Ungarean v. CNA (majority)
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A dental practice owned by Timothy A. Ungarean, DMD, purchased a commercial property insurance policy from CNA and Valley Forge Insurance Company. The policy was intended to cover business-related losses. In March 2020, due to the COVID-19 pandemic, Pennsylvania's Governor ordered non-essential businesses to close, which led to significant financial losses for Ungarean's practice. Ungarean filed a claim under the policy, which was denied by CNA on the grounds that there was no physical damage to the property.
Ungarean then filed a class action complaint in the Court of Common Pleas of Allegheny County, seeking a declaration that the policy covered his pandemic-related business losses. The trial court granted summary judgment in favor of Ungarean, interpreting the policy's language to include loss of use of the property as a form of "direct physical loss." The court also found that none of the policy's exclusions applied to bar coverage.
The Superior Court affirmed the trial court's decision, agreeing that the policy language was ambiguous and should be interpreted in favor of the insured. The court held that the loss of use of the property due to the government shutdown constituted a "direct physical loss."
The Supreme Court of Pennsylvania reviewed the case and reversed the Superior Court's decision. The court held that the policy's language was unambiguous and required a physical alteration to the property for coverage to apply. The court found that the economic losses suffered by Ungarean due to the government shutdown did not meet this requirement. Consequently, the court ruled that Ungarean was not entitled to coverage under the policy and remanded the case to the Superior Court with instructions to enter summary judgment in favor of CNA.
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