policy), and (2) an ocean
marine policy (marine policy). The package policy cov-
ers ‘‘direct physical loss of or direct physical damage to
. . . [c]overed [p]roperty caused by or resulting from
a [c]overed [c]ause of [l]oss.’’ The policy defines a
‘‘[c]overed [cause] of [l]oss’’ as ‘‘direct physical loss or
direct physical damage that occurs during the [p]olicy
[p]eriod and in the [c]overage [t]erritory unless the loss
or damage is excluded or limited [by the] policy.’’ Cov-
ered property includes specified premises and ‘‘[b]usi-
ness [p]ersonal [p]roperty,’’ such as ‘‘[s]tock.’’
In addition to property loss or damage, the package
policy covers the loss of business income incurred (1)
‘‘due to the necessary interruption of . . . business
operations during the [p]eriod of [r]estoration due to
direct physical loss of or direct physical damage to
property caused by or resulting from a [c]overed [c]ause
of [l]oss at [s]cheduled [p]remises’’;2 (2) ‘‘when access
to . . . ‘[s]cheduled [p]remises’ is specifically prohib-
ited by order of a civil authority as the direct result of a
[c]overed [c]ause of [l]oss to property in the immediate
area of [the] ‘[s]cheduled [p]remises’ ’’; and (3) in the
event of an ‘‘interruption of . . . business operations
. . . due to loss or damage to property caused by . . .
[a] virus,’’ if the virus ‘‘is the result of’’ a ‘‘[s]pecified
[c]ause of [l]oss,’’ which is defined to include ‘‘aircraft
or vehicles . . . .’’ (Internal quotation marks omitted.)
Excluded from the package policy’s coverage, how-
ever, is any ‘‘loss or damage caused directly or indirectly
by’’ the ‘‘[p]resence, growth, proliferation, spread or
any activity of . . . [a] virus.’’ This virus exclusion is
subject to an exception for loss or damage caused by
a ‘‘ ‘[s]pecified [c]ause of [l]oss,’ ’’ which includes ‘‘air-
craft or vehicles . . . .’’
The marine policy that Fisher purchased from Hart-
ford Fire protects Fisher’s shoes while they are in transit
and storage. It ‘‘insures against all risks of direct physi-
cal loss or direct physical damage to [i]nsured [p]rop-
erty from any external cause,’’ subject to specific exclu-
sions. ‘‘Insured [p]roperty’’ includes Fisher’s ‘‘shoes and
related accessories.’’
Hartford Fire initiated this action seeking a judgment
declaring that Fisher’s losses are not covered by the
package policy.3 Fisher filed an answer and counter-
claim, alleging (1) breach of the package and marine
insurance policies, (2) breach of the implied covenant
of good faith and fair dealing, and (3) violation of the
Connecticut Unfair Insurance Practices Act (CUIPA),
General Statutes § 38a-815 et seq., via the Connecticut
Unfair Trade Practices Act (CUTPA), General Statutes
§ 42-110a et seq., by, among other things, ‘‘refusing to
pay claims without conducting a reasonable investiga-
tion based [on] all available information’’ and ‘‘failing
to promptly settle claims, [when] liability has become
reasonably clear . . . .’’
Hartford Fire moved for summary judgment on its
declaratory judgment complaint and Fisher’s counter-
claim, arguing that neither the package policy nor the
marine policy covered Fisher’s losses because Fisher
had not suffered a ‘‘direct physical loss of or direct
physical damage to’’ property. (Internal quotation marks
omitted.) Alternatively, Hartford Fire claimed that the
virus exclusion in the package policy ‘‘expressly
exclude[s] coverage for any loss or damage caused by
a virus, and [Fisher’s] COVID-19 related business losses
were caused by the . . . coronavirus . . . .’’ Fisher
opposed Hartford Fire’s motion for summary judgment,
contending that it had suffered ‘‘three distinct forms of
direct physical loss of or damage to property: contami-
nation of its property, loss of use of its property, and loss
of value of its inventory.’’ (Emphasis omitted; internal
quotation marks omitted.) Fisher further argued that
the virus exclusion in the package policy was inapplica-
ble because its business losses were not caused by the
COVID-19 virus but, rather, by the ‘‘business interrup-
tion caused by orders of civil authority used to control
a pandemic . . . .’’
The trial court concluded that there was no coverage
under either policy. With respect to the package policy,
the court reasoned that Fisher’s losses were exempted
from coverage by the virus exclusion because ‘‘[t]here
[could] be no doubt that the cause of [Fisher’s] damages
[was] the [SARS-CoV-2] virus . . . .’’ With respect to
the marine policy, the court reasoned that, ‘‘under New
York law, the words ‘direct’ and ‘physical’ in an insur-
ance policy limit an insurance company’s coverage obli-
gations to physical damage to the property itself.’’
Fisher therefore could not ‘‘succeed on [its argument
that it was] entitled to coverage based on loss of access
to the property and the fact that [its] inventory became
outdated or diminished in value.’’ The court rejected
Fisher’s argument that its property had been ‘‘ ‘contami-
nated’ ’’ on the ground that ‘‘there [were] no allegations
in the counterclaim or evidence in the record indicating
that [its] shoes [had] somehow been infected with the
. . . virus.’’ Having determined that ‘‘the language of
both the package policy and the marine policy clearly
and unambiguously [did] not cover [Fisher’s] alleged
losses,’’ the trial court concluded that Harford was
‘‘entitled to summary judgment’’ on its claim and Fish-
er’s counterclaim. This appeal followed.4
Our review of a trial court’s interpretation of an insur-
ance contract is de novo; e.g., National Grange Mutual
Ins. Co. v. Santaniello, 290 Conn. 81, 88, 961 A.2d 387(2009); as is our review of a trial court’s decision to grant
summary judgment. E.g., Graham v. Commissioner of
Transportation, 330 Conn. 400, 415, 195 A.3d 664(2018). In deciding a motion for summary judgment,
the court must view the evidence in the light most
favorable to the nonmoving party. E.g., Heisinger v.
Cleary, 323 Conn. 765, 776, 150 A.3d 1136 (2016). Sum-
mary judgment is appropriate if ‘‘there [is] no genuine
issue as to any material fact’’ and ‘‘the moving party
is entitled to judgment as a matter of law.’’ (Internal
quotation marks omitted.) Id.; see Practice Book § 17-49.
I
THE PACKAGE POLICY
It is well established that ‘‘any ambiguity in the terms
of an insurance policy must be construed in favor of
the insured because the insurance company drafted the
policy.’’ (Internal quotation marks omitted.) Lexington
Ins. Co. v. Lexington Healthcare Group, Inc., 311 Conn.
29, 38, 84 A.3d 1167 (2014).5 However, we ‘‘will not
torture words to import ambiguity . . . .’’ (Internal
quotation marks omitted.) Id. ‘‘If the terms of the policy
are clear and unambiguous, then the language . . .
must be accorded its natural and ordinary meaning.’’
(Internal quotation marks omitted.) Id.Coverage under the package policy is limited to cases
of ‘‘direct physical loss of or direct physical damage to
. . . [p]roperty . . . .’’ In the companion case that we
decide today, Connecticut Dermatology, we interpreted
a policy with almost identical language. See Connecti-
cut Dermatology, PC v. Twin City Fire Ins. Co., supra,346 Conn. 36–37. We held that ‘‘the plain meaning of
the term ‘direct physical loss of . . . [p]roperty’ does
not include the suspension of business operations on
a physically unaltered property in order to prevent the
transmission of the coronavirus. Rather, in ordinary
usage, the phrase ‘physical loss of . . . [p]roperty’
clearly and unambiguously means that there must be
some physical, tangible alteration to or deprivation of
the property that renders it physically unusable or inac-
cessible.’’ Id., 51. Mere loss of use or access is not
enough, unless that loss is caused by a physical alter-
ation of the property or the physical removal of the
property.6 See id., 53–58. There is no need to repeat
that reasoning here.
Our holding in Connecticut Dermatology resolves
most of the issues raised by Fisher with respect to the
package policy. Fisher’s main claim is that it lost the
value and use of its insured property when stores were
forced to close during the pandemic. That claim fails
as a matter of law because the losses Fisher suffered
did not result from any tangible physical alteration to
Fisher’s stock or real property. Rather, those losses
resulted from ‘‘a transformation in governmental and
societal expectations and behavior that had a seriously
negative impact on [Fisher’s] businesses.’’ Id., 52. The
plain language of the package policy does not provide
coverage for such losses.
Fisher claims, without elaboration, that its property
suffered direct physical damage because it was contam-
inated with the SARS-CoV-2 virus. It points to testimony
in the record that ‘‘persons infected with or carrying
[the virus] were present at Fisher’s facilities . . . .’’
This testimony, Fischer claims, raises ‘‘an issue of fact
[as to] whether Fisher’s shoes themselves were contam-
inated . . . .’’
Fisher has not explained how this alleged contamina-
tion contributed to its business losses. Fisher has not
argued or provided evidence that it spent money to
decontaminate its shoes or that the shoes could not be
sold, or would need to be sold for less, because they
were contaminated. Fisher claims that the shoes became
‘‘effectively unsellable’’ because they went out of sea-
son, not because they were contaminated. Moreover,
as we explained in Connecticut Dermatology, ‘‘the virus
is not the type of physical contaminant that creates the
risk of a direct physical loss because, once a contami-
nated surface is cleaned or simply left alone for a few
days, it no longer poses any physical threat to occu-
pants.’’ Connecticut Dermatology Group, PC v. Twin
City Fire Ins. Co., supra, 346 Conn. 59. Contamination
with the SARS-CoV-2 virus, even if it could be proved, is
not sufficient to establish that the shoes were physically
lost or damaged within the meaning of the package pol-
icy.7
For these reasons, Fisher has failed to establish a
genuine issue of material fact as to whether it suffered
a covered loss under the package policy. As Fisher’s
business losses are not covered by the package policy,
we do not need to address whether those losses are
excluded from coverage by the virus exclusion con-
tained in that policy.8
II
THE MARINE POLICY
We next address whether Fisher’s losses are covered
by the marine policy. Our interpretation of that policy
is governed by New York law.9 In New York, as in
Connecticut, ‘‘[i]f the terms of a policy are ambiguous
. . . any ambiguity must be construed in favor of the
insured and against the insurer . . . .’’ (Citations omit-
ted; internal quotation marks omitted.) Antoine v. New
York, 56 App. Div. 3d 583, 584, 868 N.Y.S.2d 688 (2008).
However, ‘‘[when] the contract is unambiguous on its
face, it should be construed as a matter of law and
summary judgment is appropriate . . . .’’ (Citations
omitted.) Niagara Frontier Transit Metro System, Inc.
v. Erie, 212 App. Div. 2d 1027, 1027, 623 N.Y.S.2d 33(1995).
The marine policy, like the package policy, provides
coverage only for ‘‘direct physical loss or direct physical
damage to [i]nsured [p]roperty . . . .’’ New York prece-
dent leads us to the same conclusion with respect to
the marine policy that we reached under Connecticut
law with respect to the policies at issue in Connecticut
Dermatology and in part I of this opinion. New York
courts consistently have held that such language does
not describe business income losses incurred as a result
of COVID-19 related closures ‘‘[when] the insured prop-
erty itself was not alleged or shown to have suffered
direct physical loss or physical damage.’’ 10012 Hold-
ings, Inc. v. Sentinel Ins. Co., Ltd., 21 F.4th 216, 221
(2d Cir. 2021).
In Roundabout Theatre Co. v. Continental Casualty
Co., 302 App. Div. 2d 1, 2, 751 N.Y.S.2d 4 (2002), the
court considered whether a theater was insured against
the loss it suffered when a street closure prevented
customers from reaching its doors. The theater’s insur-
ance covered ‘‘all risks of direct physical loss or damage
to the [insured’s] property . . . .’’ (Emphasis omitted;
internal quotation marks omitted.) Id., 3. The court held
that ‘‘[t]he plain meaning of the words ‘direct’ and ‘phys-
ical’ narrow[ed] the scope of coverage and mandate[d]
the conclusion that losses resulting from off-site prop-
erty damage do not constitute covered perils under the
policy . . . .’’ (Citations omitted.) Id., 7. In other words,
the theatergoers’ inability to reach the theater because
of the street closure did not constitute direct physical
loss or damage to the theater. See id., 7–10.
This precedent has been uniformly followed by New
York courts and federal courts applying New York law.
See, e.g., Visconti Bus Service, LLC v. Utica National
Ins. Group, 71 Misc. 3d 516, 523, 142 N.Y.S.3d 903 (2021)
(‘‘[t]he words ‘direct’ and ‘physical’ narrow the scope
of coverage to physical damage to the property itself
and foreclose [the] argument that the phrase ‘loss of’
includes mere ‘loss of use of’ the property’’); see also,
e.g., Newman Myers Kreines Gross Harris, P.C. v.
Great Northern Ins. Co., 17 F. Supp. 3d 323, 331
(S.D.N.Y. 2014) (‘‘[t]he words ‘direct’ and ‘physical’ . . .
ordinarily connote actual, demonstrable harm of some
form to the premises itself, rather than forced closure
of the premises for reasons exogenous to the premises
themselves’’). Hartford Fire claims ‘‘that every New
York court addressing the issue—both state and fed-
eral—has held that property insurance policies like [the
one at issue] do not cover losses sustained from [COVID-
19] and related government[al] orders’’; (emphasis in original;
footnotes omitted); and Fisher has not provided any
authority to contradict Hartford Fire’s claim. See, e.g.,
Island Gastroenterology Consultants, PC v. General
Casualty Co. of Wisconsin, Docket No. 604318-21, 2021
WL 3852967, *2 (N.Y. Sup. August 25, 2021) (decision
without published opinion, 72 Misc. 3d 1221(A), 150
N.Y.S.3d 898 (2021)) (‘‘the loss of use of premises due
to COVID-19 related government[al] orders does not
trigger business-income coverage based on physical
loss to property’’); Mangia Restaurant Corp. v. Utica
First Ins. Co., 72 Misc. 3d 408, 414, 148 N.Y.S.3d 606(2021) (‘‘[s]ince the appearance of the COVID-19 pan-
demic, courts have continued to posit that actual physi-
cal damage is required before business interruption
insurance coverage is paid’’).
Fisher asks us to disregard these cases and, instead,
to apply the reasoning employed by the Appellate Divi-
sion of the New York Supreme Court in a different
context in Pepsico, Inc. v. Winterthur International
America Ins. Co., 24 App. Div. 3d 743, 806 N.Y.S.2d
709 (2005). That case involved insurance coverage for
losses caused by ‘‘ ‘off-tasting’ soft drink products . . .
resulting from faulty raw ingredients . . . .’’ (Citation
omitted.) Id., 743. The court concluded that the plaintiff
could prove the drinks were ‘‘ ‘physically damaged’ ’’
without showing that they ‘‘ha[d] gone from good to
bad.’’ Id., 744. In other words, the court reasoned that
the drinks could be ‘‘ ‘physically damaged’ ’’ simply by
being made from faulty ingredients and suffering a loss
in market value as a result. Id.Fisher points to the court’s statement in Pepsico,
Inc., that ‘‘[i]t is sufficient . . . that the product’s func-
tion and value ha[d] been seriously impaired, such that
the product [could not] be sold . . . .’’ (Citations omit-
ted.) Id. In context, however, that statement merely
reinforces the court’s conclusion that the presence of
faulty raw ingredients could be a ‘‘physical event’’ that
‘‘ ‘physically damaged’ ’’ the products.10 Id. There does
not appear to have been any doubt in Pepsico, Inc.,
that the drinks contained faulty ingredients. Thus, the
holding in Pepsico, Inc., does not contradict the sub-
stantial body of New York precedent interpreting
‘‘direct physical loss or direct physical damage to
[i]nsured [p]roperty’’ to require some fault in the physi-
cal substance of the insured property. We therefore
agree with the trial court that the marine policy plainly
and unambiguously does not cover Fisher’s losses.11
III
CONCLUSION
Fisher’s losses plainly and unambiguously are not
covered by either the package policy or the marine
policy. The trial court was therefore correct to render
summary judgment on Hartford Fire’s claim for declara-
tory relief.12 The only remaining issue is the status of
Fisher’s counterclaim. The trial court reasoned that,
because Hartford Fire had properly denied Fisher’s
insurance claims, Fisher’s counterclaim must fail as a
matter of law. Fisher has not asked us to question that
reasoning. Thus, having decided that Fisher’s losses are
plainly and unambiguously not covered by the policies,
we affirm the judgment of the trial court.
The judgment is affirmed.
In this opinion the other justices concurred.
* January 27, 2023, the date that this decision was released as a slip
opinion, is the operative date for all substantive and procedural purposes.
1
The defendants are Moda, LLC; Marc Fisher, LLC; Fisher International,
LLC; MB Fisher, LLC; Fisher Footwear, LLC; MFKK, LLC; Unisa Fisher
Wholesale, LLC; Fisher Licensing, LLC; Fisher Accessories, LLC; Fisher
Sigerson Morrison, LLC; MBF Holdings, LLC (DE); Marc Fisher Holdings,
LLC; Fisher Services, LLC; MBF Air, LLC; Unisa Fisher, LLC; MBF Licensing,
LLC; MBF Invest, LLC; MBF Holdings, LLC (WY); Fisher Design, LLC; Marc
Fisher Jr. Brand, LLC; Marc Fisher International, LLC; MF-TFC, LLC; Easy
Spirit, LLC; MFF-NW, LLC; and MFF NW Investment, LLC.
2
‘‘Period of [r]estoration’’ is defined as ‘‘the period of time that: (1) [b]egins
at the time the [c]overed [c]ause of [l]oss occurred; and (2) [e]nds on the
earlier of: (a) [t]he date when the property should be repaired, rebuilt or
replaced with reasonable speed and similar quality; or (b) [t]he date when
business is resumed at a new permanent location.’’
3
Fisher first raised the coverage dispute relating to the marine policy as
part of its counterclaim. Hartford Fire subsequently moved for summary
judgment on the ground that there was no coverage under either policy.
4
Fisher appealed from the judgment of the trial court to the Appellate
Court, and we transferred the appeal to this court pursuant to General
Statutes § 51-199 (c) and Practice Book § 65-1.
5
The parties appear to agree that the package policy is governed by
Connecticut law.
6
For example, property that has been stolen or lost at sea may not be
physically altered but has been physically removed from the owner’s posses-
sion and rendered physically inaccessible. It is undisputed that Fisher’s
property was not lost, stolen, or rendered physically inaccessible.
7
For the same reason, Fisher cannot establish direct physical loss or
damage to premises other than its own. Two provisions of Fisher’s business
income coverage apply if there is direct physical loss or damage to other
premises. First, the package policy provides ‘‘[d]ependent [p]roperties’’ cov-
erage for lost business income if there is direct physical loss or damage at
premises on which Fisher depends to ‘‘[d]eliver materials or services . . .
[to] [a]ccept . . . [or] [m]anufacture products . . . [or to] [a]ttract custom-
ers . . . .’’ Second, ‘‘[c]ivil [a]uthority’’ coverage applies to lost business
income if civil authority orders are issued in response to direct physical loss
or damage at premises ‘‘in the immediate area’’ of Fisher’s insured premises.
Fisher has not offered sufficient evidence to show that its dependent
properties, or properties in Fisher’s immediate area, suffered the kind of
physical alteration that would constitute direct physical loss or damage
under the package policy. Although nonessential businesses were forced to
close during the pandemic, the evidence in the record suggests that these
closures were preventative measures to prevent the spread of the SARS-
CoV-2 virus. As we explained in detail in Connecticut Dermatology, the
mere fact that proximity to an infected person while inside a building might
be dangerous does not qualify as a risk of direct physical loss or damage
to that building. See Connecticut Dermatology, PC v. Twin City Fire Ins.
Co., supra, 346 Conn. 52. These preventative measures do not, therefore,
constitute a covered cause of loss under the package policy.
In addition, we note that Fisher has coverage for losses of business income
caused by a virus. This coverage is limited to viruses that are caused by a
‘‘specified cause of loss . . . .’’ (Internal quotation marks omitted.) We have
considered Fisher’s arguments and agree with the trial court that the SARS-
CoV-2 virus was not a specified cause of loss, as defined in the package policy.
8
For the same reason, we do not need to consider Fisher’s claim that
Hartford Fire should be estopped from relying on the virus exclusion.
9
The choice of law provision in the marine policy directs us to apply
federal maritime law or, in the absence of federal maritime law, the law of
New York. The United States Supreme Court has declined to create a federal
common law to govern maritime insurance contracts and, instead, has ‘‘[left]
the regulation of marine insurance . . . [to] the [s]tates.’’ Wilburn Boat Co.
v. Fireman’s Fund Ins. Co., 348 U.S. 310, 321, 75 S. Ct. 368, 99 L. Ed. 337(1955). Fisher nevertheless attempts to persuade us that federal maritime
common law applies. It points us to only one case, Northwestern Selecta,
Inc. v. Guardian Ins. Co., 541 F. Supp. 3d 206 (D.P.R. 2021), in which the
United States District Court for the District of Puerto Rico concluded that
Wilburn Boat Co. was inapplicable because ‘‘the Puerto Rico legislature
exclude[d] marine insurance contracts from the Insurance Code . . . .’’ Id.,
211. Neither party in this case argues that there is no New York law for us to
apply, and we see no grounds for pursuing the logic followed in Northwestern
Selecta, Inc. We have considered Fisher’s other choice of law arguments
and find them similarly unconvincing.
10
The court in Pepsico, Inc. v. Winterthur International America Ins.
Co., supra, 24 App. Div. 3d 744, relied on five cases, all of which involved
physically contaminated products. See National Union Fire Ins. Co. of
Pittsburgh, P.A. v. Terra Industries, Inc., 216 F. Supp. 2d 899, 901 (N.D.
Iowa 2002) (benzene contamination in carbon dioxide product), aff’d, 346
F.3d 1160 (8th Cir. 2003), cert. denied, 541 U.S. 939, 124 S. Ct. 1697, 158 L.
Ed. 2d 360 (2004); Zurich American Ins. Co. v. Cutrale Citrus Juices USA,
Inc., Docket No. 5:00-CV-149-OC-10GRJ, 2002 WL 1433728, *1 (M.D. Fla.
February 11, 2002) (juice adulterated with foreign substance); Pillsbury Co.
v. Underwriters at Lloyd’s, London, 705 F. Supp. 1396, 1397–98 (D. Minn.
1989) (use of cans with ‘‘tin free steel . . . ends’’ when processing cans of
cream-style corn ‘‘result[ed] in [the] underprocessing of the product’’); Shade
Foods, Inc. v. Innovative Products Sales & Marketing, Inc., 78 Cal. App.
4th 847, 862, 93 Cal. Rptr. 2d 364 (2000) (presence of wood splinters in
diced roasted almonds); General Mills, Inc. v. Gold Medal Ins. Co., 622
N.W.2d 147, 150 (Minn. App. 2001) (traces of unapproved chemical in oats),
review denied, Minnesota Supreme Court (October 17, 2001), and review
denied, Minnesota Supreme Court (April 17, 2001).
11
We have considered Fisher’s other arguments relating to the marine
policy and find them unconvincing. Fisher’s allegation that its shoes were
contaminated with the SARS-CoV-2 virus is not enough to establish coverage
under the marine policy for the same reason that it fails to establish coverage
under the package policy. See part I of this opinion; see also Mangia Restau-
rant Corp. v. Utica First Ins. Co., supra, 72 Misc. 3d 415 (‘‘[e]ven had there
been proof that the virus physically attached to the property . . . that would
not have constituted the direct, physical loss or damage required to trigger
the policy coverage, because such presence can be eliminated by routine
cleaning and disinfecting’’ (internal quotation marks omitted)).
We also reject Fisher’s argument that it did not need to prove direct
physical loss or damage for coverage under the marine policy’s ‘‘Ocean
Cargo Choice Coverage Form.’’ Fisher contend that, ‘‘when [§§] 19 and 25
[of the Ocean Cargo Choice Coverage Form] are read together, it is clear
that coverage under [§] 25 can be triggered by showing the ‘frustration,
interruption or termination of the insured voyage,’ with no requirement of
a risk of direct physical loss or damage,’’ because § 19 specifies that direct
physical loss or damage only is required ‘‘[u]nless otherwise specified
. . . .’’ Section 25 provides coverage for ‘‘all landing, warehousing, transship-
ping, forwarding and other expenses incurred . . . should same be incurred
by reason of a risk insured against . . . .’’ Risks insured against are
described in § 19 of the Ocean Cargo Choice Coverage Form. That section
provides that, ‘‘[u]nless otherwise specified . . . this policy insures against
all risks of direct physical loss or direct physical damage to [i]nsured [p]rop-
erty . . . .’’ Fisher argues that, because § 19 applies only ‘‘[u]nless otherwise
specified,’’ it does not apply to § 25. We disagree.
Read as generously as reasonably possible in favor of the insured, § 19
applies to the subsequent sections unless they explicitly or implicitly specify
otherwise. There is nothing in the language of § 25 to suggest that § 19
does not apply. In fact—although Fisher fails to mention it—the coverage
provided by § 25 is expressly limited to expenses ‘‘incurred by reason of a
risk insured against.’’ That language is a clear reference back to the policy’s
definition of ‘‘a risk insured against,’’ which is found in § 19. There is simply
no basis in the text for Fisher’s argument that § 25 rejects or modifies the
definition of a risk insured against offered by § 19.
12
Because there is no ambiguity in either the package or the marine policy,
we need not address Fisher’s claim that additional discovery is necessary
to clarify alleged ambiguities in the policy provisions.