Action to recover under a commercial business insurance policy for losses resulting from the COVID-19 pandemic; Coverage under the civil-authority & business-loss provisions; Gavrilides Mgmt Co, LLC v Michigan Ins Co; Amending the complaint; MCR 2.116(I)(5); Futility

Noting Gavrilides was binding precedent, the court held that defendant-insurer was properly granted summary disposition of plaintiff-insured’s claims for coverage under the civil-authority and business-loss provisions of its commercial business policy for losses resulting from the COVID-19 pandemic. Plaintiff contended “that direct physical loss of property is distinguishable from direct damage to property under the insurance policy, either of which can suffice to support a claim, and that direct physical loss of property can encompass a situation where the property owner is deprived or dispossessed of property even without physical damage to” it. The court found that, to the extent Gavrilides did not address this precise issue, plaintiff’s argument was unpersuasive. Assuming the validity of its premise, “there was no allegation or indication that plaintiff was actually deprived or dispossessed of the property. In fact, plaintiff, along with many Michigan businesses, were merely limited or restricted in the use of the property; there was no direct physical loss of” it. Plaintiff also appeared to assert “that viral particles that cause COVID-19 infested the property or that asymptomatic customers carrying the virus patronized the salon and spa, and that business losses occurred because of the infestation and/or patronage, where customers stayed” away due to concerns about viral contamination and asymptomatic carriers. The court found that such a position required allegations and evidence showing “the virus was in fact present on surfaces at plaintiff’s business or that customers were actually infected with the virus and that there were prospective customers that chose not to patronize the business specifically because of” this. It determined there were no supporting allegations in the complaint as to this theory, and even if they “had been sufficiently stated, the theory would clearly be so speculative that it could not survive summary disposition. To the extent that plaintiff’s position is that the virus, by sheer statistical probability, had to have been present at the salon and spa and thus there was necessarily damage to the property, . . . plaintiff still needed to adequately allege the specific nature of the damage and that the purported contamination caused specific business losses. The allegations lack such specificity.” The court also upheld the denial of plaintiff’s request to amend the complaint as futile. Affirmed.