The Northern District of New York recently awarded summary judgment to insurer Affiliated Factory Mutual Insurance Co. against Mohawk Gaming Enterprises, a casino and resort operated by the Saint Regis Mohawk Tribe located on the border of New York and Canada. Mohawk Gaming sued AFM seeking recovery of business income losses due to the COVID-19 pandemic. In granting the insurer’s motion, however, the court failed to consider all parts of the AFM policy, as required under New York law, and failed to afford meaning to specific language contained in the policy’s two communicable disease sections, each of which specifically contemplate that “communicable disease,” as defined and covered under the AFM policy, can cause loss and damage to property. Instead, the court followed other decisions from “numerous courts around the country,” each of which is based on inherently flawed reasoning (e.g., reliance on cases where no presence of virus was alleged or cases that clearly and broadly excluded loss caused by virus), to conclude that the presence of virus “is insufficient to trigger coverage when the policy’s language requires physical loss or physical damage.” In fact, a federal court in Texas recently rejected the very same reasoning employed in Mohawk Gaming after recognizing that the FM/AFM policy form “is much broader than [others] and expressly covers loss and damage caused by ‘communicable disease.’” See Cinemark Holdings, Inc. v. Factory Mut. Ins. Co., No. 4:21-cv-00011 (E.D. Tex. May 5, 2021).

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