DMC’s Haddick Obtains Dismissal Of Suits Against Two Northeastern Pennsylvania Insurance Brokers In COVID-19 Coverage Cases

Dickie, McCamey & Chilcote (“DMC”) attorney Charles E. Haddick, Jr. has recently secured voluntary dismissals of COVID-related lawsuits against two Northeastern Pennsylvania insurance brokers in two separate cases venued in Lackawanna County.

Mr. Haddick defended the C.C. Young & Henkelman Insurance Agency of Scranton in COVID-related business interruption claims in a suit brought by agency customer Brown’s Gym, Inc. against the agency and The Cincinnati Insurance Co. He also represented the McGovern Insurance Agency of Clarks Summit in a separate action brought by Fangio Enterprises against the agency and Selective Insurance Company of the Southeast. In both cases, the plaintiffs alleged that the insurance brokers failed to secure business interruption coverage insuring against business losses related to COVID-19 and government-mandated closures.

In September of 2024, the Pennsylvania Supreme Court ruled in Ungarean v. CNA and Valley Forge Insurance Co. that a Western Pennsylvania dentist was not entitled coverage for COVID-related losses under a commercial property insurance policy issued to the dental practice by CNA. The court held that because the standard business interruption endorsements in the policies under review required proof of physical loss or damage, losses related to COVID and mandatory closures were non-qualifying, as they caused no actual physical damage to the business premises in question. The ruling in Ungarean is in line with a vast majority of jurisdictions which have held that COVID-related losses did not trigger business interruption coverage under commercial property policies.

“On its face, Ungarean and similar rulings directly benefit insurers, and not necessarily brokers,” said Mr. Haddick. “But,” he added, “these rulings also made cases against agents and brokers far, far, more difficult, if not impossible. Agents could not sell a product which did not commonly exist in the marketplace, nor could agents foresee what nobody else could reasonably foresee in the pre-COVID days.” Mr. Haddick pointed out that “exotic” and non-standard infectious disease coverage has been commercially available on a very limited basis, but he added, “the limited availability and exorbitant cost of such coverage made it virtually impossible for small and mid-size businesses to prove that they could have afforded it and, more importantly, that they would have purchased it, even if it was offered.”

In the wake of Ungarean, Mr. Haddick made requests of the plaintiffs’ attorneys in the Brown’s Gym and Fangio Enterprise cases for dismissals of the suits, in lieu of filing motions for summary judgment seeking judicial dismissals of the claims. “After Ungarean,” Mr. Haddick said, “most knowledgeable plaintiffs’ lawyers looked at these cases and decided the juice was not worth the squeeze.”

Charles E. Haddick, Jr. 717-731-4800 chaddick@dmclaw.com