Fed. N.C. / COVID-19

Allegations of Direct Physical Loss Sufficient – Motion to Dismiss Denied

The United States District Court for the Middle District of North Carolina, applying North Carolina law, denied an insurer’s motion to dismiss for failure to state a claim, holding instead that the insured, Novant Health Inc., adequately alleged direct physical damage or loss resulting from the COVID-19 pandemic. The insurer, a network of healthcare centers around the nation, argued that the presence of the COVID-19 virus made its property “unsafe, unfit and uninhabitable” and transforms “air and property into a dangerous and potentially deadly instrumentality.” The District Court held that the extent of that physical damage is better evaluated on a more developed factual record, and, thus, denied the insurer’s motion to dismiss. Novant Health Inc. v. Am. Guarantee & Liab. Ins. Co., 1:21-CV-309, 2021 WL 4340006 (M.D.N.C. Sept. 23, 2021).