COULD PLEASE STEP FORWARD. APPEARSES OF COUNSEL. STEPHEN M. ORLOFSKY:
BLANK ROAM L L G PETITIONER AC OCEAN LLP. WITH1
NEXT IS AC OCEAN WALK VS. AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY. IF COUNSEL
COULD PLEASE STEP FORWARD. APPEARSES OF COUNSEL. STEPHEN M. ORLOFSKY:
BLANK ROAM L L G PETITIONER AC OCEAN LLP. WITH PLEA THIS MORNING ARE MY PARTNERS AND
COLLEAGUES, MR. LI VILLA AND MR. BERMAN WHO HAVE BEEN ADMITTED PRO HAC VICE ALSO WITH
BLANK ROAM LLP. P. NICHOLAS M. INSUA: NICHOLAS INSUA FOR UNITED POLICY,
ROTH RAUNL DAVE ROTH FOR DEFENDANT AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY.
KEITH MOSKOWITZ: KEITH MOSKOWITZ ON BEHALF OF AFRMENT I C SPECIALTY INSURANCE
COMPANY. SOUL. JUSTICE SOLOMON: BRETT SOLBERG ON BEHALF. INTERSTATE F
IRE AND CASUAL COMPANY. THE COURT: GOOD MORNING, COUNSEL, MR. ORLOFSKY,
PLEASE. STEPHEN M. ORLOFSKY: . GOOD MORNING, MR. CHIEF JUSTICE, JUSTICES
M CHIEF JUSTICE MAY I RYE SERVE 10 MINUTES FOR REBUTTAL. CHIEF JUSTICE RABNER:
10 IS MORE THAN WE USUALLY GRANT. STEPHEN M. ORLOFSKY: I'LL FOLLOW, BREF
WERE THE IS THE SOUL OF WIT. STEPHEN M. ORLOFSKY: OF THIS COURT HAS
BEFORE IT, AS I'M SURE YOU'RE AWARE, OF VOLUMINOUS BRIEFS SUBMITTED BY THE PARTIES AND
THE VARIOUS AMICI. PLEASE ALLOW ME TO TAKE A FEW MOMENTS THIS MORNING TO PENETRATE THE
FOG OF HIGH PESHLY P THE 3 ISSUES THIS COURT HAS GRANTED CERTIFICATION. FIRST,
T LET ME BEGIN BY TELLING YOU WHAT THIS CASE IS NOT ABOUT. DEFENDANTS HAVE TAKEN WHAT
I CALL THE "SCOREBOARD" APPROACH. THEY HAVE CITED MANY STATE AND FEDERAL CASES FROM
AROUND THE COUNTRY WHICH HAVE DECIDED THESE QUESTIONS AGAINST POLICYHOLDERS. THOSE CASES
WILL CERTAINLY ENTITLED TO CONSIDERATION ARE KNOWS DISPOSITIVE. FIRST OF
ALL, FEDERAL COURTS OUNTD OUR FEDERAL SYSTEM CAN ONLY PREDICT WHAT THE LAW OF A STATE
MAY BE IF THE SUPREME COURT OF THAT STATE HAS NOT DECIDED THE ISSUE. SECOND, WHILE DECISIONS
OF THE SUPREME COURTS OF OTHER STATES ARE CERTAINLY ENTITLED TO CONSIDERATION, THEY,
TOO, ARE NOT DISPOSITIVE. WHY, YOU ASK, IS THAT? BECAUSE OWN BEFORE THE PANDEMIC P, THERE
WAS WELL SETTLED NEW JERSEY CASE LAW IN THE FIELD OF INSURANCE LAW WHICH GOVERNED WHAT
OCCURRED HERE. AND WHAT THESE POLICIES MEAN. IN SHORE THE PANDEMIC CHANGED MANY THINGS
IN OUR LIVES BUT IT DIDN'T CHANGE THE LAW, NEW JERSEY LAW OF INSURANCE. AND
FINALLY, THE OTHER THING TO REMEMBER HERE IS THAT INSURANCE POLICIES ARE CONTRACTS OF
ADHESION AND AMBIGUITIES IN INSURANCE CONTRACTS MUST BE RESOLVED IN FAVOR OF THE INSUREDS.
SO THE FIRST QUESTION THE COURT GRANTED CERTIFICATION ON WAS DOES, PEFRMENT
NEW JERSEY COURTS TO ADJUDICATE FACTUAL DISPUTES SPT PLEADING STAGE SUCH AS RKS THE AIRSPACE
OR SERVICES THAT THE VIRUS IS EASILY WIPED AWAY THE I VIETS RUSS AND THAT THE VIRUS IS
THREATENED OR ACTUAL PRESENCE CANNOT RENDER PROPERTY UNUSABLE CONTRARY TO THE ALLEGATIONS
IN THE PLAINTIFF'S COMPLAINT. THE SHORT ANSWER TO THAT QUESTION IS NO.
AND THE COMPLAINT OCEAN WALK MADE NUMEROUS FACT WRUL ALLEGATIONS ABOUT THE CAUSE OF THE
LOSS AND THE PROPERTY AND WHAT THE VIRUS DID TO ITS PROPERTY. THE APPELLATE DIVISION
NOT ONLY DISREGARDED THESE ALLEGATIONS, BUT IN SOME CASES ACTUALLY FOUND FACTS TO THE
CONTRARY. NOW, THE -- AND MORE IMPORTANTLY, THE PANDEMIC DID NOT CHANGE
THE RULES OF COURT AND IN PARTICULAR DID NOT CHAFRMG RULE 4:6-2(E). THAT RULE HAS BEEN
P GENEROUSLY APPLIED BY THIS COURT FOR MANY YEARS SINCE THE SEMINAL CASE OF PRINTING MARTD
WAS DECIDED. UNDER PRINTING MART, AS THIS COURT IS AWARE, THE TRIAL COURT MUST SERVE
THE COMPLAINT IN DEPTH AND WITH LIBERALITY TOE ASCERTAIN WHETHER THE FUND MEANT OF A
CAUSE OF ACTION MAY BE GLEANED EVEN FROM AN OBSCURE STATEMENT OF A CLAIM. AND THE
ALLEGATIONS OF THE COMPLAINT ARE ASSUMED TO BE TRUE. AND THE PLAINTIFF IS GIVEN ALL
REASONABLE, THE BENEFIT OF ALL REASONABLE INFERENCES TO BE DERIVED FROM THE COMPLAINT.
IN THIS CASE, JUDGE WING CAN YOU TELL STEIN A RETIRED WELL RESPECTED JUDGE
OF THE APPELLATE DIVISION ON RECALL DID JUST THAT, THE APPELLATE DIVISION DID NOT. THE
APPELLATE DIVISION CURSORY AND CONCLUSORY REVIEW OF THE ALLEGATIONS OF THE COMPLAINT IGNORES
THE PRINTING MART STANDARD. I THINK IT'S IMPORTANT TO NOTE BECAUSE FOR
SOME REASON IN READING MANY OF THE BRIEFS HERE, I READ A LOT ABOUT RULE 12 B 6 OF THE FEDERAL
RULES OF CIVIL PROCEDURE, A RULE OF WHICH I'M VERY FAMILIAR BUT I WANT TO MAKE THE CLEAR
THAT THIS CASE IS NOT GOVERNED BY 12 B 6 OR BY OTHER CASES. IT'S RULED BY 4:6-2 AND I THINK
THAT'S IMPORTANT. YET THE APPELLATE DIVISION IGNORED THE ALLEGATIONS OF THE COMPLAINT,
DISREGARDED THEM AND IN SOME CASES MADE FACTUAL FINDINGS CONTRARY TO THE ALLEGATIONS.
YOU KNOW, OBVIOUSLY THE IF YOU KNOW OF THE APPELLATE DIVISION IS NOT T MAKE ANY FACTUAL
FINDINGS. YOU AND AS THE JUDGE NOTED IN HIS OPINION, THE DEFENDANTS MAY DISAGREE WRI
THE ALLEGATIONS OF THE COMPLAINT, BUT THAT DISAGREEMENT IS FOR ANOTHER DAY. NOT ON A
MOTION TO DISMISS. JUSTICE PATTERSON: MR. OR MROF SKI, IF ONE OF THE
ALLEGATIONS OF THE COMPLAINT IS THAT THE DAMAGE THAT YOUR CLIENTS ALLEGE IS WITHIN THE
COVERAGE AS IT'S DESCRIBED IN THE INSURANCE POLICY, IS THAT SOMETHING THAT THE COURT
THOOS ASSUME THE TRUTH OF UNDER PRINTING MART? AND I SAY THAT BECAUSE IF THAT IS SO, IT
SEEMS TO ME THAT THERE COULD NEVER BE A DISMISSAL AT THE PLEADING STAGE OF ANY COVERAGE
ALLEGATION. STEPHEN M. ORLOFSKY: I DON'T THINK RULE 46 E 2 CHANGES BECAUSE
WE'RE TALKING ABOUT AN INSURANCE CRACK. JUSTICE PATTERSON: NO, MY QUESTION
IS THIS. IF THE ALLEGATION OF THE COMPLAINT IS THAT A PARTICULAR LOSS IS WITHIN THE COVERAGE
LANGUAGE, AND I'M JUST SAYING THIS VERY GENERALLY, OF AN INSURANCE POLICY, IS THAT
THE SORT OF ALLEGATION THAT MUST BE ASSUMED TO BE TRUE UNDER PRINTING MART?
STEPHEN M. ORLOFSKY: I DON'T SEE WHY NOT. JUSTICE PATTERSON: SO THERE COULD
NEVER, AS LONG AS AN INSURED ALLEGES THAT THEIR LOSS IS WITHIN THE COVERAGE AS DESCRIBED
IN THE INSURANCE POLICY, THEN THERE CAN NEVER BE A MOTION TO DISMISS. I SAY THAT BECAUSE
IT SEEMS TO ME THAT MANY COVERAGE DISPUTES ARE RESOLVED OF AT THE MOTION TO DISMISS STAGE,
AND I'LL NOT TALKING ABOUT 12 B 6, I'M TALKING ABOUT OUR NEW JERSEY RULE FOR MOTIONS TO
DISMISS. STEPHEN M. ORLOFSKY: VEL, YOUR HONOR, LET'S FOCUS ON THIS CASE.
IN THIS CASE, OCEAN ALLEGED THAT THE AIR AND SURFACES ON ITS PROPERTY WERE AFFECTED BY
THE CORONA ZIE HAVE I RUSS RUSS. THAT'S AN ALLEGATION ASSUME TO BE TRUE RULING ON A
MOTION TO DISMISS. THAT'S THE ALLEGATION WITHIN THE COVERAGE LANGUAGE OF THE POLICY.
JUSTICE PATTERSON: SO YOU'RE SAYING THAT ALL AN INSURED HAS TO DO TO DEFEAT
A MROEGS TO DISMISS IS TO OF STATE THE LANGUAGE OF THE INSURANCE POLICY AND SAY OUR LOSS
WHICH IS CLEARLY DESCRIBED, IT'S COVERT RELATED CAUSE OF BUSINESS IS WITHIN THAT COVERAGE
LANGUAGE AND THAT DWEETS THE MOTION TO DISMISS. IS THAT ALL AN INSURE HAS TO DO?
STEPHEN M. ORLOFSKY: IF THE COMPLAINT PROPERLY PLEADS A LOSS THAT'S WITHIN THE COVERAGE
LANGUAGE OF THE POLICY, THEN THE ALLEGATIONS WHICH ARE OF ADVANCED IN THE COMPLAINT MUST
BE ASSUME TO BE TRUE. THAT'S NOT A DECISION, IT'S NOT A DECISION FOR THE TRIAL COURT OR
FOR THE APPELLATE DIVISION TO ARE QUESTION THE ACCURACY OR THE VALIDITY OR THE TRUTH OF
THOETS ALLEGATIONS. JUSTICE WAINER APTER: YOU AGREE TLTS HE A ONLY FACTUAL
ALLEGATIONS AND NOT LEGAL ALLEGATIONS. STEPHEN M. ORLOFSKY: ABSOLUTELY,
YOUR HONOR. JUSTICE WAINER APTER: WOULD THE DEFINITION OF PHYSICAL LOSS
OR PHYSICAL DAMAGE WITHIN A PARTICULAR INSURANCE POLICY BE A QUESTION OF FACT OR A QUESTION
OF LAW? STEPHEN M. ORLOFSKY: THAT'S AN INTERESTING QUESTION, YOUR HONOR
BECAUSE IT CAN BE BOTH. FOR EXAMPLE, OF THE, WE'RE TALKING ABOUT, HERE WE'RE TALKING
ABOUT DIRECT PHYSICAL LOSS OR DAMAGE. AND SO WE'VE ALLEGED THAT THE SURFACES AND THE
AIR WITHIN THE CASINO FACILITIES WERE AFFECTED BY THE CORONA VIRUS. WE'RE ALSO ALLEGING
AVENUE DIRECT DAMAGE. NOW, THAT CAN BE A QUESTION OF LAW. OF BUT I DON'T THINK THAT
THE COMPLAINT CAN BE DISMISSED ON A MROEGS TO DISMISS BECAUSE ULTIMATELY WHETHER THERE
IS A DIRECT DAMAGE LOSS HE HAS TO BE DETERMINED ULTIMATELY BY THE CASE LAW.
JUSTICE PATTERSON: SO YOU SAY THAT YOUR LOSS, IF THE COURT, IS THE COURT IN A POSITION
TO DETERMINE WHETHER THE LOSS THAT YOU DESCRIBED IS WITHIN THE COVERED LANGUAGE OF THE
INSURANCE POLICY OR NOT ON A MOTION TO DISMISS? STEPHEN M. ORLOFSKY: I THINK
SO, YOUR HONOR. I THINK THAT THE COURT HAS TO ASSUME THOSE ALLEGATIONS TO BE, ALLEGATIONS
TO BE TRUE. NOW, THE, ASSUMING JUDGE ON A MROEGS TO DISMISS, THE DEFENDANT
CAN SERNL MOVE TO DISMISS WHEN SAYING THAT UNDER, AS A MATTER OF LAW PT THERE'S NO COVERAGE.
JUSTICE PATTERSON: WHAT ALLEGATION, IT SEEMS TO ME YOU HAVE
ALLEGATIONS OF FACT IN TERMS OF WHAT THE LOSSES WERE AND YOU HAVE ALLEGATIONS THAT IT IS
WITHIN THE COVERED, WITHIN THE COVERAGE LANGUAGE OF THE INSURANCE POLICIES. YOU HAVE
BOTH OF THOSE AT GOERS OF ALLEGATIONS. STEPHEN M. ORLOFSKY: LOOK, THERE ARE
TWO BASIC ALLEGATIONS. 2 BASIC ALLEGATIONS IN THE COMPLAINT. ONE IS THAT THE SERVICES
AND AIRSPACE WITHIN THE CASINO FACILITIES WERE AFFECTED AND ALTERED BY THE CORONA VIRUS.
AND THE SECOND ALLEGATION IS THAT WITH RESPECT TO DAMAGE IS THAT OF THE CASINO, BECAUSE
OF THE PRESENCE OF THE CORONA VIRUS, THE CASINO LAUFRT THE EFFECTIVE USE OF ITS FACILITIES,
SIMILAR TO THE AMMONIA CASE OR IN SOME CASES THE ASBESTOS CASE WHERE THE IS ASBESTOS IS
SUCH CONCENTRATION THIT MAKS THE FACILITY UNUSABLE. CHIEF JUSTICE RABNER:
YOUR COLLEAGUES PONT OUT THAT THE CLOSURE AND THE OPENING WERE KEY TO THE EKS EXECUTIVE
ORDERS THAT YOUR CLIENT HO TO SHUT ITS DOOR WITH THE FIRST EXECUTIVE ORDER AND IT REOPENED
AS SOON AS THE REVISED EXECUTIVE ORDER PERMITTED TO IT DO SO. TO WHAT EXTENT
MAY THAT BE CONSIDERED? STEPHEN M. ORLOFSKY: WELL, FIRST OF ALL, LET ME
MAKE THE CLEAR THAT WE ARE NOT SEEKING COVERAGE BASED ON THE CLOSURE ORDERS ISSUED BY
GOVERNOR MURPHY. CHIEF JUSTICE RABNER: YES, BUT THE ARGUMENT RGS OF COURSE,
IS THAT IT IS THE CLOSURE ORDER THAT BROUGHT ABOUT THE LOSSES TO YOUR CLIENT.
STEPHEN M. ORLOFSKY: WELL -- CHIEF JUSTICE RABNER: TO WHAT EXTENTS MAY
THAT BE CONSIDER AT THIS POINT. STEPHEN M. ORLOFSKY: WELL IT SEEMS TO ME
THAT'S A DEFENSE THAT THEY'RE ASSERTING BUT I DON'T THINK THAT DEFENSE CAN BE ADJUDICATED
ON A MOTION TO DISMISS. IT STEAMS ME THAT THAT'S SOMETHING, IF WE MAKE THE AL GATHSS
AND PUT ON PROOFS THAT THE DEFENDANTS CAN THEN PUT ON PROOFS, WELL, YOU SAY THAT RT THAT'S
WHY YOU CLOSE, BUT P THEY'RE PERFECTLY OF MAKING THIS DEFENSE THEMSELVES BUT WHAT THEY WOULD
LIESHG MANY SAY IS THAT WHILE YOU MAY BE SAYING THAT, BUT THE REASON YOU REALLY CLOSE
IS BECAUSE GOVERNOR MURPHIES CLOSURE ORDERS, THAT'S A DISPUTED ISSUE WHICH CAN'T BE
RESOLVED ON A MOTION TO DISMISS. OKAY. THE -- JUSTICE PATTERSON:
WHAT IS THE FACTUAL ALLEGATION THAT P YOUR CLIENT IS MAKING THAT THE CASINOS AND THE 0,
THE CASINO IN THE OTHER FATS WERE CLOSED BECAUSE THERE WAS SURFACE CONTAMINATION UNRE
LATED TO THE CLOSURE ORDERS THAT I THINK UNDISPUTE MANY APPLIED THOSE FACILITIES?
STEPHEN M. ORLOFSKY: STEPHEN M. ORLOFSKY: OKAY. JUST GIVE ME A MOMENT,
YOUR HONOR. THERE WERE SEVERAL ALLEGATIONS WHICHES ADDRESS THAT POINT. THEY MAY BE
FOUND AT D A 22 PARAGRAPH 3, OCEAN WALKS OPERATIONS HAVE BEEN AND CONTINUE TO BE
SUSPENDED AND THREATENED BY THE ONGOING AND INCREASINGLY DAFRMG RUSS CONDITIONS CREATED
BY THE CORONA VIRUS EPIDEMIC. THERE'S AN ALLEGATION THAT D A 31 PARAGRAPH 66 OCEAN
WALK REASONABLY EXPECT THE DEFENDANT INSURANCE TO PROVIDE COVERAGE WHERE AS HERE THE RISKLY
THREAT OF HARM. JUSTICE PATTERSON: SLOW DOWN, IF YOU WOULD.
STEPHEN M. ORLOFSKY: I'M SORRY. I APOLOGIZE. JUSTICE PATTERSON: NO PROBLEM.
STEPHEN M. ORLOFSKY: NO JUST THE D A 66. LET'S GO BACK TO PARAGRAPH 66.
OCEAN WALK REASONABLY, SPEKT THE THE DEFENDANT INSURANCE ERS TO PROVIDE COVERAGE WHERE
AS HERE THE RISK OFFICER THREAT FROM HARM FROM CORONA VIRUS TO PERSONS OR PROPERTY CAUSED
OCEAN WALK TO SUFFER LOSS BY BEING DEPRIVED OF PHYSICAL USE OF THE PROPERTY. D A 43
PARAGRAPH 119, THE VIRTUALLY GUARANTEED RISK OF SIGNIFICANT HARM AND DAMAGE TO PERSONS
AND PROPERTY IS WHY IT BECAME NECESSARY TO LIMIT OR CLOSE THE USE OF INDOOR SPACES SUCH
AS THE OCEAN CASINO RESORT AS WELL AS NEARBY PROPERTIES THAT ALSO ATTRACT CUSTOMERS TO
OCEAN WALK'S PREMISES. D A 45 PARAGRAPH 130, COMMENCING ON OR ABOUT MARCH 16, 2020,
OCEAN WALK WAS REQUIRED TO SUSPEND OPERATIONS AT ITS COVERED PREMISES AS A RESULT OF THE
RISKS ASSOCIATED WITH THE CORONA VIRUS PANDEMIC INCLUDING DIRECT PHYSICAL LOSS OR DAMAGE
TO COVERED PROPERTY AND IN COMPLIANCE WITH GOVERNMENT GUIDANCE AND ORDERS. A.
WE HAD TO COMPLY WITH THE GOVERNMENT ORDERS, THERE WAS NO CHOICE ABOUT THAT. BUT THAT'S
NOT THE BASIS UPON WHICH WE'RE SEEKING COVERAGE. AND SO ARE THE TWO CONCEPTS, THE CLOSURE
REQUIRED BY GOVERNOR MURPHY'S EXECUTIVE ORDERS WAS SOMETHING THAT WHEN HE TO COMPLY WITH
AS A MATTER OF LAW. BUT WE'RE ALLEGING MORE THAN THAT, THAT THE CLOSURE, THAT WE WOULD HAVE
BEEN REQUIRED TO CLOSE THE FACILITIES EVEN WITHOUT GOVERNOR MURPHY'S EXECUTIVE ORDERS AND
THAT'S AN ALLEGATION THAT MAY BE AS JUDGE STEIN POIND OUT THE AL GATHSS MAY BE FACTUALLY
DISPUTED BUT THAT DISPUTE IS FOR ANOTHER DAY. IT'S NOT TO BE ADJUDICATED ON A MOTION
TO DISMISS. JUSTICE PATTERSON: THE CLOSURE COINCIDES WITH THE ORDERS, THE
TIMING OF THE ORDERS COMPANY WIVEN SIDE WITH THE ORDERS, IN OTHER WORDS, DID YOU CLOSE,
DID YOUR CLIENT CLOSE THE FACILITIES IN ACCORDANCE WITH THE CLOSURE ORDERS WHEN THE
GOVERNMENT REQUIRED THEM TO BE CLOSED? STEPHEN M. ORLOFSKY: YOU KNOW, JUSTICE
RGS I DON'T KNOW THE ANSWER TO THAT QUESTION. THEY HAPPENED AT OR ABOUT THE SAME TIME.
THE. CHIEF JUSTICE RABNER: WASN'T THE CASINO CLOSED ON MARCH 16TH OF '20.
STEPHEN M. ORLOFSKY: I THINK THAT'S CORRECT. CHIEF JUSTICE RABNER:
I THINK P REOPENED ON JULY 20TH AND OF 20, COINCIDED WITH THE DATES.
STEPHEN M. ORLOFSKY: SKRSHGS YES, IT DID. IEVENLG THAT'S WHAT HAPPENED, YES. RPT LET
ME MOVE ON. JUSTICE WAINER APTER: YOU HAD REFERRED TO THE ASBESTOS CASE
BUT IT SEEMS THAT IN THE PORT AUTHORITY DECISION THE 3RD CERTIFICATE ELDER WHEN QUANTITIES
OF LARGE QUANTITIES OF AS BES OWES TO THE AIR A BUILDING SUCH TO MAKE THE STRUCTURE UNINHABIT
AL AND UNUSABLE, THEN THERE'S BEEN A DISTINCT LOSS TO THE OWNER, BUT IF THE ASBESTOS IS
PRESENT IN DPOEN NANTS OF A STRUCTURE BUT IT IS NOT IN SUCH FORM OR QUANTITIES TO MAKE
THE BUILDING UNYOUS ABL THE OWN IF HAS NOT SUFFERED A LOSS. IS YOUR ALLEGATION WHETHER
OR NOT THE LONG WAS ACTUALLY RENDERED UNUSABLE IS A QUESTION OF FACT THAT HAS TO BE DECIDED
FLOT AT A MROEGS TO DISMISS CASE. STEPHEN M. ORLOFSKY: " YOU WERE THERE,
IS OUR CONTENTION, I DON'T SEE, IT'S AN ALLEGATION AND THE IT'S DISPUTED AND WE WOULD
OBLIGATED TO PROVE IT AND OVRL THE DEFENDANTSES WILL TAKE THE DECISION THAT WE CAN'T PROVE
IT OR THAT THE, YOU KNOW, THE SIMILAR TO THE OS BES TOES CASE THAT THE AMOUNT OF CORONA
VIRUS IN THE AIR SPACE DID NOT REQUIRE COMPLETE CLOSURE. CHIEF JUSTICE RABNER:
YOU'VE ALLEGED THAT THE DAMAGE CAUSED BY THE CORONA VIRUS PHYSICALLY REMAINING ON AN R
PROPERTY FOR EX SEN STENDED PERIODS OF TIME WAS REMEDIED AT SKRABLTH THE TIME THE GOVERNOR'S
EXECUTIVE ORDER SAID YOU COULD REOPEN AND I'M ASSUMING YOUR RESPONSE WOULD BE TO THE EXTENT
THERE'S ANY QUESTION THERE THAT HAS TO WAIT FOOR LATER DETERMINATION? STEPHEN M.
ORLOFSKY: THAT'S CORRECT. AND BY THE WAY, JUDGE, AND OI SAY THIS WIZ RESPECT TO THIS
COURT AND TO THE APPELLATE DIVISION, JUDGES AND JUSTICES DON'T SIT ASSIGN TIFTS AND THERE'S
AN MEEBLG CAN YOU SAY BRIEF FILED BY THE MEDICAL SOCIETY OF NEW JERSEY WHICH TALKS ABOUT
SOME OF THE SCIENCE SURROUNDING THE CORONA VIRUS AND THAT IT CANNOT, THE APPELLATE DIVISION
FOR EXAMPLE FOUND TO THE CORONA VIRUS COULD BE EASILY REMOVED WITH HOUSEHOLD CLEANERS,
THAT'S NOT TRUE. IT CANNOT. AND IT'S MUCH MORE DIFFICULT TO REMOVE IT AND IT CAN LINGER
FOR DAYS AND PERIODS OF WEEKS. AND SO, YOU KNOW, IT'S AN AREA OF EVOLVING SCIENCE AND
I THINK THE CASE THAT WE SHOULD BE ALLOWED TO PROCEED THROUGH DISCOVERY AND PRESENT EXPERT
TESTIMONY ABOUT THAT. AND I THINK THAT THE APPELLATE DIVISION WAS CLEARLY WRONG IN
MAKING THAT DETERMINATION. JUSTICE PATTERSON: THE DAY BEFORE THE CLOSURES WERE
ORDERED BY GOVERNOR MURPHY, THE CASINO WAS OPERATING, IS THAT CORRECT? OPERATING THE
OTHER FACILITY WGS OPERATING? STEPHEN M. ORLOFSKY: I THINK THAT'S CORRECT,
YOUR HONOR. PATS PAT WAS THAT BASED UPON A DETERMINATION BY YOUR CLIENT, IS THAT YOUR
ALLEGATION THAT THAT WAS BASED ON A DETERMINATION BY YOUR CLIENT THAT ON THAT DAY, IT WAS
SAFE TO OPERATE? STEPHEN M. ORLOFSKY: YES. JUSTICE
PATTERSON: AND THE DAY AFTER THAT IS THE DAY THE ORDER CAME IN, IS IT YOUR CLIENT'S CONTENTION
THAT IT STOPPED OCHTING BASED OCHTING BASED UPON A. STEPHEN M. ORLOFSKY:
I THINK IT WAS BOTH. JUSTICE PATTERSON: BOTH WHAT? STEPHEN
M. ORLOFSKY: BOTH A CLOSURE ORDER AND THE CONCERN THAT THE IMPACT THAT THE VIRUS WAS
HAVING ON THE PHYSICAL SERVICES AND THE AIR. JUSTICE PATTERSON: SO THE DAY
BEFORE IT WAS, YOUR CLIENT'S CONTENTION IT WAS SAFE TO OPERATE AND THE DAY AFTER WITH
THE CLOSURE ORDER IN PLACE, THERE'S A DIFFERENT DETERMINATION AS TO SAFETY, IS THAT THE
ALLEGATION? STEPHEN M. ORLOFSKY: THESE THINGS HAPPEN, REMEMBER, THESE THINGS
HAPPENED PRETTY QUICKLY FOR AWFUL US IN MARCH OF 2020. JUSTICE PATTERSON:
EVERYONE EXPERIENCED IT. STEPHEN M. ORLOFSKY: EVERYBODY WAS CONFUSED, TRYING
TO SORT UT WHAT THE CORONA VIRUS WAS. AND SO I CAN'T PINPOINT FOR YOU WHEN THE DECISIONS
WERE MADE AND HOW THEY WERE MADE. WHAT I'M SAYING NOW AND WE'RE SAYING, AND OBVIOUSLY
THE COMPLANLT WAS PLED AND FILED AFTER MARCH OF 2020, ALL OF THOSE -- JUSTICE
PATTERSON: I'M NOT ASKING FOR A FACTUAL REPRESENTATION, MR. ORLOFSKY, I'M ASKING WHAT
IS THE ALLEGATION THAT YOU ARE MAKING HERE WITH RESPECT TO THE DISTINCTION BETWEEN THE
LAST DAY BEFORE THE CLOSURE THAT YOUR CLIENT WAS OPERATING AND THE DAY IT CLOSED?
STEPHEN M. ORLOFSKY: WELL, JUDGE, I DON'T THINK THAT YOU CAN, I DON'T WANT TO CONFUSE
THE CLOSURE ORDER WITH THE DECISION TO CLOSE THE FACILITY BECAUSE OF THE CONCERN OF THAT
THE VIRUS WAS HAVING ON THE AS YOU REMEMBER AND THE AIR OF THE CASINO. JUSTICE
FASCIALE: THOSE DATES COINCIDE. THOSE DATES COINCIDE WITH EACH OTHER AND EVEN THE
PARAGRAPH THAT YOU READ, PARAGRAPH 130 OF THE COMPLAINT, IT SAYS THAT OCEAN WALK WAS
REQUIRED TO SUSPEND OPERATIONS ON MARCH 16TH, 2020. STEPHEN M. ORLOFSKY:
WELL, THAT'S A STATEMENT OF FACT. WE WERE. JUSTICE FASCIALE: BECAUSE OF THE
CLOSURE ORDERS. STEPHEN M. ORLOFSKY: WELL, WE HAD NO CHOICE, WHETHER WE
AGREED WITH THE CLOSURE ORDER OR NOT, WE HAD TO SUSPEND OLGSS. JUSTICE
PATTERSON: OPERATIONS SUSPENDED IN THES PRIVATE SEK FER, ALL OVER NEW JERSEY AND ALL OVER
THE COUNTRY AT THAT TIME. BUT IS IT YOUR ALLEGATION THAT THE CLOSURE ORDER WAS NOT THE
REASON YOU CLOSED, YOUR CLIENT CLOSED? STEVE TEEF. STEPHEN M. ORLOFSKY:
WELL, FOR PURPOSES OF THE, NO, IT WASN'T JUST THAT. WE HAD NO CHOICE. LOOK, WE HAD NO
CHOSE WHEN THE GOVERNOR ISSUED THE ORDER. OF I'M NOT CHALLENGING THE MERITS OF THE GOVERNOR'S
ORDER, WHETHER THE GOVERNOR HAD A BASIS. JUSTICE PATTERSON: Z DOES YOUR
CLIENT CHALLENGE THE ASSERTION THAT IT CLOSED WHEN IT DID AND REOPENED WHEN IT DID BECAUSE
THE ORDER WAS IMPOSED AND THAT IT WAS RESCINDED? STEPHEN M. ORLOFSKY: WELL.
JUSTICE PATTERSON: DOES THAT A FACT OR IS IT NOT? STEPHEN M.
ORLOFSKY: WELL, WE HAVE THING, WE ALLEGED IT WAS MORE THAN THE CLOSURE ORDER AND WE THINK
THAT'S AN ISSUE THAT HAS TO BEED ADJUDICATED FACTUALLY AND CAN'T BE ADJUDICATED ON A ARE
MROEGS TO DISMISS. P. LET ME TURN TO THE SECOND QUESTION. SECOND QUESTION
ON CERTIFICATION IS P ARE AL GATHSS THAT INSURED ROPT WAS PHYSICALLY DAMAGED BY THE PRESENCE
OF THE CORONA VIRUS RENDERED SDEFRJLY UNUSABLE WHETHER RISK OF THE CORONA VIRUS SUFFICIENT
TO ALLEGED "DIRECT FIZZ CULLING LOSS OR DAMAGE TO COVERED PRIVATE PROPERTY. THE ANSWER
TO THAT QUESTION IS KW. HERE OGS WALK ALLEGED ITS PROPERTY WAS PHYSICALLY ALTERED BY
THE CORONA VIRUS. BY THE WAY, I DON'T THINK THE DEFENDANTS DISAGREED THAT PHYSICAL ALTERATION
DOESN'T CONSTITUTE PHYSICAL DAMAGE. BUT THE APPELLATE DIVISION IN OUR VIEW IMPROPERLY
REJECTED THOSE ALLEGATIONS, AND SECONDLY, WITH RESPECT TO THE QUESTION OF DIRECT PHYSICAL
LOSS, IT WAS CERTAINLY PRE PANDEMIC LAW WHICH HELD THAT PHYSICAL LOSS INCLUDED, AMONG
OTHER THINGS, LOSS OF ESSENTIAL FUNCTION OR PROPERTY BEING RENDERED UNINHABITABLE AND
THE CASES THE, WE CAN GO THROUGH ALL THE CASES, BUT I'M SURE THE COURT IS FAMILIAR WITH
CUSTOMIZED DISTRIBUTION, WAKEFERN, GREGORY PACK KEFRPING AND PORT AUTHORITY, ALL OF THOSE
CASES TO ONE DEGREE OR NOT ADDRESS THE QUESTION OF ARE WHETHER PROPERTY IS LOST ITS ESSENTIAL
FUNCTION OR HAS BEEN RENDERED AND INHABITABLE. JUSTICE WAINER APTER: SEPARATE
TEST SO YOU'RE AL LEFRPING THAT WAKEFERN AND KUFRT MIEFD DISTRIBUTION SAY THAT IT'S LOSS
OF ESSENTIAL FUNCTION BUT THEN THE THIRD CIRCUIT CASE SAID IT'S TOTELY ININHABIT AVENLT
ARE YOU SAYING IT'S THE SAME LOSS OF FUNCTION EQUALS TOTALLY UNINHABIT ABL?
STEPHEN M. ORLOFSKY: NOT THE SAME, BUT LET ME SAY IT'S ANOTHER STRING TO OUR GOAL, IF
YOU WILL, THAT THE 3RD CIRCUIT AND THE ASBESTOS CASE OF PORT AUTHORITY ESSENTIALLY HELD
IF THE CONCENTRATION OF ASBESTOS WAS OF SUCH A HIGH DEGREE IT WOULD RENDERLY PROPERTY
UNINHABITABLE AND THAT'S CERTAINLY, YOU KNOW, THAT'S CERTAINLY AN, ONE PART OF THE
ALLEGATION. BARG. PARAGRAPH I THINK THE A MOAN I DON'T CASE WHERE THERE WAS
AMMONIA P SOMEHOW INFUSED THE PROPERTY AND IT BECAME ATS LEAST FOR A PERIOD OF TIME BECAME
ININHABITABLE AND UNUSABLE FOR ITS ESSENTIAL PURPOSE, I THINK THAT'S ESSENTIALLY WHAT
WE'RE TALKING ABOUT HERE. JUSTICE WAINER APTER: BOTH OF THOETS CASES,
THOESHGS TALK ABOUT THE PROPERTY OWNER NEEDING TO COMPLETE REPAIRS IN ORDER TO REMOVE THE
ASBESTOS, IN ORDER TO REMOVER THE AMMONIA. WHAT WERE THE REPAIRS THAT ARE ALLEGED FOR
COMPLETED HERE. STEPHEN M. ORLOFSKY: WELL, FIRST OF ALL, IT'S NOT CLEERN
I THINK THE SIGH KWENS IS STILL EVOLVING ABOUT HOW TO REMOVER THE CORONA VIRUS FROM THE
FACILITY BECAUSE THE APPELLATE DIVISION SAID INCORRECTLY THAT IT COULD BE, THE CORONA
VIRUS COULD BE REMOVED FROM SURFACES WITH ORDINARY HOUSEHOLD CLEANING AND IT CAN'T,
THAT'S JUST INACCURATE. AND I THINK THERE'S A DISCUSSION IN THE AMICUS BRIEF BY THE MEDICAL
SOCIETY OF NEW JERSEY WHICH TALKS ABOUT REMOVAL OF THE CORONA VIRUS FROM SURFACES. AND
THAT, BY THE WAY S AN EVOLVING SCIENCE AND THERE'S GOING TO BE EXPERT TESTIMONY ABOUT
WHAT THE REMEDIATION, WHAT THE REMEDIATION EFFORTS HAVE TO BE -- JUSTICE
WAINER APTER: WHAT ARE THE FACTUAL ALLEGATIONS A TO WHAT REMEDIATION OR REMEDIAL MEASURES
YOU UNDERSTOOD IN ORDER TO BE ABLE TO REOPEN ON JULY 2ND, THIS ALREADY HAPPENED, IT'S
NOT, YOU KNOW, IN THEORY, IF THE FUTURE WHAT SHOULD THE REMEDIATION ISSUES BE, MUCH
PRESUMABLY YOUR ARE CLIENT JUDGED DWAU NO LONGER ININHABITABLE. WHAT RP THE REMEDIAL MEASURES
TAKING IN ORDER TO MAKE THE NO MG ERR UNINHABITABLE. STEPHEN M.
ORLOFSKY: I DON'T THINK WE LIFRT THE ALLEGED DETAILS OF WHAT THEY DID, THEY DID THE BEST
THEY COULD UNDER THE CIRCUMSTANCES TO DEAL WITH THE CORONA VIRUS AND AT THE TIME, YOU KNOW,
THERE WERE A VARIETY, THEY WERE USING AIR FILTRATION SYSTEMS TO CLEAN THE AIR, THEY
WERE USING, YOU KNOW, INDUSTRIAL STRENGTH CLEANERS, WHATEVER THAT MEANS; TO TRY TO
REMOVER IT FROM THE SURFACES AT THE CASINO. JUSTICE PATTERSON: DOES YOUR
CLIENT ALLEGE THAT THEY REOPENED BECAUSE THE THEY REMEDIATED? P. STEPHEN M.
ORLOFSKY: WELL, I THINK, I DON'T THINK THEY WOULD HAVE REOPENED IF THEY DIDN'T FEEL THAT.
JUSTICE PATTERSON: I GET THAT, BUT IS IT YOUR CLIENT'S CONTENTION THAT THE
REASON THEY WERE IN A POSITION TO REOPEN ON THE DATE THEY REOPENED WAS BECAUSE THEY HAD
REMEET 88 REME 88ED? P SFEEF STEVE LOOK, TO THE EXTENT THAT REMEDIATION WAS CAPABLE OF
BEING PERFORMED AT THE TIME BACK IN 2020 AND, YOU KNOW, WHAT THE REMEDIATION WAS, WHAT
EFFECT REMEDIATION TECHNIQUES WERE THE WUNDZ THAT THEY USED, SO I MEAN THEY DID THE BEST
THAT THEY COULD, THEY DID THE BEST THEY COULD UNDER THE CIRCUMSTANCES R. CHIEF
JUSTICE RABNER: DOES YOUR CLIENT ASSERT THAT THE REOPENING ON JULY 2ND WAS UNCONNECTED
TO THE EXECUTIVE ORDER? STEPHEN M. ORLOFSKY: STEVE, WELL, IF GOVERNOR MURPHY
HAD NOT LIFTED THE OR, THEY COULDN'T HAVE REOPENED. IN OTHER WORDS, IF THE ORDER,
REGARDLESS OF WHETHER THEY HAD EFFECTIVELY REMEDIATED, IF THE GOVERNOR HAD NOT VACATED
HIS ORDER TO REOPEN, THEY COULDN'T HAVE OPENED. CHIEF JUSTICE RABNER: DOES
YOUR CLIENT ASSERT IT WAS ITS SUCK SOCIAL SECURITY FELL EFFORTS AT REIMMEDIATE YAD THAT
ALLOW TOWED TO ROW OPEN. STEPHEN M. ORLOFSKY: I DON'T THINK THEY WOULD HAVE
REOPENED SOLELY BECAUSE THE GOVERNOR LISTED THE ORDER UNLESS THEY FELT THAT THEY, TO THE
EXTENT POSSIBLE USING THE TECHNOLOGY AVAILABLE TO THE, TO THEM AT THE TIME THAT THEY
EFFECTIVELY REMEDIATED THE PREMISES. JUSTICE PATTERSON: WHY DOESN'T THE
CONTAMINATION EXCLUSION APPLY? STEPHEN M. ORLOFSKY: OKAY. SO THAT
ADDRESSES THE THIRD QUESTION THAT WAS ON WHICH THE COURT GRANTED CERTIFICATION AND, LET
ME JUST, WELL, JUSTICE, JUDGE STEIN FELT OR HELD THAT THE COULDN'T TESTIMONY NATION EX
CLUSION OF THREE OF THE CARRIERS WAS BARRED BY NAV-ITS, IT POINTS OUT AND HE SAYS THAT
AT SOMEWHAT LENGTH THAT THE ANALYSIS ARTICULATED BY JUSTICE WALLESS IN VAF VITS THE POLLUTION
EXCLUSION IN 3 OF CARRIERS WERE OVERLY BROAD, UNFAIR AND WITHOUT DOUBT CONTRARY TO
OBJECTIVELY REASONABLE EXPECTATIONS OF THE ENSURED. NOW, WHAT THE CARRIERS
DID WAS THEY INSERTED THE WORD, THE TERM VIRUS IN THE SECTION DEFINING CONTAMINATION,
BUT IN THE DEFINITION OF CONTAMINANT, THEY DID NOT INCLUDE THE WORD VIRUS.
JUSTICE WAINER APTER: WHERE DOES THE WORD CONTAMINANT ACTUALLY APPEAR IN THE POLICY,
I'M READING SECTION 30301, I DON'T SEE THE WORE CONTAMINATION. STEPHEN M.
ORLOFSKY: JUST GIVE ME A SECOND, PLEASE. Z THE CONTAMINATION EXCLUSION, APPEARS AT D
A 83 FOR SEWER RICK. D A-2 IF I 3 FOR AFRMENT I G SPECIALTY. D A-427 FOR INTERSTATE
FIER AND CASH RESULT TEE AND D A-367 FOR NATIONAL FIRE AND FIER AND MARINE FRPT THE DEFINITION
P OF CAN NAM NANT AND I CAN READ IT, AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY
I WAS ASKING WHERE CONTAMINANT, SO I AGREE WITH YOU THAT THE DEFINITION OF THE WORD CO
NTAMINANT DOES NOT INCLUDE THE WORD VIRUS BUT WHEN I READ THE EXCLUSION IT OPENLY USES
THE WORD CONTAMINATION, IT DOES NOT USE THE CORD COULDN'T TESTIMONY NANT AND THE DEFINITION
CONTAMINATION DOES INCLUDE THE WORD VIRUS. I WAS ASKING WHERE IN THE POLICY DOES THE
ACTUALLY USE THE WORD CONTAMINANT IN THE SUBSTANTIVE EXCLUSION RATHER THAN THE WORD
COULDN'T TIK TAM NATION. STEPHEN M. ORLOFSKY: IT DOESN'T USE THE WORD VIRUS
IN THE DEFINITION OF CONTAMINANT. THAT'S THE PROBLEM. IT USES R. JUSTICE
WAINER APTER: I UNDERSTAND, I'M SAYING THE SUBSTANTIVE EXCLUSION WHICH I THINK IS FOUND
30301 SOCIAL SECURITY COULDN'T TOO MANY NATION AND ANY COST DUE TO CONTAMINATION INCLUDING
THE IP ABILITY TO USE OR OCCUPY PROPERTY OR ANY COST OF MAKING PROJECT SAFER ESAFE OR
SUIT BL FOR THE USE OF OCCUPANTS, SEPTS AS PROVIDE IN THE RADIOACTIVE SECTION OF THIS
POLICY. SO I'M SAYING THE EXCLUSION YUTSZ THE WORD CONTAMINATION THE DEFINITION OF COULDN'T
TESTIMONY NATION INLUDES THE WORD VIRUS SO WHY DO WE CARE ABOUT THE DEFINITION OF THE
WORD COULDN'T TESTIMONY NANT IF THE EX CLUES DOES NOT USE THE WORE COULDN'T TESTIMONY
NANT? STEPHEN M. ORLOFSKY: IT'S CONFUSING TO A POLICYHOLDER, ONE WOULD
THINK THAT COULDN'T NAM ATAM NATION WOULD INCLUDE A CONTAMINANT, RIGHT? WHEN YOU READ
THE DEFINITION OF CONTAMINANT IT DOESN'T CONTAIN THE WORD VIRUS WHERE THE DEFINITION OF
CONTAMINATION DOES. THAT IS ALSO THE FILED IN CONTAMINANT, IS THAT CORRECT? FASH FAB
VIRUS IS NOT THE. JUSTICE PIERRE-LOUIS: THAT IS NOT FOUND IN THE DEF
NIGS OF. STEPHEN M. ORLOFSKY: CORRECT. JUSTICE PIERRE-LOUIS:
SO IT'S NOT OF NECESSARILY THE CASE THAT ALL OF THOSE WORDS FIT WITHIN THE CONTAMINANT
DEFINITION YUS TIS WAINER APTER'S POINT THE WORD CONTAMINATION IS THE WORD ENCOMPASSED
IN THE EX CLIES IN SECTION.03 AND WE HAVE A DID HE HAVE SIGS VERY CLEARLY HERE IN SECTION
7.09 WHAT CONTAMINATION ENCOMPASSES AND THAT'S THE WORD THAT'S IN THE EXCLUSION.
STEPHEN M. ORLOFSKY: YES, BUT THE CONFUSING PART IS. JUSTICE PIERRE-LOUIS:
IF THE CORD WORD CONTAMINATION IS USER IN THE EXCLUSION AND THE WORD CONTAMINATION AND
IT INCLUDES VIRUS? STEPHEN M. ORLOFSKY: YES BUT WHEN THE POLICY DEFINES
CONTAMINANT IT DOESN'T INCLUDE THE WORD VIRUS. JUSTICE PIERRE-LOUIS: DOES THIS
IS PATHOGEN AND MANY OTHER WORDS. STEPHEN M. ORLOFSKY: THAT'S A DECISION
REBIED LLIED THIS COURT'S DECISION IN NAV-ITS RELIED UPON BY THE JUDGE SAID THESE POLICY
EXCLUSIONS SHOULD BE NARROWLY CONSTRUED. JUSTICE PATTERSON: HERE YOU HAVE,
WHO ARE UFR THE WORD THTSDZ USED IN THE EXCLUSION WHICH IS CONTAMINATION WITH A DEFINITION
THAT INCLUDES A VIRUS AND YOU HAVE THIS ENTIRE CASE PREMISED ON A VIRUS. WHERE IS, YES,
YOU HAVE CONTAMINANT ALSO INSURANCE POLICIES CERTAINLY INCLUDE SOMETIMES DEFINITIONS OF
TERMS THAT AREN'T THE FOCUS OF THE CASE AND MAY NOT EVEN APPEAR IN THE --
STEPHEN M. ORLOFSKY: JUSTICE, LOOK, I THINK, FIRST OF ALL, I THINK THE NAV-ITS CASE
DECISION REQUIRES THE COURT TO CONSTRUE THESE EXCLUSIONS NARROWLY, BUT MORE IMPORTANTLY,
I THINK WHAT'S AT ISSUE HERE ARE THE REASONABLE EXPECT TATHSS OF A POLICYHOLDER READING
THE POLICY. JUSTICE WAINER APTER: IT SAYS COULDN'T MANY AT A NATION BY
A CONTAMINANT I WOULD TOTALLY BE WITH YOU, DOESN'T, HOW DO WE UNDERSTAND THIS BUT IT
DOESN'T ACTUALLY SAY CONTAMINANT IN ANY OF THE SUBSTANTIVE PROVISIONS THAT ARE BEING RAISED
IN THIS CASE. STEPHEN M. ORLOFSKY: BUT AULT LANGUAGE OF A POLICY SHOULD
BE GIVEN AND SHOULD BE INTR PRETED, IF THEY DECIDED TO AND CLUED A DEFINITION FOR
CONTAMINANT AND NOT AND CLUED A VIRUS, DON'T YOU THINK THAT'S CONFUSING TO A POLICYHOLDER?
CHIEF JUSTICE RABNER: IF AULT WORD OF A POLICY ARE TO BE GIVEN MEANING,
WHAT MEANING IS LEFT FOR THE WORDS VIRUS AND PATHOGEN UNDER YOUR READING OF THE POLICY?
STEPHEN M. ORLOFSKY: WELL, JUSTICE I'M NOT SURE THAT, I'M NOT SURE THAT
THAT QUESTION, THE ANSWER TO THAT QUESTION, YOU KNOW, LOOK, READING TO ME, I'M CONFUSED
BY READING THE POLICY, I READ THE EXCLUSION AND THEN I READ THE DEFINITION OF CONTAMINANT
AND THE WORD VIRUS APPEARS IN THE DEFINITION OF CONTAMINATION BUT NOT IN THE DEFINITION
OF CONTAMINANT AND SO I AS A REASONABLE POLICYHOLDER WOULD SAY, OH, WELL, THEN IT
DOESN'T, IT DOESN'T EXCLUDE VIRUSES BECAUSE THEY DON'T DEFINE A VIRUS AS A CONTAMINANT.
I THINK THAT'S A READ TLIS IN A PRACTICAL COMMON SENSE WAY. JUSTICE NORIEGA:
BUT COUNSEL THE POLICY, THIS WAS AGREED TO FAR BEFORE THE PANDEMIC AND NOBODY COULD HAVE
ANTICIPATED OBVIOUSLY A DMROEBL PANDEMIC OCCURRING, BUT CLEARLY THE PARTIES HAD
REACHED AN AGREEMENT THAT WOULD INCLUDE WHAT A VIRUS COULD DO. AND THESE ARE SOPHISTICATED
PARTIES. STEPHEN M. ORLOFSKY: WELL, FISHLGS LET ME JUST ADDRESS THAT ONE
POINT, YOUR HONOR. THERE'S NO EVIDENCE IN THE RECORD THAT THIS IS A SOPHISTICATED PARTY
SORE THAT COULDN'T TROE PRO DOESN'T APPLY, SUB STANLEY NO EVIDENCE IN RECORD THAT AC OCEAN
HAD ANY PARTICIPATION IN THE NEGOTIATION OR DRAFTING OF THIS POLICY LANGUAGE, THESE ARE
STARRED DARD FOFRM POLICIES, SO TO SAY LET'S NOT SAY THAT BECAUSE THIS WAS A SCHEDULE
ENTITY PURCHASING COMMERCIAL INSURANCE THAT IT DOESN'T GET THE BENEFIT OF COULDN'T TROE
QUO, THERE'S NO EVIDENCE TO THAT EFFECT. SO TO SAY THAT I THINK IS SIMPLY MISS LOADING
AND NOT TRUE. NOW, THE OTHER THING -- JUSTICE PATTERSON: TO
SAY WHAT, THAT IT IS MISLEADING AND NOT TRUE TO P SUGGEST THAT THIS WAS A COMMERCIAL POLICY
THAT WAS AGREED TO BY A COMMERCIAL -- STEVE TEEF NO JUSTICE, THAT'S NOT WHAT I'M SAYING,
THIS IS AC OESHGS CERTAINLY THIS IS A COMMERCIAL POLICY. BUT COULDN'T TROE PRO APPLIES
IN THE CONTEXT OF COMMERCIAL POLICIES AS WELL. AND TO TO DEPRIVE OCEAN OF THE BENEFIT
OF CONTRO PRO WHEN THERE'S NO EVIDENCE IN THE RECORD AT ALL THAT IT WAS INVOLVED IN THE
DRAFTING OR NEGOTIATION OF THE LANGUAGE OF THE POLICY, I JUST THINKING IS UNFAIR. THEY
SHOULD BE GIVEN THE SAME, YOU KNOW, BENEFIT, SAME BENEFIT OF CONTRO PRO IN NONCOMMERCIAL
POLICYHOLDERS RECEIVE. JUSTICE WAINER APTER: IS THAT WHAT THE CASE LAW
SAYS? STEPHEN M. ORLOFSKY: WELL, THE CASE LAW THAT THE DEFENDANTS ARE RELYING
ON, I THINK THE OXFORD REALTY CASE WHICH NEVER REALLY GOT TO THE QUESTION BECAUSE IT DIDN'T
FIND AN AMBIGUOUS, DIDN'T FINE THE LANGUAGE IN THAT CASE WAS AMBIGUOUS AND THERE'S A
DISSENT BY JUSTICE ALBIN, SOMEWHAT SFRIEFD FIND THE I AGREE WITH JUSTICE ALBIN BUT I DO
IN THIS CASE, WHICH SAYS THAT THERE'S NO REASON TO, THERE'S SIMPLY NO EVIDENCE THAT THE
INSURED WAS, YOU KNOW, SHOULDN'T GET THE BENEFIT OF CONTRO PRO -- JUSTICE
PATTERSON: LET'S ASSUME THE STANDARD APPLIES THAT YOU WERE SAYING SHOULD APPLY. WE HAVE
ONE OPERATIVE WORD THAT WE'RE ALL TALKING ABOUT AND IT IS NOT AS JUSTICE WAINER APTER
POINTS OUT, THE WORD CONTAMINANT. IT IS THE WORD CONTAMINATION. SO POLICYHOLDER
GOES TO THE DEFINITION AND FINDS VIRUS AND CONTAMINATION. THE WORD THAT YOU'RE FOCUSED
ON COULD HAVE BEEN IN THIS POLICY, IN THIS SECTION OF THE POLICY, THE EXCLUSION BUT IT'S
NOT. SO YOU HAVE, RT UFR THE WORD CONTAMINATION APPEARING AND IT'S OBVIOUSLY THE MOST
CRITICAL WORD. YOU HAVE A DID HE HAVE NIS THAT INCLUDES VIRUSES AND YOU HAVE AN ALLEGATION
THAT IS FROM SOUP TO NUTS ALL ABOUT A VIRUS. STEPHEN M. ORLOFSKY: YOU HAVE
A DEFINITION OF, YOU HAVE -- WELL, YOU HAVE A DEFINITION OF CONTAMINANT WHICH DOESN'T
INCLUDE VIRUS AND TO ME THAT COULD BE VERY. JUSTICE PATTERSON: THAT COULD BE
VERY IMPORTANT IF THE WORD CONTAMINANT WERE IN THE EXCLUSION BUT I DON'T SEE IT.
STEPHEN M. ORLOFSKY: ARE YOU, JUSTICE ARE YOU SAYING TO ME THAT WHEN I READ AN EXCLUSION
CLAUSE FOR CONTAMINATION THAT IT DOESN'T COVER CONTAMINANT MATS PAT I'M NOT SAYING ANYTHING
TO YOU MR. ORLOFSKY, I'M NOT ARGUING TO YOU. STEPHEN M. ORLOFSKY: I'M SAYING
TO YOU, YOUR HONOR THAT, I DON'T THINK YOU CAN HAVE A DF NIGS OF CONTAMINATION AND THEN
HAVE A DEFINITION OF CONTAMINANT WHICH IS IVEN CONSISTENT WITH THE DEFINITION OF
CONTAMINATION -- CHIEF JUSTICE RABNER: LET'S FOLLOW UP ON THAT WITH YOU IF
I COULD. YOUR ESSENTIAL ARGUMENT IS VIRUS AND PATHOGENIC ORGANISM DID 0 TO THE APPEAR
IN THE DEFINITION OF CONTAMINANT, THAT LEADS TO CONFUSION SO WE SHOULDN'T CONSIDER THEM
UNDER CONTAMINATION, IS THAT FAIR? STEPHEN M. ORLOFSKY: YES.
CHIEF JUSTICE RABNER: I DID A QUICK COMPARISON BETWEEN THE TWO CLAUSES AND I'M LOOKING
AT THE DEFINITION FOR CONTAMINATION. OF IT IS REFERS TO OF THE ACTUAL PRESENCE OF ANY
FOREIGN SUBSTANCE, THAT DOESN'T APPEAR IN THE DEFINITION OF COULDN'T TAN NAPT, IMPURITY,
SAME. POLLUTANT DOES APPEAR. HAZARD TODAY'S MATERIAL DOESN'T APPEAR. POISON, TOK SIN,
PATHOGEN, PATHOGENIC ORGANISM. BACTERIA, NONE OF THEM APPEAR IN THE DEFINITION OF CAN'T
COME NAPT, VIRUS, SAME. DISEASE CAUSING LITTLENESS CAUSE, FUNGUS APPEARS, MOLD AND
MILDEW DO NOT. SO UNDER YOUR ARGUMENT, THIS POL SEESHG THE OHM WORDS THAT
MAY BE CONSIDERED OR POLLUTANT AND FUNGUS. IS THAT A SENSIBLE WAY TO READ THESE CLAUSES?
STEPHEN M. ORLOFSKY: WELL, JUDGE, THAT'S ONE WAY TO READ THEM. BUT OTHER
WAY TO READ THEM WHICH I RESPECTFULLY SUGGEST IS THAT THE DEF NIGS OF CONTAMINATION CAN'T
BE READ WITHOUT, CAN'T BE INTERPRETED WITHOUT READING THE DEFINITION OF CONTAMINANT AND
IT'S CONFUSING BAUFR IT DOESN'T, CONTAMINANT DOESN'T INCLUDE VIRUS. NOW,
INTERESTINGLY THAT YOU HAVE, THE OTHER INSURER, NATIONAL FIRE, HAD A FESHL VIRUS EXCLUSION
WHICH JUDGE STEIN UPHELD AND GRANTED THEIR MROEGS TO DISMISS. AND IN THAT CASE, IN THEIR
EXCLUSION IN THE NATIONAL FIRE EXCLUSION, IT WAS CLEAR THAT VIRUSES WERE EXCLUDED. DIDN'T
I THINK, YOU KNOW, THAT'S, TO ME THAT'S AN INTERESTING CONTRAST BECAUSE IN THE NATIONAL
FIRE INSTANCE, THERE COULD BE NO CONCLUSION BECAUSE THEY SPECIFICALLY ADDRESSED IT. AND
WE'RE TALKING ABOUT THE REASONABLE EX SMEKT TAGSS OF THE POLICY. NOW, JUSTICE PATTERSON
IS TORTURING ME WITH THE LANGUAGE HERE AND WHAT I'M. CHIEF JUSTICE RABNER:
NO, SHE'S NOT, I'VE SEEN OTHER ARGUE MANY, SHE'S NOT TORTURING YOU. STEPHEN M.
ORLOFSKY: JUST A FIGURE OF. JUSTICE PATTERSON: HE KNOWS WHAT THE TORTURE
IS ALL ABOUT. STEVE TEEF I'M JUST SAYING, WE'RE PARSING THE LANGUAGE AND FOR GETTING
THAT THESE NAV-ITS DECISION OF THIS COURT SAY THE POLLUTION EXCLUSION CLAUSES SHOULD BE
NARROWLY CONSTRUED. JUSTICE WAINER APTER: WASN'T THAT BASED ON A REGULAR
STORY ESTOPPEL ARGUMENT THAT BECAUSE THE INSURANCE INDUSTRY TOLD THE REGULATORS THAT
POLLUTION EXCLUSION CAUSES AN ISSUE WOULD ONLY AP PLAY TO ENVIRONMENTAL POLLUTION, THEY
SHOULDN'T BE ALLOWED TO GET AR WAY FROM THAT. IS THERE ANY EVIDENCE OF ANYONE
-- STEPHEN M. ORLOFSKY: THERE'S AN INTERESTING POINT THERE, IS SOME EVIDENCE
THAT THE LOUISIANA INSURANCE BODY WHEN REVIEWING THIS PARTICULAR EXCLUSION CLAUSE PRESENTED
BY SEWER RICK SAID THAT IT WAS INAPPROPRIATE, IT DOESN'T, CLUED VIRUSES AND THEY SHOULD
HAVE THEIR OWN, EXCLUDE VIRUSES YOU NEEDED A SPECIAL EXCLUSION. THEY CHOSE NOT TO DO
THAT, NATIONAL FIRE DID AND SO NATIONAL FIRE GOT, SO THERE IS SOME ASPECT.
JUSTICE WAINER APTER: THAT BASED ON NEW JERSEY REGULATOR THE AND STATEMENTS MRADZ TO NEW
JERSEY REGULATORS. STEPHEN M. ORLOFSKY: LOOK, JUSTICE, I UNDERSTAND, YOU
ASKED THE QUESTION, THERE WAS, IT'S TRUE THAT THE OPENLY REGULATORY BODY THAT RAISED THAT
QUESTION WAS LOUISIANA. BUT, YOU KNOW, THERE IS AN ELEMENT, AT LEAST WILL IS SOME EVIDENCE
IN THE RECORD THAT A REGULATOR, PERHAPS NOT A NEW JERSEY REGULATOR, DID LOOSHG AT THIS
LANGUAGE AND RAISE QUESTIONS ABOUT IT. AND NATIONAL FIRE, UNLIKE ZURICH, DECIDED TO
ADOPT ITS OWN SPECIAL EXCLUSION WHICH JUDGE STEIN UPHELD AND GRANTED THEIR MOTION TO DISMISS.
I THINK THAT I AM STRAITS THE PROBLEM HERE. JUSTICE PATTERSON: WHY WAS THAT
APPROPRIATE FOR A MOTION TO DISMISS UNDER THE NEW JERSEY STANDARD? WHY WAS THAT DECISION
FINE? STEPHEN M. ORLOFSKY: THE NATIONAL FIRE. JUSTICE
PATTERSON: JUDGE STEIN'S DISMISSAL OF THE CLAIMS AGAINST NATIONAL FIRE. WHY WAS, YOU WERE
SAYING THAT NONE OF THIS SHOULD BE RESOLVED ON A MOTION TO DISMISS. STEPHEN M.
ORLOFSKY: BECAUSE THAT EXCLUSION MADE IT CLEAR THAT IT COVERED, THAT IT COVERED VIRUSES.
LET ME SEE IF I CAN FINE THE LANGUAGE. JUSTICE PATTERSON: NO, I'M AWARE
OF THE LANGUAGE SHTHS I'M TALKING ABOUT THE PROCEDURAL MATTER YOU'RE TELLING US THAT A
MROEGS TO DISMISS IS NOT THE APPROPRIATE PROCEDURAL STAGE FOR A COVER RICHL
DETERMINATION IN THIS CASE, AND YET IT SOUNDS TO ME AS IF YOU'RE NOT DISPUTING --
STEPHEN M. ORLOFSKY: JUDGE, PLEASE DON'T PUT WORDS IN MY MOUTH MATS PAT I'M NOT, SIR.
I'M NOT, STEEFR STEVE WHAT I'M SAYING IS THAT THERE ARE DISPUTED FACTS ABOUT WHETHER THE
CLAIM FOR COVERAGE FALLS, THAT THE ASSERTION FOR COVERAGE FALLS WITHIN THE COVERAGE LANGUAGE.
THAT'S ALL I'M SAYING. WHEN FACTS ARE DISPUTED, IT CAN'T BE, IT CAN'T BE DISSPUTDED.
BUT LET ME TURN TO -- JUSTICE PATTERSON: LET'S. STEPHEN M.
ORLOFSKY: JUDGE STEIN'S -- CHIEF JUSTICE RABNER: IT'S NOT NECESSARY AND
WE'RE A LITTLE BIT BEYOND THE 15 MINUTES, WE CAN PASS ON THAT. STEPHEN M.
ORLOFSKY: I THINK THAT'S IMPORTANT BECAUSE, IT ADD DRETSDZ ADD DRETSZ THE NOIPT JUSTICE
PATTERSON IS RAISING AND, YES, YOU CAN RULE ON CERTAIN COVERAGE CLAIMS ON A MOEKS TO DISMISS
AND JUDGE STEIN'S RUTH IN FAVOR OF NATIONAL FIRE ILLUSTRATES THAT AND IF YOU LOOK AT THE
LANGUAGE OF THE NATIONAL FIRE EXCLUSION, THEN YOU CAN SEE THE DIFFERENCE AND WHY IT'S
CLEAR ON THE RECORD WHICH DOESN'T, AND AS A MATTER OF LAW THAT THE NATIONAL FIRE
EXCLUSION UNLIKE THE ZURICH EXCLUSION CLEARLY EXCLUDES VIRUSES. CHIEF JUSTICE
RABNER: IS THERE ANYTHING ELSE YOU WOULD LIKE T ADD TO YOUR ARGUMENT IS T NOT THE COURT.
NICHOLAS M. INSUA: NICHOLAS INSUA FOR THE WHERE DO YOU RESIDE
POLICYHOLDERS. WE MOVE THE COURT FOR ORAL ARGUMENT ON THREE POINTS AND I'D LIKE
TO COVER AT LEAST THOSE THREE POINTS VERY BRIEFLY RIGHT NOW, POSSIBLY IN A
LITTLE DIFSHT ORDER THAN WE PUT IN OUR MOTION TO ARGUE. THE FIRST IS THAT THE
PRE PANDEMIC UNDERSTANDING OF PHYSICAL LOSS OR DAMAGE WAS VERY VERY WELL
ESTABLISHED BEFORE THE CORONA VIRUS AND COVID-19 CASES BEGAN COMING INTO THE COURTS,
AND THIS WAS OVER MANY MANY MANY YEARS, DECADES, WHERE COURTS ANOTHER THAT AS
MR. ORLOFSKY TALKED ABOUT, FUMES, AMMONIA, ASBESTOS, DIFFERENT TYPES OF LOSSES
COULD BE CONSIDERED PHYSICAL LOSS OR DAMAGE UNDER THE POLICY. THE POLICY LANGUAGE
WAS ORIGINALLY CALLED FOR THE TRIGGER OF COVERAGE BEING DAMAGE OR DESTRUCTION,
IT WAS THEN BROADENED TO BE ALL RISKS OF PHYSICAL LOSS OR DAMAGE AND IT WAS VERY
WELL UNDERSTOOD BEFORE THE PANDEMIC THAT THAT COULD ENCOMPASS THE ABILITY
TO USE THE PROPERTY'S INTENDED USE OR INTENTIONALITY. THAT WAS DECADES BEFORE
THE PANDEMIC, WE THEN PUT IN THE BRIEF STATEMENTS BY INSURANCE COMPANIES,
WE TALKED ABOUT STRATHMORE AND ITS STATEMENTS TO REGULATORS IN NEW YORK ABOUT THE
VIRUS EXCLUSION AND IT NOT WANTING TO INCLUDE A VIRUS EXCLUSION BECAUSE IT
WANDERED TO HAVE COVERAGE THAT WOULD ACTUALLY ENSURE VIRUSS, WE TALKED ABOUT
STATEMENTS, ABOUT FM, FM BEING ONE OF THE LARGEST PROPERTY INSURERS IN THE WORLD,
STATEMENTS BY FM THAT VIRUSS COULD TRIGGER COVERAGE UNDER THESE ALL RISK
POLICIES, WE ALSO PUT STATEMENTS IN OUR BRIEF FROM AIG CINCINNATI INSURANCE COMPANY
THAT TALKED ABOUT AT THE BEGINNING OF THE PANDEMIC THAT THESE CLAIMS COULD
POTENTIALLY TRIGGER CLAIMS UNDER THE POLICY. JUSTICE WAINTER
APTER: WHEN YOU'RE REFERRING TO WELL SETTLED UNDERSTANDING THAT ANY LOSS OF
FUNCTION WOULD SUFFICE, ARE YOU RELYING ON PRIMARILY WAKEFERN AND THE APPELLATE
DIVISION CUSTOM DISTRIBUTION CASE OR ARE THERE OTHER CASES FROM OTHER JURISDICTIONS
THAT YOU'RE RELYING ON. NICHOLAS M. INSUA: SO THERE ARE OTHER
CASES FROM OTSDZ JURISDICTIONS BUT CERTAINLY FROM NEW JERSEY, CUSTOM
DISTRIBUTION, WAKEFERN, PORT AUTHORITY, ALL OF THESE DECISIONS W W PORT AUTHORITY
READS TO ME LIKE IT'S A DIFFERENT STANDARDS. JUSTICE
WAINTER APTER: ESPECIALLY AS TO AS BECHTS IT SAYS THAT IF THE BUILDING IS COMPLETELY
UNI KNOW HABTDABLE THAT WOULD BE COVERED BUT IF ONLY CERTAIN PORTION IT'S
OF THE BUILDING AREN'T, IT WOULDN'T TRIGGER THE POLICY, SO YOU'RE SAYING IT'S ALL
THE SAME STANDARD. NICHOLAS M. INSUA: I BELIEVE IT'S ALL PART OF
THE SAME STANDARD, WHICH IS THE ABILITY TO USE THE PROPERTY FOR ITS INTENDED PURPOSES,
YOU'VE LOST IT'S FUNCTIONALITY, I MEAN ESSENTIALLY IT'S THE SAME THING.
JUSTICE PATTERSON: DO ANY OF THOSE INVOLVE GOVERNMENT SHUTDOWN ORDERS
ANALOGOUS TO WHAT OCCURRED DURING THE PANDEMIC. NICHOLAS M.
INSUA: I BELIEVE GREGORY PACKAGING INVOLVED A CLOSURE WHERE THE BUILDING WAS
SHUTDOWN BECAUSE OF THE AMOUNT OF AMMONIA THAT WAS FOUND AND IT COULDN'T BE USED.
JUSTICE PATTERSON: SHUTDOWN BY A GOVERNMENT ORDER.
NICHOLAS M. INSUA: I BELIEVE THERE WAS AN ORDER TO CLOSE IT.
I WOULD ALSO JUST MENTION VERY BRIEFLY THAT IN THE SUPPLEMENTAL BRIEF OF THE DEFENDANTS
THEY SAY THAT, YOU KNOW, YOU DON'T NEED TO LOOK AT, ESPECIALLY THE STATEMENTS
OF THE OTHER INSURANCE COMPANIES, THIS IS EXTRINSIC EVIDENCE BUT THE COURT HAS
REGULARLY LOOKED AT INFORMATION TO PROVIDE CONTEXT AND CIRCUMSTANCES THAT WOULD
SURROUND INTERPRETING POLICY LANGUAGE, MORE INTERNATIONAL, NAV-ITS WE'VE BEEN TALKING
ABOUT WHERE REGULATORY HISTORY, WE KNOW IN THAT CONTEXT COURTS SHOULD ALWAYS
LOOK AT NOT OATH EXPRESS TERMS, TECHNICAL TERMS AND TERMS OF ART SHOULD BE GIVEN
THEIR MEANING IN A PARTICULAR INDUSTRY. THE SECOND POINT
I WANT TO TOUCH ON IS A LITTLE BIT OUT OF ORDER OF WHAT MR. ORLOFSKY TALKED
ABOUT, WHETHER THIS IS A SOPHISTICATED POLICYHOLDER AND WHETHER THIS IS AN
EXCEPTION THAT'S BEEN RECOGNIZED BY THIS COURT. WE BELIEVE THAT IT IS NOT, IN THE
OXFORD CASE CITED BY THE DEFENDANTS AS MR. ORLOFSKY SAID THERE WAS NO FINDING
THAT A RULE OF CONSTRUCTION HAD TO BE APPLIED AND THEREFORE THERE WAS NO NEED TO
APPLY AN EXCEPTION TO RULE OF CONSTRUCTION. WE'RE NOT AWARE OF ANY
DECISION OF THIS COURT THAT HAS HAD ARE HAS APPLIED A "SOPHISTICATED POLICYHOLDER
STANDARD, WE DON'T BELIEVE THAT THAT'S THE LAW OF THE STATE, WE DON'T BELIEVE
THAT'S THE MAJORITY RULE, WEE CITED IN OUR PAPERS THE RESTATEMENT OF THE
LAW OF LIABILITY INSURANCE, WE'VE TALKED ABOUT DECISIONS, NAV-ITS AND OTHER DECISIONS
WHERE RULES OF CONSTRUCTION HAVE BEEN APPLIED EVEN THOUGH LOTS OF INSURANCE
IS PURCHASED AND THERE COULD BE ARGUMENTS ABOUT WHETHER THE POLICYHOLDER WAS
SOPHISTICATED OR NOT, AND LEAVING ASIDE WHETHER A STANDARD HAS BEEN ADOPTED BY THIS
COURT, WHICH IT HASN'T, EVEN IF IT WERE, WE DON'T KNOW WHAT THE STANDARD IS,
WE DON'T KNOW WHAT THE PARAMETERS OF IT WOULD BE, IS IT A SOPHISTICATED POLICYHOLDER
JUST BASED ON HOW MANY LOCATIONS IT HAS, REVENUE, DOES IT HAVE A RISK
MANAGEMENT DEPARTMENT, DO THOSE PEOPLE HAVE TO BE TRAINED IN RISK MANAGEMENT, DOES
IT HAVE TO HAVE IN-HOUSE COUNSEL, DID IT HAVE TO HAVE WORKED WITH THE BROKER,
DOES IT HAVE TO HAVE WORKED WITH A LARGE BROKER OR COULD A SMALL BROKER ON THE
CORNER SUFFICE, WE DON'T KNOW ANYTHING ABOUT WHAT THAT WOULD BE AND THERE'S
CERTAINLY NO EVIDENCE IN THIS RECORD ABOUT ANY OF THOSE FACTORS, AND SO WE BELIEVE
THAT THERE SHOULD BE NO APPLICATION OF A SOPHISTICATED POLICYHOLDER STANDARD.
THE THIRD POINT WHICH I'LL TALK IT OUT WHICH IS THE SECOND
POINT ACTUALLY IN OUR MOTION FOR ARGUMENT IS THE COUCH SECTION WHICH IS SECTION
140 A:46, AND THAT WAS THE SECTION WHERE THE AUTHORS OF THE SECTION SAID THAT
PHYSICAL LOSS OR DAMAGE MEANT DEMONSTRABLE OR PHYSICAL ALTERATION OF THE PROPERTY,
THEY SAID THAT THIS WAS THE ESTABLISHED RULE, BUT AS IT TURNED OUT WHEN THAT
WAS FIRST PUBLISHED IN THE EARLY TO MID 1990'S, THAT WAS IN FACT NOT THE SFABLD
RULE AND ALL THE PRECEDENT FROM OTHER JURISDICTIONS WE TALKED ABOUT DID NOT TALK
ABOUT PHYSICAL ALTERATION BEING A REQUIREMENT OF PHYSICAL LOSS OR
DAMAGE. THOSE WORDS DON'T APPEAR IN THE POLICY. THE POLICY SAYS ALL RISK OF PHYSICAL
LOSS OR DAMAGE, IT DOESN'T SAY ALL RISKS OF PHYSICAL ALTERATION OR DEMONSTRABLE
ALTERATION. AS WELL, THIS COURT, AND COURTS BEFORE THE PANDEMIC
IN NEW JERSEY, HAVE NOT ADOPTED PHYSICAL ALTERATION REQUIREMENT, SO EVEN IF OTHER
COURTS IN OTHER STATES HAVE PREVIOUSLY OR DURING THE PANDEMIC ADOPTED THIS
STANDARD AND SAID THAT PHYSICAL LOSS OR DAMAGE REQUIRES A PHYSICAL ALTERATION,
THIS COURT HAS NOT, AND THEREFORE IT NEEDN'T BE BOUND BY THOSE OTHER DECISIONS
NOR NEED IT BE BOUND BY DECISIONS OF THIS STATE WHICH HAVE SAID OR SUGGESTED
THAT'S A STANDARD WHEN THIS COURT HAS NOT IN FACT ADOPTED THAT STANDARD.
JUSTICE PATTERSON: DOES WHERE DO YOU RESIDE POLICYHOLDERS HAVE A POSITION
ON THE APPLICABILITY OF THE CONTAMINATION EXCLUSION TO COVID.
NICHOLAS M. INSUA: TO COVID IN THIS CASE. JUSTICE PATTERSON: IN THIS
CASE. NICHOLAS M. INSUA: YES. OUR POSITION WOULD BE THAT
IT DOES NOT APPLY. UNDER NAV-ITS EXCLUSIONS LIKE THAT ARE MEANT TO BE CON TRUED
NARROWLY AND APPLIED TO INSTANCES OF TRADITIONAL ENVIRONMENTAL CONTAMINATION,
THAT IS NOT WHAT THIS WAS, YOU KNOW, IF MAYBE -- AND THIS IS NOT THE FACTS
HERE, BUT IF THERE WAS A DUMPING OF MEDICAL WASTE AND THE MEDICAL WASTE SOMEHOW
HAD OR CONTAINED VIRUS AND THEN THAT CAUSED A LOSS, MAYBE THAT WOULD BE
EXCLUDED, THAT'S NOT WHAT HAPPENED HERE, THIS IS A GLOBAL PANDEMIC THAT NO ONE
-- JUSTICE PATTERSON: SO YOUR CONTENTION ON BEHALF OF WHERE DO
YOU RESIDE POLICYHOLDERS IS IS THAT THIS CONTAMINATION EXCLUSION SHOULD BE LIMITED
TO ENVIRONMENTAL POLLUTION. NICHOLAS M. INSUA: YES, AND I WOULD
SAY -- I WOULD ALSO POINT OUT THAT IN IN THE MATTER OF IT IS, NAV-ITS DEALT
WITH A LOSS RELATED TO FUMES, THE EXCLUSION IN NAV-ITS CONTAINED THE WORD FUMES
AND THE COURTS STILL HELD THAT THE EXCLUSION WOULDN'T NECESSARILY APPLY
UNLESS IT WAS AN INSTANCE OF TRADITIONAL ENVIRONMENTAL CONTAMINATION.
JUSTICE WAINTER APTER: SO DO YOU DISAGREE THAT NAV-ITS WAS BASED ON SOME SORT
OF THEORY OF REGULATORY ESTOPPEL OR THE INSURANCE INDUSTRY SPECIFICALLY
TOLD REGULATORS THAT THE EXCLUSION AT ISSUE WOULD ONLY APPLY TO ENVIRONMENTAL POLLUTION?
NICHOLAS M. INSUA: SO I WOULD DISTINGUISH NAV-ITS AND MORE
TO KNOW. IN MORE TO KNOW THE COURT ESTABLISHED CAUSE OF ACTION FOR REGULATORY
ESTOPPEL, AS I READ NAV-ITS I SEE THAT WE'RE LOOKING AT REGULATORY HISTORY
TO GLEAN THE MEANING OF THESE WORDS, JUST AS YOU MIGHT LOOK AT WHAT STRATHMORE
SAID OR WHAT FM SAID SO WE CAN UNDERSTAND WHAT THESE WORDS MEAN AND THEY LOOKED
AT THE WORDS AND THEY LOOKED AT WHAT WAS SAID TO REGULATORS AND THERE WAS
A DETERMINATION MADE THAT THIS SHOULD BE READ NORMALLY. JUSTICE
WAINTER APTER: BUT WHY WOULD IT APPLY BEYOND THAT CIRCUMSTANCE, SO JUST BECAUSE
IN A PARTICULAR CIRCUMSTANCE INSURANCE COMPANIES SAY A PARTICULAR THING
TO REGULATORS AND THEREFORE THEY SHOULD BE HELD TO WHAT THEY SAID, HERE IF THERE IS
NO SIMILAR HISTORY, WHY ARE WE APPLYING THE SAME RULE. NICHOLAS
M. INSUA: SO A COUPLE OF THINGS. FIRST THAT -- I BELIEVE THE MORE TIN DECISION
WHICH DEALT WITH SUDDEN AND ACCIDENTAL POLLUTION EXCLUSIONS, THAT HOLDING
THAT IT WOULD APPLY TO ONLY TRADITIONAL ENVIRONMENTAL POLLUTION APPLIED TO OTHER
TYPES OF POLLUTION EXCLUSIONS THAT DIDN'T USE THE EXACT SAME LANGUAGE BECAUSE
THE COURT HELD THAT THESE EXCLUSIONS NEEDED TO BE READ NARROWLY.
JUSTICE PATTERSON: THAT'S A POLLUTION EXCLUSION. NICHOLAS M.
INSUA: THAT WAS A SUDDEN AND ACCIDENTAL EXCLUSION, YES. JUSTICE
PATTERSON: BUT THIS IS A CONTAMINATION EXCLUSION. NICHOLAS M.
INSUA: IT DOES SAY CONTAMINATION BUT I THINK THAT GIVEN THAT IT HAS THE WORDS
POLLUTANTS IN IT AND TOXINS THAT IT SHOULD BE CONSTRUED CONSISTENTLY WITH THE COURT'S
PRIOR DECISION. JUSTICE WAINTER APTER: CAN INSURANCE
COMPANIES NOT DO ANYTHING TO HAVE AN EXCLUSION THAT IS BEYOND ENVIRONMENTAL
EXCLUSIONS, EVEN IF THEY SAID WE ARE TRYING TO EXCLUDE ALL VIRUSS BECAUSE IT'S GOING
TO TJ TO INCLUDE EXCLUSION, NAV-ITS IS GOING TO SAY THAT IT'S ONLY
ENVIRONMENTAL? NICHOLAS M. INSUA: WELL THERE IS A SPECIFIC HE
KNOW VIEMENT AL EXCLUSION THAT I S O DRAFTED AND IT WAS PUT BEFORE REGULATORS AND
THAT SAID ESSENTIALLY VIRUSES AREN'T INSURED UNDER THIS POLICY, IT WASN'T IN
THE CONTEXT OF ALL THESE TYPES OF LOSSES AND THEN POLLUTANTS AND THEN A LIST AFTERWARDS,
AND THAT'S WHAT THE DISCUSSION IN OUR BRIEF ABOUT STRATHMORE, RIGHT, THERE
WAS A SPECIFIC VIRUS EXCLUSION AND STRATHMORE SAID WE DON'T WANT TO YOUR KNOWLEDGE
TO PUT THIS ON OUR POLICY BECAUSE WE WANTS TO BE ABLE TO PROVIDE COVERAGE FOR
VIRUS VENTHS. JUSTICE PATTERSON: SO WHEN WE SEE PATHOGEN,
PATHOGENIC ORGANISM, VIRUS, THE OATH EFFECT OF THOSE WORDS IS IF VIRUSES, PATHOGENS,
ARE IN MEDICAL WASTE THAT SOMEHOW ENDS UP BEING POLLUTEING, THAT'S HOW WE'RE
SUPPOSED TO READ THOSE WORDS? NICHOLAS M. INSUA: THAT WAS AN EXAMPLE
I GAVE BUT IF IT WAS IN SOME CONTEXT THAT COULD BE CONSIDERED AN EVENTS
OF TRADITIONAL ENVIRONMENTAL CONTAMINATION OR POLLUTION I THINK THAT THIS EXCLUSION
MIGHT APPLY, BUT THAT'S NOT WHAT THIS IS. CHIEF JUSTICE RABNER:
I THINK WE HAVE YOUR POSITION, ANYTHING YOU'D LIKE TO ADD?
NICHOLAS M. INSUA: NO YOUR HONOR. CHIEF JUSTICE RABNER: TWO HOUSEKEEPING
MATTERS, WE'RE GOING TO BREAK AROUND 1230, I DON'T KNOW WHETHER THE ARGUMENT
WILL BE COMPLETED AT THAT POINT OR NOT, BUT I WANTED TO ALLOW ALL COUNSEL TO PREPARE
FOR THAT, AND TO THE EXTENT COUNSEL ON THIS SIDE OF THE AISLE ARE ABLE TO
INCORPORATES ARGUMENTS FROM ONE ANOTHER, PLEASE DO SO, OUR BREAK WILL BE AROUND
30 MINUTES. MR.LY ROTH. DAVID ROTH: GOOD MORNING, YOUR HONORS,
DAVE ROTH FOR AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY. MAY IT
PLEASE THE COURT, IT'S APPELLATE DIVISION'S DISMISSAL OF OCEAN WALK RS
COMPLAINT SHOULD BE AFFIRMED FOR TWO REASONS, FIRST, OCEAN WALK DIDN'T
ALLEGE FACTS THAT AMOUNT TO DIRECT PHYSICAL LOSS OF OR DAMAGE WHICH IS REQUIRED
FOR ALL THE CONVERSATION AT ISSUE IN THIS CASE, AND SECONDS EVEN IF IT HAD ALLEGED
PHYSICAL LOSS, COVERAGE WOULD BE BARRED BY THE CONTAMINATION EXCLUSION WHICH
SPECIFICALLY INCLUDES VIRUS. I'D LIKE TO BEGIN WITH THE PHYSICAL LOSS ISSUE,
AS THE APPELLATE DIVISION HELD IN THE MAC PROPERTY GROUP CASE, THE OERD MEANING
OF THAT FACE, PHYSICAL LOSS OR DAMAGE TO PROPERTY IS THE PROPERTY HAS SUFFERED
A DETRIMENTAL PHYSICAL ALTERATION RAGS OF SOME KIND OR THERE'S BEEN A PHYSICAL
LOSS OF THE INSURED PROPERTY AND THAT PLAIN ORDINARY MEANING IS REINFORCED BY THE
PERIOD OF LIABILITY PROVISION WHICH MAKES CLEAR THAT PHYSICAL LOSS OR DAMAGE
TO PROPERTY MEANS SOMETHING REQUIRING REPAIRS OR REPLACEMENT OF THE PROPERTY IN
ORDER TO RESTORE IT TO ITS PRE LOSS CONDITION. NOW MAC PROPERTY ISN'T
ALONE IN INTERPRETING THE WORDS THAT WAY, 10 APPELLATE DIVISION PATHS HAVE AGREED
WITH MAC PROPERTY, 14 SUPREME COURTS HAVE CONSIDERED WHAT THESE WORDS MEAN IN
THIS EXACT CONTEXT, THEY HAVE ALL COME TO THE SAME CONCLUSION, AS HAS THE WILSON
CASE, THE THIRD CIRCUIT APPLYING NEW JERSEY LAW AND EVERY NUCHLD FEDERAL
CIRCUIT. SO ONCE YOU ESTABLISH WHAT THOSE WORDS MEAN, WHAT DIRECT PHYSICAL LOSS
TO PROPERTY IS, OCEAN WALK'S CLAIM FAILS. SO THEY HAVE ESSENTIALLY TWO THEORIES
IN THEIR BRIEFS, WHAT THEY CHARACTERIZE AS THEIR MAIN THEORY IN THEIR BRIEF
IS THAT THEY LOST THE INTENDED USE OF THEIR PROPERTY DUE TO THE GOVERNMENT ORDERS
OR THE PANDEMIC. SPECIFICALLY THEY COULDN'T USE THEIR PROPERTY FOR IN
PERSON GAMING OR THERE WERE RESTRICTIONS ON ITS USE. AND THE BASIC PROBLEM WITH THAT
THEORY IS THAT IS SIMPLY NOT A PHYSICAL LOSS, THE LOSS OF A PARTICULAR
INTENDED USE OF PROPERTY IS A LOGS OF A LEGAL RIGHT, AN ECONOMIC RIGHT, IT'S NOT
A TANGIBLE LOSS OF PROPERTY, THEY HAVEN'T BEEN PHYSICALLY DPRIECHD OF IT, IT'S
NO DIFFERENT FROM ANYWAY OTHER GOVERNMENT REGULATION OR ORDER WHICH MAY
IMPAIR HOW A POLICYHOLDER USES THEIR PROPERTY. AND THAT'S PARTICULARLY SO IN THIS
CASE BECAUSE THIS POLICY CONTAINS EXPLICIT EXCLUSIONS FOR LOSS OF USE AND
EXPLICIT EXCLUSIONS FOR LOSS DUE TO GOVERNMENT ORDERS REGULATING THE OCCUPANCY
OR USE OF PROPERTY. EVERY SUPREME COURT NOW 14 AND COUNTING THAT'S LOOKED
AT THIS ISSUE HAS HELD THAT THE USE OF USE OF PROPERTY IS NOT A COVERED LOSS NOT
COVERED UNDER A POLICY SUCH AS THIS ONE SO THEY'VE REJECTED CLAIMS UNDER THAT
THEORY. TODAY THEY FOCUS MOSTLY ON WHAT THEY CHARACTERIZE
ASSIST A SECOND THEY'RE RE OF THEIR COMPLAINT WHICH IS THAT THE VIRUS WAS
ACTUALLY PRESENT AT THEIR PROPERTY AND CAUSED PHYSICAL DAMAGE, SPECIFICALLY
THEIR GUESTS OR EMPLOYEES ASK HAILED VIERLGS PARTICLES, THOSE VIRUS PARTICLES HUNG
IN THE AIR AND FELD ON SURFACES AND WERE IN THE PROPERTY AND THAT THAT AMOUNTS
TO PHYSICAL DAMAGE. NOW, ASSUMING THE VIRUS PARTICLES WERE ACTUALLY PRESENT IN
THEIR CASINO AND THEIR ALLEGATIONS ARE FAIRLY VAGUE ABOUT THAT, THE KEY
IS WHAT IMPACT THOSE VIRUS PARTICLES ACTUALLY HAD. AND THE OEM FACT THAT THEY
PLEAD IN THE COMPLAINT IS SIMPLY THAT MICROSCOPIC VIRUS PARTICLES RESTED ON THE
SURFACE OF THEIR PROPERTY. THEY DON'T PLEAD THAT THOSE VIRUS PARTICLES
KAUFLD SOME DISCERNIBLE ALTERATION, THAT IT MADE THE PROPERTY CHANGE COLORS, MADE
AN ODOR, CAUSED SOME SORT OF INVISIBLE HARM, CAUSED THE PROPERTY TO DEGRADE
AND DETERIORATE, THEY DON'T ALLEGE THAT THEY HAD TO REPAIR OR REPLACE A SINGLE
ITEM IN THE PROPERTY AND THEY CONCEDE THAT THOSE PARTICLES BECAME INERT AND
HARMLESS IN HOURS OR AT MOST DAYS. THE COURTS IN OTHER STATES HAVE CONSISTENTLY
AGREED WITH APPELLATE DIVISION THAT ALLEGATIONS OF VIRUS PARTICLES BEING PRESENT
IN PROPERTY WITHOUT CAUSING ANY ALTERATION ON IT AND ABATING WITHIN A MATTER
OF HOURS OR DAYS SIMPLY DOESN'T MEET THE DEFINITION OF PHYSICAL DAMAGE, THE THIRD
CIRCUIT IN WILSON UNDER NEW JERSEY LAW, 19 SUPREME COURTS HAVE CONCLUDED
THE SAME THING. ORDINARY MEANING OF PHYSICAL DAMAGE IS THE SAME IN NEW JERSEY
AS IT IS IN ALL THOSE OTHER STAILTS SO THERE'S NO REASONING THAT THIS COURT
SHOULD DISAGREE. I WANT TO TALK A LITTLE BIT ABOUT THE PLEADING
STANDARDS. A LOT OF THEIR ARGUMENTS SOUNDED LIKE THE ASSERTION THAT SO LONG AS
THEY ASSERT THE PRESENCE OF A VIRUS IS PHYSICAL DAMAGE, THIS COURT IS BOUND
TO ACCEPT THAT FOR THE PURPOSES OF A MOTION TO DISMISS AND THEN WE HAVE THE CASE
PROCEEDS TO DISCOVERY. AND THAT JUST FUNDAMENTALLY MISUNDERSTANDS IT'S ISSUE ON
APPEAL AND THE ISSUE FACING THE COURT ON A MOTION TO DISMISS. THE QUESTION
IS WHAT DIRECT PHYSICAL LOSS OVER DAMAGE MEANS, THAT'S A LEGAL QUESTION ABOUT THE
INTERPRETATION OF A CONTRACT AND IT'S ALSO A LEGAL QUESTION WHETHER A PARTICULAR
SET OF ASSUMED FACTS MEET THAT DEFINITION. SO THEIR ASSERTION THAT THOSE FACTS
SATISFY THE LEGAL DEFINITION IS JUST A LEGAL CONCLUSION, AND THAT'S NOT
ENTITLED TO THE PRESUMPTION OF TRUTH. INSTEAD LOOK AT WHAT THEY ACTUALLY ALLEGE
ABOUT THE VIRUS'S IMPACT ON THEIR PROPERTY, THEY ONLY ALLEGE THAT A
VIRUS PARTICLE WAS THERE AND THAT DOES NOT MEET THE DEFINITION OF PHYSICAL DAMAGE.
SO THE APPELLATE DIVISION WAS RIGHT TO FIND THAT THESE ALLEGATIONS WERE
SIMPLY LEGALLY INADEQUATE, IT WAS NOT RESOLVING FACTUAL DISPUTES AGAINST THEM.
JUSTICE PATTERSON: THE FACTS THAT WE SHOULD ASSUME THE TRUTH
OF FOR THE PURPOSES OF THE MOTION TO DISMISS ARE THE FACTS ABOUT WHAT ACTUALLY
OCCURRED, IN OTHER WORDS THAT THERE WAS A VIRUS PRESENT, THE COVID PANDEMIC,
AND I ASSUME WE SHOULD ASSUME AS TRUE THE ALLEGATIONS WITH RESPECT TO THE GOVERNMENT
CLOSURES AS WELL. DAVID ROTH: YES. SO THE ACTUAL FACTS
THAT THEY PLEAD, SO WHAT THE VIRUS DID TO THEIR PROPERTY, THE FACT THAT
THEY SHUTDOWN ON PARTICULAR DAYS, THOSE FACTS YOU HAVE TO ACCEPT AS TRUE, BUT WHETHER
THOSE FACTS MEET THE DEFINITION OR FALL WITHIN THE SCOPE OF PHYSICAL LOSS OR
DAMAGE AS THOSE TERMS ARE USED IN THIS POLICY, THAT'S A LEGAL QUESTION.
JUSTICE PATTERSON: SO WHEN YOUR ADVERSARY REFERS TO A FACT THAT WE NEED
TO ASSUME TO BE TRUE, USING THE POLICY LANGUAGE, YOU'RE SAYING THAT'S ACTUALLY
A LEGAL CONCLUSION THAT WE NEED NOT ACCEPT AS TRUE. IS THAT CORRECT?
DAVID ROTH: YES. SO THE ULTIMATE QUESTION IS DO THESE FACTS
AMOUNT TO PHYSICAL DAMAGE WITHIN THE MEANING OF THIS POLICY, AND THAT IS A LEGAL
QUESTION, IT'S WHAT IS PHYSICAL DAMAGE MEAN, WHAT FACTS ARE PHYSICAL DAMAGE,
AND SIMPLY ASSERTING THAT A PARTICULAR SET OF FACTS AMOUNT TO PHYSICAL DAMAGE IS
NOT ENOUGH. IF THERE WERE ENOUGH, AS YOUR HONOR WAS INDICATING, IT'S HARD
TO IMAGINE HOW ANY MOTION TO DISMISS COULD EVER BE GRANTED, NOT ONLY AN INSURANCE
CASE, BUT A BREACH OF CONTRACT CASE, IN A STATUTORY INTERPRETATION CASE, IT
SEEMS THE UPSHOT OF THEIR ARGUMENT IS SO LONG AS A PLAINTIFF ALLEGES A PARTICULAR
SET OF FACTS, SATISFIES SOME LEGAL TERM, WELL YOU HAVE TO ASSUME THAT'S TRUE AND
PROCEED TO DISCOVERY AND THAT'S NOT HOW THIS COURT UNDERSTANDS PLEADINGS
STANDARDS, AS IT'S MADE CLEAR YOU HAVE TO PLEAD ESSENTIAL FACTS AND THEN WHETHER
THOSE ESSENTIAL FACTS CREATE A CAUSE OF ACTION IS A LEGAL QUESTION SO IT'S
REALLY NO DIFFERENT THAN ANY OTHER BREACH OF CONTRACT CONTEXT.
JUSTICE PATTERSON: OUTSIDE OF COVID ARE THERE CASES THAT HAVE DEALT -- I'M ASSUMING
PRE COVID, WITH GOVERNMENT CLOSURES AND SITUATIONS WHERE A BUILDING HAS
BECOME UNUSABLE FOR ASBESTOS OR FOR SOME MORE TRADITIONAL ENVIRONMENTAL REASON?
DO YOU SEE WHAT I'M SAYING? DAVID ROTH: YES.
JUSTICE PATTERSON: BUT ALSO COUPLED WITH A GOVERNMENT CLOSURE. OBVIOUSLY YOU HAVE
GOVERNMENT REMEDIATION ORDERS THAT OCCUR ALL THE TIME IN THAT TYPE OF
SITUATION, BUT WE'RE DEALING HERE WITH SOMETHING DIFFERENT WHICH IS YOU MUST CLOSE
ON THIS DATE, YOU MUST CEASE TO DO BUSINESS ON THIS DATE, EVERYBODY ACROSS THE
BOARD MUST DO SO THAT ARE ADMITTING THE PUBLIC. DAVID ROTH:
SO I'M NOT AWARE OF A CONTEXT EXACTLY LIKE THIS ONE BUT THERE ARE PRE COVID KALSZ
DEALING WITH GOVERNMENT SHUTDOWN ORDERS AND COURTS CONSISTENTLY HELD THAT
THE INTERFERENCE OF THE USE OF PROPERTY DUE TO A SHUTDOWN ORDER IS NOT A PHYSICAL
LOSS. AND I'D START WITH A DECISION FROM THE NEW YORK APPELLATE DIVISION
ROUND ABOUT, THAT'S A CASE WHERE THE POLICYHOLDER WAS A THEATRE, THERE WAS A
CONSTRUCTION ACCIDENT DOWN THE STREET, THE CONSTRUCTION ACCIDENT DIDN'T ACTUALLY
DAMAGE THE THEATRE BUT AS A RESULT OF THE ACCIDENT, THE AUTHORITIES SHUTDOWN THE
ENTIRE STREET AND BECAUSE THE STREET WAS SHUTDOWN THE THEATRE COULDN'T HAVE
PERFORMANCES TO REMEMBER A PERIOD OF TIME, SOLE IT ALLEGED THAT'S A PHYSICAL LOSS
OF ITS PROPERTY, WE COULDN'T USE THE PROPERTY AS INTENDED BECAUSE OF THE
SHUTDOWN ORDER, NEW YORK APPELLATE DIVISION HELD THLGS NOT A PHYSICAL LOSS.
JUSTICE PATTERSON: I'M SURE MR. ORLOFSKY WOULD ABLY DISTINGUISH THAT BECAUSE
IT WASN'T DEALING WITH A SITUATION WHERE THERE'S A HAZARD WITHIN THE PROPERTY.
IS THERE ANYTHING CLOSER TO THAT? I'M JUST ENVISIONING THERE'S TOO MUCH ASBESTOS
IN A PARTICULAR LOCATION, YOU HAVE TO SHUTDOWN THE BUILDING NOW AND KEEP IT
CLOSED UNTIL WE TELL YOU OTHERWISE, IS THERE ANYTHING LIKE THAT IN ANY OF THESE
COVERAGE CASES THAT YOU'RE AWARE OF. DAVID ROTH: SO THERE WERE
THE PRE COVID CASES INVOLVING CONTAMINATION OF THE PREMISES AND SOME
OF THE QUESTIONING WAS TALKING ABOUT THINGS LIKE ASBESTOS, AMMONIA CONTAMINATION
AND THE LIKE, AND THOSE HAVE BEEN DISCUSSED BY MANY OF THE COVID CASES, WILSON
TALKED ABOUT THEM AT LENGTHS, THE RECENT KNIFE IN A VA TODAY, ALL OF THOSE
CASES ARE DEALING WITH A SUBSTANCE PHYSICALLY IN THE PROPERTY, THERE IS ASBESTOS
IN THE WALLS, AMMONIA LEAKING OUT OF A PIPE AND THAT SUBSTANCE IS MAKING
THE PROPERTY UNINHABITABLE AND UNUSABLE UNTIL YOU BRING IN SPECIALIZED REMEDIATION
TO RESTORE THE PROPERTY, YOU HAVE TO TEAR OUT THE WALLS, REMOVE THE ASBESTOS,
USING TRAINED HAZMAT CREWS IN ORDER TO RETAIN THE PROPERTY TO USE ABILITY AND THAT
MIGHT BE PHYSICAL LOSS BECAUSE THERE'S ESSENTIALLY A DISPOSSESSION. WE DON'T
HAVE THAT HERE, WE'RE NOT COMPLAINING ABOUT SOME CONDITION OF THE PROPERTY, THE
REASON WHY COVID VIRUS IS THERE IS BECAUSE THEIR PATRONS AND GUESTS COME IN AND
ASK HAIL VIRUS PARTICLES, THOSE PARTICLES DON'T MAKE THE PROPERTY UNINHABITABLE
AND UNUSABLE, WE KNOW THAT BECAUSE ALL MANNER OF PROPERTY REMAINED OPEN, GROCERY
STORES, FACTORIES, EVEN LIQUOR STORES REMAINED OPEN, SO WHATEVER IMPACT
COVID-19 VIRUS HAS ON PROPERTY DOESN'T AMOUNT TO UNINHABIT ABILITY, AND WE KNOW
THAT SPECIFICALLY BECAUSE OF WHAT THEY ALLEGE, THEY ALLEGE THEY CLOSED ON
MARCH 16TH IN COMPLIANCE WITH THE EXECUTIVE ORDER THAT DAY ISSUED THAT DAY
REQUIRING CASINOS LIKE OCEAN WALK TO REMAIN CLOSED TO THE PUBLIC. THEY REMAINED
CLOSED UNTIL JULY 2ND WHEN IN COMPLIANCE WITH THE EXECUTIVE ORDER THEY REOPENED
TO THE PUBLIC. SO THE ONLY TIME PERIOD WHEN THEY WEREN'T ABLE TO OPERATE
THEIR CASINO AND BE OPEN TO THE PUBLIC WAS WHEN THE GOVERNOR REQUIRED THEM TO BE
CLOSED. OTHER THAN THAT THERE IS NO ALLEGATION THAT THE VIRUS EVER DID
ANYTHING TO THEIR PROPERTY THAT MADE THEM PHYSICALLY INCAPABLE OF OPERATING AND
PLAINLY IF IT DID, IF IT DID HAVE THAT SORT OF PHYSICAL IMPACT, THEY WOULD NOT
HAVE BEEN OPEN ON JULY 3RD 2020, THEY WOULD NOT HAVE BEEN OPEN FOR THE LAST
3 YEARS, SO THERE'S NO WAY TO READ THIS COMPLAINT AND SEE AN ALLEGATION THAT THE
VIRUS HAD A PHYSICAL IMPACT ON THEIR PROPERTY THAT MADE IT UNI KNOW
HABLTABLE AND UNUSABLE. THERE'S ALSO NO CLAIM THAT THEY HAD TO TAKE SOME REMEDIATION
TO REMOVE THE VIRUS, THAT'S NOT IN THE COMPLAINT AND WE KNOW THAT'S NOT TRUE
BECAUSE AS THEY CONCEDE IN PARAGRAPH 114 THE VIRUS BECOMES INERT AND HARMLESS ON
ITS OWN IN A MATTER OF DAYS, SO EVEN IF THEY HAD DONE NOTHING AT ALL, THE VIRUS
WOULD A BAIT, AND THAT'S NOT THE SITUATION WITH ASBESTOS AND RELEASE OF
AMMONIA, ET CETERA, AS CASES LIKE WILSON HAVE EXPLAINED. CHIEF
JUSTICE RABNER: WHAT ABOUT THE ALLEGATIONS IN 118 AND 119, WHERE THEY ALLEGE CORONA
VIRUS CAUSES PHYSICAL LOSS TO PROPERTY AND THAT A RISK OF SIGNIFICANT HARM
AND DAMAGE TO PERSONS IS WHY IT IS NECESSARY TO CLOSE THE SPACE.
DAVID ROTH: SO THERE'S NO ALLEGATION OF WHAT THE ACTUAL PHYSICAL DAMAGE IS
AND IF YOU GO THROUGH THE ENTIRE COMPLAINT, I THINK THE ONLY ALLEGATION YOU
WILL SEE OF SOME KINDS OF REAL ALTERATION OF THEIR PROPERTY, OR SUPPOSED REAL
ALTERATION OF THEIR PROPERTY, IS IN PARAGRAPH 113 WHERE THEY SAY THE VIRUS
ALTERED THEIR PROPERTY BECAUSE MICROSCOPIC PARTICLES WERE RESTING ON IT,
SO THAT'S THE OATH ESSENTIAL FACT THAT IS PLED HERE, A VIRUS PARTICLE RESTED ON
THIS PROPERTY, THAT IS WHAT THEY SAY AMOUNTS TO PHYSICAL ALTERATION.
JUSTICE WAINTER APTER: BUT DIDN'T THE GREGORY DECISION THAT YOU'VE REFERENCED
BEFORE HOLD THAT PROPERTY CAN SUSTAIN A PHYSICAL LOSS OR DAMAGE WITHOUT
EXPERIENCING ANY STRUCTURAL ALTERATION? DAVID ROTH: SO THAT'S SOMETHING
THAT GREGORY PACKAGING SAYS BUT IT'S A SITUATION WHERE THERE IS A RELEASE
OF A DANGEROUS SUBSTANCE FROM THE FACILITY, THAT SUBSTANCE NOT ONLY REQUIRES THE
PROPERTY ITSELF TO BE EVACUATED, IN THAT CASE AN ENTIRE ONE MILE RADIUS AROUND
THE FACTORY HAD TO BE EAST VAK 88ED AND THERE WAS A CONCESSION AGREEMENT BY BOTH
PARTIES IN THAT CASE THAT THE PROPERTY IN QUESTION COULD NOT BE USED, IT WAS
COMPLETELY UNINHABITABLE AND UNUSABLE FOR A WEEK UNTIL SPECIALIZED REMEDIATION EFFORTS
HAD RESTORED THE PROPERTY. SO THAT IS A CASE WHERE THERE WAS AN ASSUMPTION
THAT THE PROPERTY WAS RENDERED UNI KNOW HABLT AND UNUSABLE DUE TO A CONDITION OF
A SUBSTANCE. JUSTICE WAINTER APTER: IN TERMS OF THE FACT THAT
THE AMMONIA RELEASED FROM THE STRUCTURE ITSELF FROM THE PIPE RATHER THAN PATRONS
COMING IN AND BREATHING AMMONIA, ARE YOU SAYING THAT THAT MAKES A DIFFERENCE FOR
THE PURPOSES OF THE POLICY, SO THE STRUCTURE, THE PHYSICAL DAMAGE TO THE
STRUCTURE HAS TO BE CAUSED BY THE STRUCTURE ITSELF, AND CANNOT BE CAUSED BY
PATRONS CAUSING DAMAGE? DAVID ROTH: SO THAT'S SOMETHING THAT
THE KNIFE TODAY SUPREME COURT FOUND IN ITS DECISION LAST WEEK, ULTIMATELY
IT'S WHETHER THERE'S PHYSICAL DAMAGE TO PROPERTY, SO IT'S QUITE LOGICAL THAT YOU
WOULD LOOK TO WHETHER THERE'S A CONDITION OF THE PROPERTY ITSELF THAT IS
CREATING THE DANGER IF THE RISK IS SOMETHING THAT'S NOT RELATED TO THE PROPERTY
IN ANY MATERIAL RESPECT, THAT SUGGESTS IT'S NOT PHYSICAL LOSS THAT WOULD BE
COVERED BY A PROPERTY INSURANCE POLICY. JUSTICE PATTERSON: WELL YOU CAN
HAVE PHYSICAL LOSS TO A PROPERTY THAT ORIGINATE FROM OUTSIDE THE PROPERTY,
SOMEONE COMES IN AND DAMAGES THE PROPERTY, AND THAT WOULD BE COVERED. IN OTHER WORDS
IT DOESN'T HAVE TO ORIGINATE IN THE ACTUAL STRUCTURE OF THE BUILDING, DOES
IT. DAVID ROTH: NO, BUT IN THOSE CASES YOU HAVE A PHYSICAL
ALTERATION, THE PROPERTY HAS BEEN PHYSICALLY ALTERED BY THAT EXTERNAL FORCE, IT'S
CHANGED ITS STRUCTURE, IT'S BURNED DOWN THE WALLS, WHATEVER, AND THAT'S
AGAIN WHAT WE JUST DON'T HAVE HERE OTHER THAN THIS ALLEGATION THAT A MICROSCOPIC
PARTICLE RESTED ON THE SURFACE FOR A COUPLE OF HOURS NICHLT WE'RE USING
2020 HINDSIGHT TO EVALUATE THAT, TAKING A SIDE THE EXECUTIVE ORDER, IF IT HADN'T
EXISTED AND WHAT WE KNOW ABOUT THE CORONA VIRUS TETHER THAT THEY DIDN'T KNOW HOW
FAST IT COULD SPREAD FROM PERSON TO PERSON, IF THEIR POSITION HAD BEEN TO
CLOSE THE CASINO ON THEIR OWN BASED ON THE FACT THAT THE EXISTING SCIENCE WAS THAT
THERE WAS SOME QUICK SPREADING NATURE TO THIS AND THAT IT COULD GO FROM
SURFACE TO INDIVIDUAL AND THAT THAT HAD BEEN THEIR CHOICE INDEPENDENT OF THE
EXECUTIVE ORDER BECAUSE IT WAS PREVENTER GO THEM FROM SAFELY HAVING INDIVIDUALS
USE THEIR TABLES BECAUSE OF THE POSSIBILITY OF THE MICROSCOPIC
PARTICLES REMAINING THERE FOR LONGER THAN DAYS, HOURS, WEEKS, WE DIDN'T KNOW AT THAT
TIME, WOULD THAT CHANGE YOUR ARGUMENT AT ALL IF THAT HAD BEEN WHAT WAS PLED.
DAVID ROTH: NO, THAT SITUATION WOULD NOT BE COVERED EITHER,
AND THE EASIEST WAY IS JUST TO WALKTHROUGH THE POLICY, SO THIS CASE IS MOSTLY ABOUT
WHAT'S CALLED TIME ELEMENT COVERAGE WHICH COVERS THE LOST INCOME THE
POLICYHOLDER MAY EXPERIENCE WHEN IT SPENLDZ ITS OPERATIONS, BUT THE POLICY SPECIFICALLY
SAYS, 4.1.1, IT ONLY APPLIES WHEN THE SUSPENSION IS DUE TO PHYSICAL LOSS
OR DAMAGE TO THE PROPERTY, AND EXPLICITLY EXCLUDES SUSPENSIONS OF BUSINESS FOR
ANY OTHER REASON, AND THAT'S IN SECTION 3.3.2.5. SO THE QUESTION IS NOT
DID THEY SUSPENDS THEIR BUSINESS, IT'S DID THEY SUSPEND THEIR BUSINESS BECAUSE OF
SOME PHYSICAL ALTERATION OF THEIR PROPERTY AND IF THEY SUSPEND THEIR BUSINESS
BECAUSE OF SOME CONCERN OR SOME FEAR, THAT IS NOT COVERED. THE ALTERATION OF ITS
PROPERTY ITSELF WOULD NEED TO BE THE CAUSE OF THE CLOSURE. AND HERE THEY
-- NICHLT BUT IN MY HYPOTHETICAL THE IDEA WAS AT THE TIME WHEN THE BUILDING WAS
CLOSED WAS BECAUSE THE MICROSCOPIC PARTICLES THAT EXISTED ON THE SURFACES MADE
THEM UNUSABLE FOR THEIR INTENDED PURPOSE WHICH IS TO HAVE PEOPLE SURROUNDING
THEM. DAVID ROTH: SO FIRST, YOUR HONOR, THE LOSS OF INTENDED
PURPOSE IS NOT A PHYSICAL LOSS, IT'S NOT PHYSICAL DAMAGE, THERE NEEDS TO BE A TANGIBLE
ALTERATION OF THEIR PROPERTY, SO WHAT THAT SORT OF COVERAGE PROVISION EXISTS
FOR IS THE SITUATION WHERE THERE IS A FIRE IN A RESTAURANT AND THE BASIN SHORING
AGREEMENT IS GOING TO COVER THE PHYSICAL DAMAGE ITSELF. AND THEN PROVISIONS
LIKE THE TIME ELEMENT COVERAGE, WHAT THEY DO IS THEY COVER THE LOST INCOME IF THAT
FIRE FORTSZ THE POLICYHOLDER TO CLOSE, TO SUSPEND THEIR OPERATIONS, BUT AGAIN
THAT SUSPENSION HAS TO BE CAUSED BY THE PHYSICAL DAMAGE ITSELF, YOU SUSPEND YOUR
BUSINESS FOR SOME OTHER REASON, YOU KNOW, JUST A GENERAL CONCERN ABOUT SAFETY OR
WHATEVER, THAT'S NOT CAUSED BY ANY PHYSICAL DAMAGE, ANY PHYSICAL
ALTERATION TO THE PROPERTY. IT'S NOT CAUSED BY ANY PHYSICAL DISPOSSESSION OF THE
PROPERTY, SO THAT IS NOT COVERED. JUSTICE PATTERSON: NOW,
YOUR ADVERSARY SAYS WE SHOULD ALLOW DISCOVERY TO GO FORWARD BECAUSE THERE'S
A FACTUAL DISPUTE AS TO WHY THE FACILITIES WERE CLOSED. WHAT'S YOUR RESPONSE TO THAT?
DAVID ROTH: WELL, I FRANKLY DON'T SEE HOW THERE COULD BE
A FACTUAL DISPUTE GIVEN THAT THEY EXPLICITLY ALLEGE THEY CLOSED ON ARE MA 16TH
IN COMPLIANCE WITH A GOVERNMENT ORDER ISSUED THAT DAY REQUIRING THEM TO
CLOSE, THEY EXPLICITLY PLEAD THAT THEY OPENED ON JULY 2ND IN COMPLIANCE WITH A
GOVERNMENT ORDER ISSUED THAT DAY ALLOWING THEM TO REOPEN, AND OTHER THAN THAT
PERIOD, THERE IS NO ALLEGATION IN THIS COMPLAINT THAT THEY WERE EVER FORCED TO
CLOSE DUE TO ANYTHING, DUE TO ANY -- AND MUCH LESS DUE TO ANY PHYSICAL ALTERATION
OR PHYSICAL LOSS OF THEIR POLICY -- OF THEIR PROPERTY. SO THEIR OWN
COMPLAINT PLEADS WHY THEY CLOSED, THEIR OWN COMPLAINT PLEADS THAT THEY CLOSED IN
COMPLIANCE WITH THE GOVERNMENT ORDER. CHIEF JUSTICE RABNER:
DON'T THEY SAY THAT THERE WERE MULTIPLE REASONS AND THAT THE GOVERNOR'S
EXECUTIVE WAS BUT ONE OF THEM. DAVID ROTH: THE ONLY THING THEY SAY
IN THEIR COMPLAINT IS THE GOVERNOR'S ORDER AND THE RISKS OF THE PANDEMIC,
SO THE GENERAL RISK OF THE SPREAD OF THE VIRUS IN SOCIETY. CHIEF
JUSTICE RABNER: AND IN PARAGRAPH 130 THEY SAY INCLUDING DIRECTOR LOSS TO COVERED
PROPERTY. DAVID ROTH: BUT THEY DON'T ALLEGE ANY ESSENTIAL
FACTS OF WHAT THAT IS, THE ONLY ALLEGATION OF PHYSICAL ALTERATION OF THEIR PROPERTY
IS THE VIRUS PART COALS BEING PRESENT ON IT, THEY PLEAD THAT THEY PERSISTED
AFTER THEY REOPENED, SO WHATEVER THE VIRUS PARTICLES DOING ON THE PROPERTY, HOWEVER
YOU CHARACTERIZE THAT, THERE WAS NO ALLEGATION THAT THAT CAUSED THEM TO
CLOSE IN THIS COMPLAINT, AND IF IT DID CAUSE THEM TO COMPLAINT THEY WOULDN'T HAVE
BEEN OPEN ON JULY 3RD AND THEY WOULDN'T HAVE BEEN OPENED FOR THE LAST 3 YEARS.
JUSTICE WAINTER APTER: BUT ISN'T THAT A DISPUTE OF FACT AS
TO WHETHER THE PROPERTY WAS UNINHABITABLE AND IT SEEMS THAT YOUR CO-DEFENDANTS
PAID 850,000.00 UNDER THE COMMUNICABLE DISEASE PROVISION WHICH I THOUGHT
WOULD ONLY APPLY IF "THE PREMISES WAS CLOSED DUE TO THE THREAT OF COMMUNEABLE
DISEASE TO THOSE OH PORTIONS OF THE LOCATION" SO HOW DOES THAT SQUARE WITH
THE ARGUMENT THAT THEY'RE NOT ALLEGING ANY FACTS THAT IT WAS UNINHABITABLE.
DAVID ROTH: SO A COUPLE OF THINGS, FIRST THAT INTERRUPTION BY COMMUNICABLE
DISEASE PROVISION, THAT'S AN OPTIONAL FORM OF COVERAGE THAT THEY ELECTED TO
PURCHASE IN THIS CASE, AND AS YOUR HONOR INDICATED, WE PAID THE LIMIT OF
LIABILITY UNDER THAT PROVISION, SO WHETHER THERE'S COURT AND JURY RIDGE UNDER THAT
PROVISION IS NOT SOMETHING THAT'S ACTUALLY AT ISSUE HERE. NOW THE KEY TO THAT
PROVISION IS THAT UNLIKE ALL THE COVERAGE WE'RE TALKING ABOUT TODAY IT DOESN'T
REQUIRE THAT THERE BE PHYSICAL LOSS OR DAMAGE TO THE PROPERTY, IT DOESN'T
REQUIRE THAT ANY LOSS BE DUE TO A COVERED CAUSE OF LOSS WHICH GOES WHAT INCORPORATES
THAT CONTAMINATION EXCLUSION, THAT I'D LIKE TO TALK ABOUT IN A LITTLE BIT.
SO BECAUSE THE PAYMENT, BECAUSE THAT COVERAGE ISN'T TRIGGERED BIOPHYSICAL LOSS
OR DAMAGE, WHETHER THAT WAS -- WHETHER THAT PROVISION WAS TRIGGERED DOESN'T
BEAR ON WHETHER THERE WAS PHYSICAL LOSS OR DAMAGE. JUSTICE WAINTER
APTER: SO ARE YOU ARGUING THAT EVEN IF A BUILDING IS UNINHABITABLE YOU STILL
WOULDN'T PAY BECAUSE THAT'S NOT PHYSICAL LOSS OR DAMAGE, I THOUGHT THE CASE LAW
ESTABLISHED THAT IF A BUILDING IS UNINHABIT THAT IS A LOSS OR DAMAGE TO THE
BUILDING. DAVID ROTH: YES, IF THERE IS A PHYSICAL ALTERATION
OR CONTAMINANTS IN THE BUILDING THAT MAKES IT COMPLETELY UNI KNOW HABLTABLE AND
UNUSABLE UNTIL THERE IS REMEDIATION,S COURTS HAVE HELD THAT THAT'S LOSS OR
DAMAGE. JUSTICE WAINTER APTER: BUT IT DOES SAY THE LOCATION
HAS TO BE UNINHABITABLE. IF UNINHABITABLE EQUALS PHYSICAL LOSS OR DAMAGE, THEN
ONCE YOU'RE SAYING YOU ALSO HAVE THE ACQUIRED -- DAVID ROTH:
IT DOESN'T SAY UNINHABITABLE DUE TO A LOSS OF A SUBSTANCE, IT HAS TO KNOW DOES
CLAFD HOOUNLD HOOUNLD DUE TO THE SPREAD OF A SDEEDZ, SO IF THE AUTHORITIES
ISSUE AN ORDER BECAUSE OF THE NATIONWIDE OR NEW JERSEY WIDE SPREAD OF A DISEASE
THAT MAKES THEIR PROPERTY UNUSABLE, THAT MAY TRIGGER THE INTERRUPTION BY
COMMUNICABLE DISEASE COVERAGE. BUT AS FAR AS WHETHER THEIR PROPERTY HAS BEEN
PHYSICALLY LOST OR DAMAGED, THEN THERE NEEDS TO BE SOME SORT OF CONTAMINATION OF THE
PREMISES THAT SPECIFICALLY MAKES THEIR PROPERTY UNINHABITABLE AND UNUSABLE.
IT'S NOT LOOKING TO SOME GOVERNMENT DECREE, IT'S LOOKING TO THE ACTUAL PHYSICAL
CONDITION OF THE PROPERTY, AND THAT'S WHAT THEY DON'T HAVE IN THIS COMPLAINT.
JUSTICE PATTERSON: SO DID YOU PAY THAT ASPECT OF THE COVERAGE
BECAUSE YOU -- BECAUSE YOUR CLIENTS VIEWED THE GOVERNMENT ORDERS TO BE A DECLARATION
THAT THE PROPERTY WAS UNINHABITABLE AND UNUSABLE BY VIRTUE OF THE COVID
PANDEMIC. DAVID ROTH: THERE'S NO FACTOR IN THE COMPLAINTS
WHY WE PAID IT, MY UNDERSTANDING IS WE PAID IT BECAUSE THE GOVERNMENT ORDERS DECLARE
D THEIR PROPERTY UNINHABITABLE AND UNUSABLE DUE TO THE STATEWIDE, NATIONWIDE
SPREAD OF THE PANDEMIC, NOT BECAUSE OF ANY PHYSICAL CONDITION OF THE PROPERTY ITSELF,
IT'S THE GOVERNMENT ORDERS ARE THE SOURCE OF THAT COVERAGE, PAID. THE SECOND
POINT IS BY PAYING THAT COVERAGE THAT IS NOT A CONCESSION OF ANY LEGAL CONCLUSIONS,
IT IS NOT A CONCESSION OF ANY FACTS, THEY BELIEVE THEY ARE ENTITLED TO COVERAGE
BECAUSE THEY SUFFERED PHYSICAL LOSS OR DAMAGE, THEY NEED TO PLEAD FACTS OF IFCC P
AL LOSS OR DAMAGE, AND BY PAYING, UNDER A COMPLETELY A DIFFERENT SET OF
POLICY PROVISIONS -- NICHLT YOUR ARGUMENT IS THE PHYSICAL LOSS OR DAMAGE CAN ONLY
BE PROVED BIOPHYSICAL ALTERATION TO THE PROPERTY. DAVID ROTH:
THERE COULD ALSO BE A PHYSICAL LOSS IF THERE'S A PHYSICAL DISPOSSESSION NICHLT
WE'RE GENERALLY TALKING ABOUT SOME KIND OF ALTERATION WOULD HAVE NEEDED
TO BE PLEADED IN YOUR ARGUMENT. DAVID ROTH: IN ORDER TO BE SOME
ALTERATION OF THE PROPERTY THAT IS ALLEGED, SHORT OF AN ALLEGED RAGS THAT
REQUIRES REPAIRS OR REPLACEMENT IN ORDER TO RESTORE THE PROPERTY --
JUSTICE NORIEGA: ISN'T THAT THE ALLEGATION, THE ALLEGATION IS THAT THE MICROSCOPIC
PARTICLES CHANGED THE NATURE OF THE PROPERTY BY MAKING IT DANGEROUS RATHER
THAN A USABLE ENTERTAINMENT VEHICLE. DAVID ROTH: THAT'S SOMETHING
THAT THE NEW HAMPSHIRE SUPREME COURT TALKED ABOUT AT SOME LENDER, YOUR
HONOR, THE QUESTION WASN'T WHETHER THERE WAS A DANGER TO THE PROPERTY, IT'S NOT
WHETHER THERE WAS A RISK OF USING THE PROPERTY, IT'S WHETHER THE PROPERTY
ITSELF HAS BEEN PHYSICALLY ALTERED. SO IT MAY WELL BE THAT THE VIRUS POSED A RISK
TO HUMANS BUT THEY DID NOT TANGIBLY CHANGE THE PROPERTY IN ANY WAY REQUIRING IT
TO BE REPAIRED OR REPLACED. JUSTICE PATTERSON: WHY IS RADON
DIFFERENT THAN THAT, IN OTHER WORDS A RAY TO KNOW AS I UNDERSTAND THE DANGER
OF IT IS TO PEOPLE WHO MAY BE NEARBY, IT DOES -- OR IN THE BUILDING, IT DOES NOT
PHYSICALLY ALTER WALLS OR DRY WALL OR WHATEVER IT MAY BE.
DAVID ROTH: SO THAT'S COMING INTO THE CONTAMINATION CASES, YOUR HONOR, AND, YOU
KNOW, THE PRESENCE OF RADON COULD POSSIBLY GIVE RISE TO A PHYSICAL LOSS IF
THERE'S RADON EMANATING FROM THE STRUCTURE AND IT'S SO SEVERE THAT IT MAKES THE
BUILDING UNINHABITABLE AND UNUSABLE UNTIL IT'S REMEDIATED. JUSTICE
PATTERSON: EVEN IF IT'S NOT FLOOD DAMAGE, FIRE DAMAGE, IT DOESN'T DAMAGE THE WALLS,
THE STRUCTURE OF THE BUILDING THAT REQUIRES A REPAIR TO BE ELIMINATED,
IT'S JUST IN THE AIR, AND I DON'T MEAN TO MAKE ANY STATEMENTS ABOUT RADON HERE,
I'M JUST USING THAT AS AN EXAMPLE AND ASKING YOU TO TELL US WHY THIS IS
DIFFERENT. DAVID ROTH: SO RADON WOULD ARGUABLY BE DIFFERENT
AND I DON'T KNOW OF ANY CASES DEALING WITH RADON, BUT RADON WOULD ARGUABLY BE DIFFERENT
BECAUSE I THINK IT'S COMING OUT OF THE GROUND, THE RADON PARTICLES PHYSICALLY
COME FROM UNDERNEATH THE STRUCTURE. JUSTICE PATTERSON: AND NOT FROM
A PERSON. DAVID ROTH: NOT FROM A PERSON, THEY NEED TO BE
REMEDIATED IN ORDER TO RESTORE THE PROPERTY TO INHABITABLE STATUS AND WE DON'T
HAVE ANY OF THAT HERE, WE DON'T HAVE A SUBSTANCE COMING OUT OF THE BUILDING, WE
DON'T HAVE IT MAKING THE BUILDING UNINHABITABLE AND UNUSABLE, WE DON'T
HAVE A NEED FOR REMEDIATION TO RESTORE THE BUILDING, AND THIS IS WHAT THE THIRD
CIRCUIT TALKED ABOUT IN THE WILSON CASE THE LOGIC OF THOSE CONTAMINATION
CASES IS THAT THE PRESENCE OF THAT SUBSTANCE MAKES THE PROPERTY UNINHABITABLE
AND UNUSABLE AND ESSENTIALLY DISPOSSESSES THE POLICYHOLDER OF THAT PROPERTY.
JUSTICE WAINTER APTER: HERE THEY ARE ARGUING THAT COVID DID
MAKE THE PROPERTY UNINHABITABLE AND UNUSABLE, THAT'S WHAT I'M NOT UNDERSTANDING,
IF IT IS MADE UNINHABITABLE BY SOME SUBSTANCE, THAT'S WHAT THEY'RE
ALLEGING -- DAVID ROTH: THEY DO NOT HAVE ANY ALLEGATION IN
THEIR COMPLAINT THAT THE VIRUS FIFK SATISFACTORILY ALTERED THEIR PROPERTY
OR PHYSICALLY MADE THEIR PROPERTY UNINHABITABLE AND UNUSABLE THE ONLY TIME THEY
WERE UNABLE TO CONDUCT THEIR PROPERTY OR CONDUCT GAMING, IS WHEN THE GOVERNMENT
ORDERED IT TO BE CLOSED. JUSTICE WAINTER APTER: SO FOR EXAMPLE IN
GREGORY PACKAGING WHERE I THINK THAT ONE IS THE AMMONIA ONE, IF OSHA COMES
IN AND SAYS THE RADON LEVEL IN THIS BUILDING IS TOO HIGH, YOU CANNOT USE THIS
BUILDING FOR THE NEXT 30 DAYS, DOES THAT AUTOMATICALLY EXCLUDE COVERAGE BECAUSE
OSHA ACKNOWLEDGED THAT THE BUILDING WAS UNINHABITABLE AND UNUSABLE BECAUSE OF THE
RADON. DAVID ROTH: THAT'S A DIFRPTS SCENARIO THAN IS HERE
BECAUSE THEN YOU'RE DEALING WITH AN ORDER ISSUED BECAUSE OF THE PHYSICAL CONDITION
OF THAT PROPERTY, WE'RE NOT DEALING WITH THAT HERE, THIS IS AN EXECUTIVE ORDER
THAT WAS ISSUED BY GOVERNOR MURPHY BECAUSE OF THE SPREAD OF COVID THROUGHOUT THE
ENTIRE COUNTRY, IT'S NOT DIRECTED AT OCEAN WALK'S PROPERTY, IT APPLIES TO EVERY
SINGLE CASINO, EVERY SINGLE REST RANTSDZ IN THE STATE, SO IT'S A GENERALIZED
GOVERNMENT ORDER NOT RESPONDING TO SOME PHYSICAL CONDITION, JUST LIKE COUNTSLESS
GOVERNMENT REGULATIONS THAT WOULD AFFECT THE USE OF PROPERTY. YOU KNOW,
YOU CAN IMAGINE ZONING RESTRICTIONS, NOISE ORDINANCES, CHANGES IN GAMING LAW THAT
MIGHT MAKE IT NO LONGER FEASIBLE TO OPERATE A CASINO, ALL OF THOSE MAY
IMPAIR THE INTENDED USE OF THE PROPERTY, BUT THEY'RE NOT PHYSICALLY DISPOSSESSING
THE OWNER OF IT, THEY'RE NOT PHYSICALLY ALTERING THE PROPERTY, AND SO THEY'RE NOT
A PHYSICAL LOSS. CHIEF JUSTICE RABNER: BEFORE WE MOVE ON
TO THE CON TAM FLAGS EXCLUSION ARE THERE OTHER QUESTIONS IN THIS AREA?
DAVID ROTH: SO THE SECOND REASON THE APPELLATE DIVISION'S
DECISION SHUSH CONFIRMED IS CONTAMINATION EXCLUSION, AS YOU NOTED IT INCLUDES
COVERAGE FOR CONTAMINATION, AND IT EXPLICITLY DEVICE CONTAMINATION AS ANY
CONDITION OF THE PROPERTY DUE TO THE PRESENCE OF ANY VIRUS.
JUSTICE PATTERSON: SO MR. ORLOFSKY TELLS US THAT CONTAMINANT THROWS A PROVERBIAL
MONKEY WRENCH INTO THIS BY NOT INCLUDING VIRUS AND THE OTHER SORT OF RELATED
WORDS THAT ARE IN THE CONTAMINATION EXCLUSION AND THEREFORE THAT CREATES AMBIGUITY
AND THE INSURED IS NOT PUT ON NOTICE AS TO WHAT IS AND WHAT IS NOT WITHIN THE
POLICY, WHY IS HE WRONG? HE'S WRONG BECAUSE THE WORD CONTAMINANT IS NOT USED IN THE
CONTAMINATION EXCLUSION AT ALL, SOMEONE WANTS TO UNDERSTAND WHAT THE CON
TAMINATION EXCLUSION EXCLUDES THEY WOULD SIMPLY LOOK AT THE DEFINITION OF
CONTAMINATION AND SEE THAT IT IS SPECIFICALLY DEFINED AS ANY SOMETHING OF
PROPERTY DUE THE TO YOU'LL VIRUS, NOTHING IN THAT SDLOOUGS LANGUAGE SUGGESTS
THAT IT'S LIMITED TO TRADITIONAL ENVIRONMENTAL POLLUTION, IT'S NOT A POLLUTION
EXCLUSION, IT DOESN'T USE TERMS OF ART THAT WOULD SUGGEST MROOUGS, AND HALF
THE SUBJECTS THAT ARE PRESENTS AND LISTED AS CONTAMINATION EXAMPLES ARE DISEASE
CAUSING SUBSTANCES THAT ARE NOT ORDINARILY ASSOCIATED WITH ENVIRONMENTAL MROOUGS.
JUSTICE PATTERSON: IS CONTAMINANT IN THE POLICIES SOMEWHERE
ELSE. DAVID ROTH: YES, SO CONTAMINANT IS USED IN THE POLICY
IN SEVERAL SPECIALIZED GRANTS OF COVERAGE. SO COVERAGE IS GRANTED FOR CERTAIN
INSTANCES INVOLVING CONTAMINANTS. FOR EXAMPLE, THERE'S A PROVISION FOR I
BELIEVE IT'S LANDS AND WATER DEBRIS CLEAN UP OR SOMETHING LIKE THAT. AND SO THE
DEFINITION IS SOMEWHAT TAILORED TO THOSE SPECIFIC GRANTS OF COVERAGE WHICH IS
WHY THIS POLICY DEFINED CONTAMINANT IN A SLIGHTLY DIFFERENT WAY THAN CON
TAMINATION, BUT ULTIMATELY IF YOU WANT TO UNDERSTAND WHAT CONTAMINATION MEANS YOU
SIMPLY LOOK AT THE DEFINITIONS, IT'S DEFINED IN NO UNCERTAIN TERMS, AND
WE ADMIT SMTS EXACTLY WHAT IT MEANS AND EXACTLY HOW IT SHOULD BE APPLIED HERE
-- JUSTICE PIERRE-LOUIS: AND WE SHUNTHD BE CONCERNED WITH ALL
OF THE TERMS LISTED AS CONTAMINANTS IN READING THE CONTAMINATION EXCLUSION POLICY
AS MR. ORLOFSKY HAS INDICATED, THAT THERE'S SOME CONFUSION THAT RESULTS
FROM ALL OF THESE DIFFERENT TERMS BEING USED IN CONTAMINATION AND IN THE TERM CON
TAMINANT, BECAUSE CONTAMINANT IS USED IN OTHER PORTIONS OF THE POLICY THAT HAVE
NOTHING TO DO WITH THE EXCLUSION -- THE EXCLUSION PROVISION THAT WE'RE DISCUSSING?
DAVID ROTH: YES, ESSENTIALLY THAT, YOUR HONOR, IT'S A
SEPARATE PROVISION USED IN OTHER PARTS OF THE POLICY, IF YOU WANT TO UNDERSTAND
WHAT IT MEANS YOU SIMPLY LOOK AT THE DEFINITION, THE FACT THAT -- THE MERE
FACT THAT A RELATED WORD IS USED IN A DIFFERENT CONTEXT IN THE POLICY DOESN'T IMPORT
AMBIGUITY WHEN CONTAMINATION IS EXPLICITLY DEFINED. JUSTICE
PATTERSON: WOULD IT BE A DIFFERENT ANALYSIS OF CONTAMINANT DIDN'T APPEAR
ANYWHERE ELSE AND IT'S OATH POSSIBLE -- THERE'S A DEFINITION THERE,
HYPOTHETICALLY THE ONLY POSSIBLE RELEVANCE TO THIS POLICY WOULD BE THAT CONTAMINANT
IS A RELATED WORD TO CONTAMINATION. DAVID ROTH: IT MIGHT BE
DIFFERENT BUT I THINK YOU WOULD HAVE TO USE THE WORD CONTAMINANT IN THIS
SPECIFIC CONTAMINATION EXCLUSION IN ORDER FOR THERE TO BE AMBIGUITY, BUT YOU HAVE
A FAIRLY UNAMBIGUOUS DEFINITION OF WHAT IT IS, PLAINLY ENCOMPASSES VIERSZ AND
OTHER DISEASE CAUSING AGENTS, AND THERE'S NO WAY TO READ THAT SINCE YOU READ
THOSE WORDS OUT OF THE POLICY BECAUSE OF SOME OTHER WORD THAT'S NOT ACTUALLY USED
IN THAT PROVISION. CHIEF JUSTICE RABNER: PERHAPS AFTER THE
BREAK COUNSEL CAN TELL US WHERE IT ELSE IT APPEARS IN THE POLICY. IS THERE
ANYTHING ELSE -- JUSTICE WAINER APTER: I HAD ONE MORE QUESTION
ON THAT. WHAT ABOUT YOUR ADVERSARY'S ARGUMENTS THAT REGARDLESS OF WHAT THE POLICY
SAYS UNDER NAV-ITS IT CAN OERNL APPLY TO TRADITIONAL ENVIRONMENT MROOUGS.
DAVID ROTH: NAV-ITS IS ABOUT THE MEANING OF A SPECIFIC POLLUTION HAVRD
EXCLUSION THAT'S FOUND IN SOME COMMERCIAL LIABILITY POLICYS, THIS ISN'T A
COMMERCIAL LIABILITY POLICY, IT'S A DIFFERENT TYPE OF POLICY, THIS ISN'T A MROOUGS
HAZARD EXCLUSION, IT'S A CONTAMINATION EXCLUSION. ESSENTIALLY NAV-ITS IS -- IT
DOESN'T APPLY TO EVERY EXCLUSION THAT COULD POSSIBLY BE AN INSURANCE POLICY
THAT IN ANY WAY RELATES TO POLLUTION OR CONTAMINATION. NAV-ITS EXPLICITLY RELIED
ON THE FACT THAT THE POLLUTION HAZARD EXCLUSION IN THAT CASE CONTAINED WORDS
THAT DENOTED TRADITIONAL POLLUTION, IT USED TERMS LIKE SEEPAGE, DISPERSAL, ESCAPE,
TERMS OF ART TO REMEMBER ENVIRONMENTAL POLLUTION AND IT SPECIFICALLY RELIED
ON THE REGULATORY ESTOPPEL DOCTRINE WHICH IS THAT IN THE CONTEXT OF THAT CASE INSURER'S
HAD REPRESENTED THAT THAT EXCLUSION WOULD BE LIMITED TO TRADITIONAL
ENVIRONMENTAL POLLUTION, IT WOULD NOT RELY ON THE POLLUTANTS INHERENT IN OF THE
POLICY HOELTS BUSINESS, AND THIS COURT HELD THAT SINCE INSURERS HAD REPRESENTED
IT WOULDN'T APPLY IN THAT FACTUAL CIRCUMSTANCE INSURERS WERE ESTOPPED
FROM ASSERTING THAT IT DID. THERE'S NO ALLEGATIONS OF ANYTHING LIKE THAT HERE,
THERE'S NO EVIDENCE OF ANYTHING LIKE THAT HERE, SO THAT WHOLE REGULATORY
ESTOPPEL PIECE OF NAV-ITS IS ABSENT. ULTIMATELY AS THIS COURT HAS AFFIRMED SEVERAL
TIMES EXCLUSIONS ARE AN INTEGRAL PART OF THE INSURANCE CONTRACT AND THEY HAVE
TO BE ENFORCED WHEN THEIR MEANING IS CLEAR, HOLDING THAT ANY EXCLUSION 24 RELATES
TO POLLUTION AS A MATTER OF LAW WOULD BE LIMITED TO ENVIRONMENTAL POLLUTION
WOULD BE A -- THAT GO INTEREST THE -- I'LL BE HAPPY TO ADDRESS ANY OTHER POINTS
BUT IF NOT WE'LL REST ON OUR BRIEFS. PLEA THIS MORNING ARE MY PARTNERS AND
COLLEAGUES, MR. LI VILLA AND MR. BERMAN WHO HAVE BEEN ADMITTED PRO HAC VICE ALSO WITH
BLANK ROAM LLP. P. NICHOLAS M. INSUA: NICHOLAS INSUA FOR UNITED POLICY,
ROTH RAUNL DAVE ROTH FOR DEFENDANT AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY.
KEITH MOSKOWITZ: KEITH MOSKOWITZ ON BEHALF OF AFRMENT I C SPECIALTY INSURANCE
COMPANY. SOUL. JUSTICE SOLOMON: BRETT SOLBERG ON BEHALF. INTERSTATE F
IRE AND CASUAL COMPANY. THE COURT: GOOD MORNING, COUNSEL, MR. ORLOFSKY,
PLEASE. STEPHEN M. ORLOFSKY: . GOOD MORNING, MR. CHIEF JUSTICE, JUSTICES
M CHIEF JUSTICE MAY I RYE SERVE 10 MINUTES FOR REBUTTAL. CHIEF JUSTICE RABNER:
10 IS MORE THAN WE USUALLY GRANT. STEPHEN M. ORLOFSKY: I'LL FOLLOW, BREF
WERE THE IS THE SOUL OF WIT. STEPHEN M. ORLOFSKY: OF THIS COURT HAS
BEFORE IT, AS I'M SURE YOU'RE AWARE, OF VOLUMINOUS BRIEFS SUBMITTED BY THE PARTIES AND
THE VARIOUS AMICI. PLEASE ALLOW ME TO TAKE A FEW MOMENTS THIS MORNING TO PENETRATE THE
FOG OF HIGH PESHLY P THE 3 ISSUES THIS COURT HAS GRANTED CERTIFICATION. FIRST,
T LET ME BEGIN BY TELLING YOU WHAT THIS CASE IS NOT ABOUT. DEFENDANTS HAVE TAKEN WHAT
I CALL THE "SCOREBOARD" APPROACH. THEY HAVE CITED MANY STATE AND FEDERAL CASES FROM
AROUND THE COUNTRY WHICH HAVE DECIDED THESE QUESTIONS AGAINST POLICYHOLDERS. THOSE CASES
WILL CERTAINLY ENTITLED TO CONSIDERATION ARE KNOWS DISPOSITIVE. FIRST OF
ALL, FEDERAL COURTS OUNTD OUR FEDERAL SYSTEM CAN ONLY PREDICT WHAT THE LAW OF A STATE
MAY BE IF THE SUPREME COURT OF THAT STATE HAS NOT DECIDED THE ISSUE. SECOND, WHILE DECISIONS
OF THE SUPREME COURTS OF OTHER STATES ARE CERTAINLY ENTITLED TO CONSIDERATION, THEY,
TOO, ARE NOT DISPOSITIVE. WHY, YOU ASK, IS THAT? BECAUSE OWN BEFORE THE PANDEMIC P, THERE
WAS WELL SETTLED NEW JERSEY CASE LAW IN THE FIELD OF INSURANCE LAW WHICH GOVERNED WHAT
OCCURRED HERE. AND WHAT THESE POLICIES MEAN. IN SHORE THE PANDEMIC CHANGED MANY THINGS
IN OUR LIVES BUT IT DIDN'T CHANGE THE LAW, NEW JERSEY LAW OF INSURANCE. AND
FINALLY, THE OTHER THING TO REMEMBER HERE IS THAT INSURANCE POLICIES ARE CONTRACTS OF
ADHESION AND AMBIGUITIES IN INSURANCE CONTRACTS MUST BE RESOLVED IN FAVOR OF THE INSUREDS.
SO THE FIRST QUESTION THE COURT GRANTED CERTIFICATION ON WAS DOES, PEFRMENT
NEW JERSEY COURTS TO ADJUDICATE FACTUAL DISPUTES SPT PLEADING STAGE SUCH AS RKS THE AIRSPACE
OR SERVICES THAT THE VIRUS IS EASILY WIPED AWAY THE I VIETS RUSS AND THAT THE VIRUS IS
THREATENED OR ACTUAL PRESENCE CANNOT RENDER PROPERTY UNUSABLE CONTRARY TO THE ALLEGATIONS
IN THE PLAINTIFF'S COMPLAINT. THE SHORT ANSWER TO THAT QUESTION IS NO.
AND THE COMPLAINT OCEAN WALK MADE NUMEROUS FACT WRUL ALLEGATIONS ABOUT THE CAUSE OF THE
LOSS AND THE PROPERTY AND WHAT THE VIRUS DID TO ITS PROPERTY. THE APPELLATE DIVISION
NOT ONLY DISREGARDED THESE ALLEGATIONS, BUT IN SOME CASES ACTUALLY FOUND FACTS TO THE
CONTRARY. NOW, THE -- AND MORE IMPORTANTLY, THE PANDEMIC DID NOT CHANGE
THE RULES OF COURT AND IN PARTICULAR DID NOT CHAFRMG RULE 4:6-2(E). THAT RULE HAS BEEN
P GENEROUSLY APPLIED BY THIS COURT FOR MANY YEARS SINCE THE SEMINAL CASE OF PRINTING MARTD
WAS DECIDED. UNDER PRINTING MART, AS THIS COURT IS AWARE, THE TRIAL COURT MUST SERVE
THE COMPLAINT IN DEPTH AND WITH LIBERALITY TOE ASCERTAIN WHETHER THE FUND MEANT OF A
CAUSE OF ACTION MAY BE GLEANED EVEN FROM AN OBSCURE STATEMENT OF A CLAIM. AND THE
ALLEGATIONS OF THE COMPLAINT ARE ASSUMED TO BE TRUE. AND THE PLAINTIFF IS GIVEN ALL
REASONABLE, THE BENEFIT OF ALL REASONABLE INFERENCES TO BE DERIVED FROM THE COMPLAINT.
IN THIS CASE, JUDGE WING CAN YOU TELL STEIN A RETIRED WELL RESPECTED JUDGE
OF THE APPELLATE DIVISION ON RECALL DID JUST THAT, THE APPELLATE DIVISION DID NOT. THE
APPELLATE DIVISION CURSORY AND CONCLUSORY REVIEW OF THE ALLEGATIONS OF THE COMPLAINT IGNORES
THE PRINTING MART STANDARD. I THINK IT'S IMPORTANT TO NOTE BECAUSE FOR
SOME REASON IN READING MANY OF THE BRIEFS HERE, I READ A LOT ABOUT RULE 12 B 6 OF THE FEDERAL
RULES OF CIVIL PROCEDURE, A RULE OF WHICH I'M VERY FAMILIAR BUT I WANT TO MAKE THE CLEAR
THAT THIS CASE IS NOT GOVERNED BY 12 B 6 OR BY OTHER CASES. IT'S RULED BY 4:6-2 AND I THINK
THAT'S IMPORTANT. YET THE APPELLATE DIVISION IGNORED THE ALLEGATIONS OF THE COMPLAINT,
DISREGARDED THEM AND IN SOME CASES MADE FACTUAL FINDINGS CONTRARY TO THE ALLEGATIONS.
YOU KNOW, OBVIOUSLY THE IF YOU KNOW OF THE APPELLATE DIVISION IS NOT T MAKE ANY FACTUAL
FINDINGS. YOU AND AS THE JUDGE NOTED IN HIS OPINION, THE DEFENDANTS MAY DISAGREE WRI
THE ALLEGATIONS OF THE COMPLAINT, BUT THAT DISAGREEMENT IS FOR ANOTHER DAY. NOT ON A
MOTION TO DISMISS. JUSTICE PATTERSON: MR. OR MROF SKI, IF ONE OF THE
ALLEGATIONS OF THE COMPLAINT IS THAT THE DAMAGE THAT YOUR CLIENTS ALLEGE IS WITHIN THE
COVERAGE AS IT'S DESCRIBED IN THE INSURANCE POLICY, IS THAT SOMETHING THAT THE COURT
THOOS ASSUME THE TRUTH OF UNDER PRINTING MART? AND I SAY THAT BECAUSE IF THAT IS SO, IT
SEEMS TO ME THAT THERE COULD NEVER BE A DISMISSAL AT THE PLEADING STAGE OF ANY COVERAGE
ALLEGATION. STEPHEN M. ORLOFSKY: I DON'T THINK RULE 46 E 2 CHANGES BECAUSE
WE'RE TALKING ABOUT AN INSURANCE CRACK. JUSTICE PATTERSON: NO, MY QUESTION
IS THIS. IF THE ALLEGATION OF THE COMPLAINT IS THAT A PARTICULAR LOSS IS WITHIN THE COVERAGE
LANGUAGE, AND I'M JUST SAYING THIS VERY GENERALLY, OF AN INSURANCE POLICY, IS THAT
THE SORT OF ALLEGATION THAT MUST BE ASSUMED TO BE TRUE UNDER PRINTING MART?
STEPHEN M. ORLOFSKY: I DON'T SEE WHY NOT. JUSTICE PATTERSON: SO THERE COULD
NEVER, AS LONG AS AN INSURED ALLEGES THAT THEIR LOSS IS WITHIN THE COVERAGE AS DESCRIBED
IN THE INSURANCE POLICY, THEN THERE CAN NEVER BE A MOTION TO DISMISS. I SAY THAT BECAUSE
IT SEEMS TO ME THAT MANY COVERAGE DISPUTES ARE RESOLVED OF AT THE MOTION TO DISMISS STAGE,
AND I'LL NOT TALKING ABOUT 12 B 6, I'M TALKING ABOUT OUR NEW JERSEY RULE FOR MOTIONS TO
DISMISS. STEPHEN M. ORLOFSKY: VEL, YOUR HONOR, LET'S FOCUS ON THIS CASE.
IN THIS CASE, OCEAN ALLEGED THAT THE AIR AND SURFACES ON ITS PROPERTY WERE AFFECTED BY
THE CORONA ZIE HAVE I RUSS RUSS. THAT'S AN ALLEGATION ASSUME TO BE TRUE RULING ON A
MOTION TO DISMISS. THAT'S THE ALLEGATION WITHIN THE COVERAGE LANGUAGE OF THE POLICY.
JUSTICE PATTERSON: SO YOU'RE SAYING THAT ALL AN INSURED HAS TO DO TO DEFEAT
A MROEGS TO DISMISS IS TO OF STATE THE LANGUAGE OF THE INSURANCE POLICY AND SAY OUR LOSS
WHICH IS CLEARLY DESCRIBED, IT'S COVERT RELATED CAUSE OF BUSINESS IS WITHIN THAT COVERAGE
LANGUAGE AND THAT DWEETS THE MOTION TO DISMISS. IS THAT ALL AN INSURE HAS TO DO?
STEPHEN M. ORLOFSKY: IF THE COMPLAINT PROPERLY PLEADS A LOSS THAT'S WITHIN THE COVERAGE
LANGUAGE OF THE POLICY, THEN THE ALLEGATIONS WHICH ARE OF ADVANCED IN THE COMPLAINT MUST
BE ASSUME TO BE TRUE. THAT'S NOT A DECISION, IT'S NOT A DECISION FOR THE TRIAL COURT OR
FOR THE APPELLATE DIVISION TO ARE QUESTION THE ACCURACY OR THE VALIDITY OR THE TRUTH OF
THOETS ALLEGATIONS. JUSTICE WAINER APTER: YOU AGREE TLTS HE A ONLY FACTUAL
ALLEGATIONS AND NOT LEGAL ALLEGATIONS. STEPHEN M. ORLOFSKY: ABSOLUTELY,
YOUR HONOR. JUSTICE WAINER APTER: WOULD THE DEFINITION OF PHYSICAL LOSS
OR PHYSICAL DAMAGE WITHIN A PARTICULAR INSURANCE POLICY BE A QUESTION OF FACT OR A QUESTION
OF LAW? STEPHEN M. ORLOFSKY: THAT'S AN INTERESTING QUESTION, YOUR HONOR
BECAUSE IT CAN BE BOTH. FOR EXAMPLE, OF THE, WE'RE TALKING ABOUT, HERE WE'RE TALKING
ABOUT DIRECT PHYSICAL LOSS OR DAMAGE. AND SO WE'VE ALLEGED THAT THE SURFACES AND THE
AIR WITHIN THE CASINO FACILITIES WERE AFFECTED BY THE CORONA VIRUS. WE'RE ALSO ALLEGING
AVENUE DIRECT DAMAGE. NOW, THAT CAN BE A QUESTION OF LAW. OF BUT I DON'T THINK THAT
THE COMPLAINT CAN BE DISMISSED ON A MROEGS TO DISMISS BECAUSE ULTIMATELY WHETHER THERE
IS A DIRECT DAMAGE LOSS HE HAS TO BE DETERMINED ULTIMATELY BY THE CASE LAW.
JUSTICE PATTERSON: SO YOU SAY THAT YOUR LOSS, IF THE COURT, IS THE COURT IN A POSITION
TO DETERMINE WHETHER THE LOSS THAT YOU DESCRIBED IS WITHIN THE COVERED LANGUAGE OF THE
INSURANCE POLICY OR NOT ON A MOTION TO DISMISS? STEPHEN M. ORLOFSKY: I THINK
SO, YOUR HONOR. I THINK THAT THE COURT HAS TO ASSUME THOSE ALLEGATIONS TO BE, ALLEGATIONS
TO BE TRUE. NOW, THE, ASSUMING JUDGE ON A MROEGS TO DISMISS, THE DEFENDANT
CAN SERNL MOVE TO DISMISS WHEN SAYING THAT UNDER, AS A MATTER OF LAW PT THERE'S NO COVERAGE.
JUSTICE PATTERSON: WHAT ALLEGATION, IT SEEMS TO ME YOU HAVE
ALLEGATIONS OF FACT IN TERMS OF WHAT THE LOSSES WERE AND YOU HAVE ALLEGATIONS THAT IT IS
WITHIN THE COVERED, WITHIN THE COVERAGE LANGUAGE OF THE INSURANCE POLICIES. YOU HAVE
BOTH OF THOSE AT GOERS OF ALLEGATIONS. STEPHEN M. ORLOFSKY: LOOK, THERE ARE
TWO BASIC ALLEGATIONS. 2 BASIC ALLEGATIONS IN THE COMPLAINT. ONE IS THAT THE SERVICES
AND AIRSPACE WITHIN THE CASINO FACILITIES WERE AFFECTED AND ALTERED BY THE CORONA VIRUS.
AND THE SECOND ALLEGATION IS THAT WITH RESPECT TO DAMAGE IS THAT OF THE CASINO, BECAUSE
OF THE PRESENCE OF THE CORONA VIRUS, THE CASINO LAUFRT THE EFFECTIVE USE OF ITS FACILITIES,
SIMILAR TO THE AMMONIA CASE OR IN SOME CASES THE ASBESTOS CASE WHERE THE IS ASBESTOS IS
SUCH CONCENTRATION THIT MAKS THE FACILITY UNUSABLE. CHIEF JUSTICE RABNER:
YOUR COLLEAGUES PONT OUT THAT THE CLOSURE AND THE OPENING WERE KEY TO THE EKS EXECUTIVE
ORDERS THAT YOUR CLIENT HO TO SHUT ITS DOOR WITH THE FIRST EXECUTIVE ORDER AND IT REOPENED
AS SOON AS THE REVISED EXECUTIVE ORDER PERMITTED TO IT DO SO. TO WHAT EXTENT
MAY THAT BE CONSIDERED? STEPHEN M. ORLOFSKY: WELL, FIRST OF ALL, LET ME
MAKE THE CLEAR THAT WE ARE NOT SEEKING COVERAGE BASED ON THE CLOSURE ORDERS ISSUED BY
GOVERNOR MURPHY. CHIEF JUSTICE RABNER: YES, BUT THE ARGUMENT RGS OF COURSE,
IS THAT IT IS THE CLOSURE ORDER THAT BROUGHT ABOUT THE LOSSES TO YOUR CLIENT.
STEPHEN M. ORLOFSKY: WELL -- CHIEF JUSTICE RABNER: TO WHAT EXTENTS MAY
THAT BE CONSIDER AT THIS POINT. STEPHEN M. ORLOFSKY: WELL IT SEEMS TO ME
THAT'S A DEFENSE THAT THEY'RE ASSERTING BUT I DON'T THINK THAT DEFENSE CAN BE ADJUDICATED
ON A MOTION TO DISMISS. IT STEAMS ME THAT THAT'S SOMETHING, IF WE MAKE THE AL GATHSS
AND PUT ON PROOFS THAT THE DEFENDANTS CAN THEN PUT ON PROOFS, WELL, YOU SAY THAT RT THAT'S
WHY YOU CLOSE, BUT P THEY'RE PERFECTLY OF MAKING THIS DEFENSE THEMSELVES BUT WHAT THEY WOULD
LIESHG MANY SAY IS THAT WHILE YOU MAY BE SAYING THAT, BUT THE REASON YOU REALLY CLOSE
IS BECAUSE GOVERNOR MURPHIES CLOSURE ORDERS, THAT'S A DISPUTED ISSUE WHICH CAN'T BE
RESOLVED ON A MOTION TO DISMISS. OKAY. THE -- JUSTICE PATTERSON:
WHAT IS THE FACTUAL ALLEGATION THAT P YOUR CLIENT IS MAKING THAT THE CASINOS AND THE 0,
THE CASINO IN THE OTHER FATS WERE CLOSED BECAUSE THERE WAS SURFACE CONTAMINATION UNRE
LATED TO THE CLOSURE ORDERS THAT I THINK UNDISPUTE MANY APPLIED THOSE FACILITIES?
STEPHEN M. ORLOFSKY: STEPHEN M. ORLOFSKY: OKAY. JUST GIVE ME A MOMENT,
YOUR HONOR. THERE WERE SEVERAL ALLEGATIONS WHICHES ADDRESS THAT POINT. THEY MAY BE
FOUND AT D A 22 PARAGRAPH 3, OCEAN WALKS OPERATIONS HAVE BEEN AND CONTINUE TO BE
SUSPENDED AND THREATENED BY THE ONGOING AND INCREASINGLY DAFRMG RUSS CONDITIONS CREATED
BY THE CORONA VIRUS EPIDEMIC. THERE'S AN ALLEGATION THAT D A 31 PARAGRAPH 66 OCEAN
WALK REASONABLY EXPECT THE DEFENDANT INSURANCE TO PROVIDE COVERAGE WHERE AS HERE THE RISKLY
THREAT OF HARM. JUSTICE PATTERSON: SLOW DOWN, IF YOU WOULD.
STEPHEN M. ORLOFSKY: I'M SORRY. I APOLOGIZE. JUSTICE PATTERSON: NO PROBLEM.
STEPHEN M. ORLOFSKY: NO JUST THE D A 66. LET'S GO BACK TO PARAGRAPH 66.
OCEAN WALK REASONABLY, SPEKT THE THE DEFENDANT INSURANCE ERS TO PROVIDE COVERAGE WHERE
AS HERE THE RISK OFFICER THREAT FROM HARM FROM CORONA VIRUS TO PERSONS OR PROPERTY CAUSED
OCEAN WALK TO SUFFER LOSS BY BEING DEPRIVED OF PHYSICAL USE OF THE PROPERTY. D A 43
PARAGRAPH 119, THE VIRTUALLY GUARANTEED RISK OF SIGNIFICANT HARM AND DAMAGE TO PERSONS
AND PROPERTY IS WHY IT BECAME NECESSARY TO LIMIT OR CLOSE THE USE OF INDOOR SPACES SUCH
AS THE OCEAN CASINO RESORT AS WELL AS NEARBY PROPERTIES THAT ALSO ATTRACT CUSTOMERS TO
OCEAN WALK'S PREMISES. D A 45 PARAGRAPH 130, COMMENCING ON OR ABOUT MARCH 16, 2020,
OCEAN WALK WAS REQUIRED TO SUSPEND OPERATIONS AT ITS COVERED PREMISES AS A RESULT OF THE
RISKS ASSOCIATED WITH THE CORONA VIRUS PANDEMIC INCLUDING DIRECT PHYSICAL LOSS OR DAMAGE
TO COVERED PROPERTY AND IN COMPLIANCE WITH GOVERNMENT GUIDANCE AND ORDERS. A.
WE HAD TO COMPLY WITH THE GOVERNMENT ORDERS, THERE WAS NO CHOICE ABOUT THAT. BUT THAT'S
NOT THE BASIS UPON WHICH WE'RE SEEKING COVERAGE. AND SO ARE THE TWO CONCEPTS, THE CLOSURE
REQUIRED BY GOVERNOR MURPHY'S EXECUTIVE ORDERS WAS SOMETHING THAT WHEN HE TO COMPLY WITH
AS A MATTER OF LAW. BUT WE'RE ALLEGING MORE THAN THAT, THAT THE CLOSURE, THAT WE WOULD HAVE
BEEN REQUIRED TO CLOSE THE FACILITIES EVEN WITHOUT GOVERNOR MURPHY'S EXECUTIVE ORDERS AND
THAT'S AN ALLEGATION THAT MAY BE AS JUDGE STEIN POIND OUT THE AL GATHSS MAY BE FACTUALLY
DISPUTED BUT THAT DISPUTE IS FOR ANOTHER DAY. IT'S NOT TO BE ADJUDICATED ON A MOTION
TO DISMISS. JUSTICE PATTERSON: THE CLOSURE COINCIDES WITH THE ORDERS, THE
TIMING OF THE ORDERS COMPANY WIVEN SIDE WITH THE ORDERS, IN OTHER WORDS, DID YOU CLOSE,
DID YOUR CLIENT CLOSE THE FACILITIES IN ACCORDANCE WITH THE CLOSURE ORDERS WHEN THE
GOVERNMENT REQUIRED THEM TO BE CLOSED? STEPHEN M. ORLOFSKY: YOU KNOW, JUSTICE
RGS I DON'T KNOW THE ANSWER TO THAT QUESTION. THEY HAPPENED AT OR ABOUT THE SAME TIME.
THE. CHIEF JUSTICE RABNER: WASN'T THE CASINO CLOSED ON MARCH 16TH OF '20.
STEPHEN M. ORLOFSKY: I THINK THAT'S CORRECT. CHIEF JUSTICE RABNER:
I THINK P REOPENED ON JULY 20TH AND OF 20, COINCIDED WITH THE DATES.
STEPHEN M. ORLOFSKY: SKRSHGS YES, IT DID. IEVENLG THAT'S WHAT HAPPENED, YES. RPT LET
ME MOVE ON. JUSTICE WAINER APTER: YOU HAD REFERRED TO THE ASBESTOS CASE
BUT IT SEEMS THAT IN THE PORT AUTHORITY DECISION THE 3RD CERTIFICATE ELDER WHEN QUANTITIES
OF LARGE QUANTITIES OF AS BES OWES TO THE AIR A BUILDING SUCH TO MAKE THE STRUCTURE UNINHABIT
AL AND UNUSABLE, THEN THERE'S BEEN A DISTINCT LOSS TO THE OWNER, BUT IF THE ASBESTOS IS
PRESENT IN DPOEN NANTS OF A STRUCTURE BUT IT IS NOT IN SUCH FORM OR QUANTITIES TO MAKE
THE BUILDING UNYOUS ABL THE OWN IF HAS NOT SUFFERED A LOSS. IS YOUR ALLEGATION WHETHER
OR NOT THE LONG WAS ACTUALLY RENDERED UNUSABLE IS A QUESTION OF FACT THAT HAS TO BE DECIDED
FLOT AT A MROEGS TO DISMISS CASE. STEPHEN M. ORLOFSKY: " YOU WERE THERE,
IS OUR CONTENTION, I DON'T SEE, IT'S AN ALLEGATION AND THE IT'S DISPUTED AND WE WOULD
OBLIGATED TO PROVE IT AND OVRL THE DEFENDANTSES WILL TAKE THE DECISION THAT WE CAN'T PROVE
IT OR THAT THE, YOU KNOW, THE SIMILAR TO THE OS BES TOES CASE THAT THE AMOUNT OF CORONA
VIRUS IN THE AIR SPACE DID NOT REQUIRE COMPLETE CLOSURE. CHIEF JUSTICE RABNER:
YOU'VE ALLEGED THAT THE DAMAGE CAUSED BY THE CORONA VIRUS PHYSICALLY REMAINING ON AN R
PROPERTY FOR EX SEN STENDED PERIODS OF TIME WAS REMEDIED AT SKRABLTH THE TIME THE GOVERNOR'S
EXECUTIVE ORDER SAID YOU COULD REOPEN AND I'M ASSUMING YOUR RESPONSE WOULD BE TO THE EXTENT
THERE'S ANY QUESTION THERE THAT HAS TO WAIT FOOR LATER DETERMINATION? STEPHEN M.
ORLOFSKY: THAT'S CORRECT. AND BY THE WAY, JUDGE, AND OI SAY THIS WIZ RESPECT TO THIS
COURT AND TO THE APPELLATE DIVISION, JUDGES AND JUSTICES DON'T SIT ASSIGN TIFTS AND THERE'S
AN MEEBLG CAN YOU SAY BRIEF FILED BY THE MEDICAL SOCIETY OF NEW JERSEY WHICH TALKS ABOUT
SOME OF THE SCIENCE SURROUNDING THE CORONA VIRUS AND THAT IT CANNOT, THE APPELLATE DIVISION
FOR EXAMPLE FOUND TO THE CORONA VIRUS COULD BE EASILY REMOVED WITH HOUSEHOLD CLEANERS,
THAT'S NOT TRUE. IT CANNOT. AND IT'S MUCH MORE DIFFICULT TO REMOVE IT AND IT CAN LINGER
FOR DAYS AND PERIODS OF WEEKS. AND SO, YOU KNOW, IT'S AN AREA OF EVOLVING SCIENCE AND
I THINK THE CASE THAT WE SHOULD BE ALLOWED TO PROCEED THROUGH DISCOVERY AND PRESENT EXPERT
TESTIMONY ABOUT THAT. AND I THINK THAT THE APPELLATE DIVISION WAS CLEARLY WRONG IN
MAKING THAT DETERMINATION. JUSTICE PATTERSON: THE DAY BEFORE THE CLOSURES WERE
ORDERED BY GOVERNOR MURPHY, THE CASINO WAS OPERATING, IS THAT CORRECT? OPERATING THE
OTHER FACILITY WGS OPERATING? STEPHEN M. ORLOFSKY: I THINK THAT'S CORRECT,
YOUR HONOR. PATS PAT WAS THAT BASED UPON A DETERMINATION BY YOUR CLIENT, IS THAT YOUR
ALLEGATION THAT THAT WAS BASED ON A DETERMINATION BY YOUR CLIENT THAT ON THAT DAY, IT WAS
SAFE TO OPERATE? STEPHEN M. ORLOFSKY: YES. JUSTICE
PATTERSON: AND THE DAY AFTER THAT IS THE DAY THE ORDER CAME IN, IS IT YOUR CLIENT'S CONTENTION
THAT IT STOPPED OCHTING BASED OCHTING BASED UPON A. STEPHEN M. ORLOFSKY:
I THINK IT WAS BOTH. JUSTICE PATTERSON: BOTH WHAT? STEPHEN
M. ORLOFSKY: BOTH A CLOSURE ORDER AND THE CONCERN THAT THE IMPACT THAT THE VIRUS WAS
HAVING ON THE PHYSICAL SERVICES AND THE AIR. JUSTICE PATTERSON: SO THE DAY
BEFORE IT WAS, YOUR CLIENT'S CONTENTION IT WAS SAFE TO OPERATE AND THE DAY AFTER WITH
THE CLOSURE ORDER IN PLACE, THERE'S A DIFFERENT DETERMINATION AS TO SAFETY, IS THAT THE
ALLEGATION? STEPHEN M. ORLOFSKY: THESE THINGS HAPPEN, REMEMBER, THESE THINGS
HAPPENED PRETTY QUICKLY FOR AWFUL US IN MARCH OF 2020. JUSTICE PATTERSON:
EVERYONE EXPERIENCED IT. STEPHEN M. ORLOFSKY: EVERYBODY WAS CONFUSED, TRYING
TO SORT UT WHAT THE CORONA VIRUS WAS. AND SO I CAN'T PINPOINT FOR YOU WHEN THE DECISIONS
WERE MADE AND HOW THEY WERE MADE. WHAT I'M SAYING NOW AND WE'RE SAYING, AND OBVIOUSLY
THE COMPLANLT WAS PLED AND FILED AFTER MARCH OF 2020, ALL OF THOSE -- JUSTICE
PATTERSON: I'M NOT ASKING FOR A FACTUAL REPRESENTATION, MR. ORLOFSKY, I'M ASKING WHAT
IS THE ALLEGATION THAT YOU ARE MAKING HERE WITH RESPECT TO THE DISTINCTION BETWEEN THE
LAST DAY BEFORE THE CLOSURE THAT YOUR CLIENT WAS OPERATING AND THE DAY IT CLOSED?
STEPHEN M. ORLOFSKY: WELL, JUDGE, I DON'T THINK THAT YOU CAN, I DON'T WANT TO CONFUSE
THE CLOSURE ORDER WITH THE DECISION TO CLOSE THE FACILITY BECAUSE OF THE CONCERN OF THAT
THE VIRUS WAS HAVING ON THE AS YOU REMEMBER AND THE AIR OF THE CASINO. JUSTICE
FASCIALE: THOSE DATES COINCIDE. THOSE DATES COINCIDE WITH EACH OTHER AND EVEN THE
PARAGRAPH THAT YOU READ, PARAGRAPH 130 OF THE COMPLAINT, IT SAYS THAT OCEAN WALK WAS
REQUIRED TO SUSPEND OPERATIONS ON MARCH 16TH, 2020. STEPHEN M. ORLOFSKY:
WELL, THAT'S A STATEMENT OF FACT. WE WERE. JUSTICE FASCIALE: BECAUSE OF THE
CLOSURE ORDERS. STEPHEN M. ORLOFSKY: WELL, WE HAD NO CHOICE, WHETHER WE
AGREED WITH THE CLOSURE ORDER OR NOT, WE HAD TO SUSPEND OLGSS. JUSTICE
PATTERSON: OPERATIONS SUSPENDED IN THES PRIVATE SEK FER, ALL OVER NEW JERSEY AND ALL OVER
THE COUNTRY AT THAT TIME. BUT IS IT YOUR ALLEGATION THAT THE CLOSURE ORDER WAS NOT THE
REASON YOU CLOSED, YOUR CLIENT CLOSED? STEVE TEEF. STEPHEN M. ORLOFSKY:
WELL, FOR PURPOSES OF THE, NO, IT WASN'T JUST THAT. WE HAD NO CHOICE. LOOK, WE HAD NO
CHOSE WHEN THE GOVERNOR ISSUED THE ORDER. OF I'M NOT CHALLENGING THE MERITS OF THE GOVERNOR'S
ORDER, WHETHER THE GOVERNOR HAD A BASIS. JUSTICE PATTERSON: Z DOES YOUR
CLIENT CHALLENGE THE ASSERTION THAT IT CLOSED WHEN IT DID AND REOPENED WHEN IT DID BECAUSE
THE ORDER WAS IMPOSED AND THAT IT WAS RESCINDED? STEPHEN M. ORLOFSKY: WELL.
JUSTICE PATTERSON: DOES THAT A FACT OR IS IT NOT? STEPHEN M.
ORLOFSKY: WELL, WE HAVE THING, WE ALLEGED IT WAS MORE THAN THE CLOSURE ORDER AND WE THINK
THAT'S AN ISSUE THAT HAS TO BEED ADJUDICATED FACTUALLY AND CAN'T BE ADJUDICATED ON A ARE
MROEGS TO DISMISS. P. LET ME TURN TO THE SECOND QUESTION. SECOND QUESTION
ON CERTIFICATION IS P ARE AL GATHSS THAT INSURED ROPT WAS PHYSICALLY DAMAGED BY THE PRESENCE
OF THE CORONA VIRUS RENDERED SDEFRJLY UNUSABLE WHETHER RISK OF THE CORONA VIRUS SUFFICIENT
TO ALLEGED "DIRECT FIZZ CULLING LOSS OR DAMAGE TO COVERED PRIVATE PROPERTY. THE ANSWER
TO THAT QUESTION IS KW. HERE OGS WALK ALLEGED ITS PROPERTY WAS PHYSICALLY ALTERED BY
THE CORONA VIRUS. BY THE WAY, I DON'T THINK THE DEFENDANTS DISAGREED THAT PHYSICAL ALTERATION
DOESN'T CONSTITUTE PHYSICAL DAMAGE. BUT THE APPELLATE DIVISION IN OUR VIEW IMPROPERLY
REJECTED THOSE ALLEGATIONS, AND SECONDLY, WITH RESPECT TO THE QUESTION OF DIRECT PHYSICAL
LOSS, IT WAS CERTAINLY PRE PANDEMIC LAW WHICH HELD THAT PHYSICAL LOSS INCLUDED, AMONG
OTHER THINGS, LOSS OF ESSENTIAL FUNCTION OR PROPERTY BEING RENDERED UNINHABITABLE AND
THE CASES THE, WE CAN GO THROUGH ALL THE CASES, BUT I'M SURE THE COURT IS FAMILIAR WITH
CUSTOMIZED DISTRIBUTION, WAKEFERN, GREGORY PACK KEFRPING AND PORT AUTHORITY, ALL OF THOSE
CASES TO ONE DEGREE OR NOT ADDRESS THE QUESTION OF ARE WHETHER PROPERTY IS LOST ITS ESSENTIAL
FUNCTION OR HAS BEEN RENDERED AND INHABITABLE. JUSTICE WAINER APTER: SEPARATE
TEST SO YOU'RE AL LEFRPING THAT WAKEFERN AND KUFRT MIEFD DISTRIBUTION SAY THAT IT'S LOSS
OF ESSENTIAL FUNCTION BUT THEN THE THIRD CIRCUIT CASE SAID IT'S TOTELY ININHABIT AVENLT
ARE YOU SAYING IT'S THE SAME LOSS OF FUNCTION EQUALS TOTALLY UNINHABIT ABL?
STEPHEN M. ORLOFSKY: NOT THE SAME, BUT LET ME SAY IT'S ANOTHER STRING TO OUR GOAL, IF
YOU WILL, THAT THE 3RD CIRCUIT AND THE ASBESTOS CASE OF PORT AUTHORITY ESSENTIALLY HELD
IF THE CONCENTRATION OF ASBESTOS WAS OF SUCH A HIGH DEGREE IT WOULD RENDERLY PROPERTY
UNINHABITABLE AND THAT'S CERTAINLY, YOU KNOW, THAT'S CERTAINLY AN, ONE PART OF THE
ALLEGATION. BARG. PARAGRAPH I THINK THE A MOAN I DON'T CASE WHERE THERE WAS
AMMONIA P SOMEHOW INFUSED THE PROPERTY AND IT BECAME ATS LEAST FOR A PERIOD OF TIME BECAME
ININHABITABLE AND UNUSABLE FOR ITS ESSENTIAL PURPOSE, I THINK THAT'S ESSENTIALLY WHAT
WE'RE TALKING ABOUT HERE. JUSTICE WAINER APTER: BOTH OF THOETS CASES,
THOESHGS TALK ABOUT THE PROPERTY OWNER NEEDING TO COMPLETE REPAIRS IN ORDER TO REMOVE THE
ASBESTOS, IN ORDER TO REMOVER THE AMMONIA. WHAT WERE THE REPAIRS THAT ARE ALLEGED FOR
COMPLETED HERE. STEPHEN M. ORLOFSKY: WELL, FIRST OF ALL, IT'S NOT CLEERN
I THINK THE SIGH KWENS IS STILL EVOLVING ABOUT HOW TO REMOVER THE CORONA VIRUS FROM THE
FACILITY BECAUSE THE APPELLATE DIVISION SAID INCORRECTLY THAT IT COULD BE, THE CORONA
VIRUS COULD BE REMOVED FROM SURFACES WITH ORDINARY HOUSEHOLD CLEANING AND IT CAN'T,
THAT'S JUST INACCURATE. AND I THINK THERE'S A DISCUSSION IN THE AMICUS BRIEF BY THE MEDICAL
SOCIETY OF NEW JERSEY WHICH TALKS ABOUT REMOVAL OF THE CORONA VIRUS FROM SURFACES. AND
THAT, BY THE WAY S AN EVOLVING SCIENCE AND THERE'S GOING TO BE EXPERT TESTIMONY ABOUT
WHAT THE REMEDIATION, WHAT THE REMEDIATION EFFORTS HAVE TO BE -- JUSTICE
WAINER APTER: WHAT ARE THE FACTUAL ALLEGATIONS A TO WHAT REMEDIATION OR REMEDIAL MEASURES
YOU UNDERSTOOD IN ORDER TO BE ABLE TO REOPEN ON JULY 2ND, THIS ALREADY HAPPENED, IT'S
NOT, YOU KNOW, IN THEORY, IF THE FUTURE WHAT SHOULD THE REMEDIATION ISSUES BE, MUCH
PRESUMABLY YOUR ARE CLIENT JUDGED DWAU NO LONGER ININHABITABLE. WHAT RP THE REMEDIAL MEASURES
TAKING IN ORDER TO MAKE THE NO MG ERR UNINHABITABLE. STEPHEN M.
ORLOFSKY: I DON'T THINK WE LIFRT THE ALLEGED DETAILS OF WHAT THEY DID, THEY DID THE BEST
THEY COULD UNDER THE CIRCUMSTANCES TO DEAL WITH THE CORONA VIRUS AND AT THE TIME, YOU KNOW,
THERE WERE A VARIETY, THEY WERE USING AIR FILTRATION SYSTEMS TO CLEAN THE AIR, THEY
WERE USING, YOU KNOW, INDUSTRIAL STRENGTH CLEANERS, WHATEVER THAT MEANS; TO TRY TO
REMOVER IT FROM THE SURFACES AT THE CASINO. JUSTICE PATTERSON: DOES YOUR
CLIENT ALLEGE THAT THEY REOPENED BECAUSE THE THEY REMEDIATED? P. STEPHEN M.
ORLOFSKY: WELL, I THINK, I DON'T THINK THEY WOULD HAVE REOPENED IF THEY DIDN'T FEEL THAT.
JUSTICE PATTERSON: I GET THAT, BUT IS IT YOUR CLIENT'S CONTENTION THAT THE
REASON THEY WERE IN A POSITION TO REOPEN ON THE DATE THEY REOPENED WAS BECAUSE THEY HAD
REMEET 88 REME 88ED? P SFEEF STEVE LOOK, TO THE EXTENT THAT REMEDIATION WAS CAPABLE OF
BEING PERFORMED AT THE TIME BACK IN 2020 AND, YOU KNOW, WHAT THE REMEDIATION WAS, WHAT
EFFECT REMEDIATION TECHNIQUES WERE THE WUNDZ THAT THEY USED, SO I MEAN THEY DID THE BEST
THAT THEY COULD, THEY DID THE BEST THEY COULD UNDER THE CIRCUMSTANCES R. CHIEF
JUSTICE RABNER: DOES YOUR CLIENT ASSERT THAT THE REOPENING ON JULY 2ND WAS UNCONNECTED
TO THE EXECUTIVE ORDER? STEPHEN M. ORLOFSKY: STEVE, WELL, IF GOVERNOR MURPHY
HAD NOT LIFTED THE OR, THEY COULDN'T HAVE REOPENED. IN OTHER WORDS, IF THE ORDER,
REGARDLESS OF WHETHER THEY HAD EFFECTIVELY REMEDIATED, IF THE GOVERNOR HAD NOT VACATED
HIS ORDER TO REOPEN, THEY COULDN'T HAVE OPENED. CHIEF JUSTICE RABNER: DOES
YOUR CLIENT ASSERT IT WAS ITS SUCK SOCIAL SECURITY FELL EFFORTS AT REIMMEDIATE YAD THAT
ALLOW TOWED TO ROW OPEN. STEPHEN M. ORLOFSKY: I DON'T THINK THEY WOULD HAVE
REOPENED SOLELY BECAUSE THE GOVERNOR LISTED THE ORDER UNLESS THEY FELT THAT THEY, TO THE
EXTENT POSSIBLE USING THE TECHNOLOGY AVAILABLE TO THE, TO THEM AT THE TIME THAT THEY
EFFECTIVELY REMEDIATED THE PREMISES. JUSTICE PATTERSON: WHY DOESN'T THE
CONTAMINATION EXCLUSION APPLY? STEPHEN M. ORLOFSKY: OKAY. SO THAT
ADDRESSES THE THIRD QUESTION THAT WAS ON WHICH THE COURT GRANTED CERTIFICATION AND, LET
ME JUST, WELL, JUSTICE, JUDGE STEIN FELT OR HELD THAT THE COULDN'T TESTIMONY NATION EX
CLUSION OF THREE OF THE CARRIERS WAS BARRED BY NAV-ITS, IT POINTS OUT AND HE SAYS THAT
AT SOMEWHAT LENGTH THAT THE ANALYSIS ARTICULATED BY JUSTICE WALLESS IN VAF VITS THE POLLUTION
EXCLUSION IN 3 OF CARRIERS WERE OVERLY BROAD, UNFAIR AND WITHOUT DOUBT CONTRARY TO
OBJECTIVELY REASONABLE EXPECTATIONS OF THE ENSURED. NOW, WHAT THE CARRIERS
DID WAS THEY INSERTED THE WORD, THE TERM VIRUS IN THE SECTION DEFINING CONTAMINATION,
BUT IN THE DEFINITION OF CONTAMINANT, THEY DID NOT INCLUDE THE WORD VIRUS.
JUSTICE WAINER APTER: WHERE DOES THE WORD CONTAMINANT ACTUALLY APPEAR IN THE POLICY,
I'M READING SECTION 30301, I DON'T SEE THE WORE CONTAMINATION. STEPHEN M.
ORLOFSKY: JUST GIVE ME A SECOND, PLEASE. Z THE CONTAMINATION EXCLUSION, APPEARS AT D
A 83 FOR SEWER RICK. D A-2 IF I 3 FOR AFRMENT I G SPECIALTY. D A-427 FOR INTERSTATE
FIER AND CASH RESULT TEE AND D A-367 FOR NATIONAL FIRE AND FIER AND MARINE FRPT THE DEFINITION
P OF CAN NAM NANT AND I CAN READ IT, AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY
I WAS ASKING WHERE CONTAMINANT, SO I AGREE WITH YOU THAT THE DEFINITION OF THE WORD CO
NTAMINANT DOES NOT INCLUDE THE WORD VIRUS BUT WHEN I READ THE EXCLUSION IT OPENLY USES
THE WORD CONTAMINATION, IT DOES NOT USE THE CORD COULDN'T TESTIMONY NANT AND THE DEFINITION
CONTAMINATION DOES INCLUDE THE WORD VIRUS. I WAS ASKING WHERE IN THE POLICY DOES THE
ACTUALLY USE THE WORD CONTAMINANT IN THE SUBSTANTIVE EXCLUSION RATHER THAN THE WORD
COULDN'T TIK TAM NATION. STEPHEN M. ORLOFSKY: IT DOESN'T USE THE WORD VIRUS
IN THE DEFINITION OF CONTAMINANT. THAT'S THE PROBLEM. IT USES R. JUSTICE
WAINER APTER: I UNDERSTAND, I'M SAYING THE SUBSTANTIVE EXCLUSION WHICH I THINK IS FOUND
30301 SOCIAL SECURITY COULDN'T TOO MANY NATION AND ANY COST DUE TO CONTAMINATION INCLUDING
THE IP ABILITY TO USE OR OCCUPY PROPERTY OR ANY COST OF MAKING PROJECT SAFER ESAFE OR
SUIT BL FOR THE USE OF OCCUPANTS, SEPTS AS PROVIDE IN THE RADIOACTIVE SECTION OF THIS
POLICY. SO I'M SAYING THE EXCLUSION YUTSZ THE WORD CONTAMINATION THE DEFINITION OF COULDN'T
TESTIMONY NATION INLUDES THE WORD VIRUS SO WHY DO WE CARE ABOUT THE DEFINITION OF THE
WORD COULDN'T TESTIMONY NANT IF THE EX CLUES DOES NOT USE THE WORE COULDN'T TESTIMONY
NANT? STEPHEN M. ORLOFSKY: IT'S CONFUSING TO A POLICYHOLDER, ONE WOULD
THINK THAT COULDN'T NAM ATAM NATION WOULD INCLUDE A CONTAMINANT, RIGHT? WHEN YOU READ
THE DEFINITION OF CONTAMINANT IT DOESN'T CONTAIN THE WORD VIRUS WHERE THE DEFINITION OF
CONTAMINATION DOES. THAT IS ALSO THE FILED IN CONTAMINANT, IS THAT CORRECT? FASH FAB
VIRUS IS NOT THE. JUSTICE PIERRE-LOUIS: THAT IS NOT FOUND IN THE DEF
NIGS OF. STEPHEN M. ORLOFSKY: CORRECT. JUSTICE PIERRE-LOUIS:
SO IT'S NOT OF NECESSARILY THE CASE THAT ALL OF THOSE WORDS FIT WITHIN THE CONTAMINANT
DEFINITION YUS TIS WAINER APTER'S POINT THE WORD CONTAMINATION IS THE WORD ENCOMPASSED
IN THE EX CLIES IN SECTION.03 AND WE HAVE A DID HE HAVE SIGS VERY CLEARLY HERE IN SECTION
7.09 WHAT CONTAMINATION ENCOMPASSES AND THAT'S THE WORD THAT'S IN THE EXCLUSION.
STEPHEN M. ORLOFSKY: YES, BUT THE CONFUSING PART IS. JUSTICE PIERRE-LOUIS:
IF THE CORD WORD CONTAMINATION IS USER IN THE EXCLUSION AND THE WORD CONTAMINATION AND
IT INCLUDES VIRUS? STEPHEN M. ORLOFSKY: YES BUT WHEN THE POLICY DEFINES
CONTAMINANT IT DOESN'T INCLUDE THE WORD VIRUS. JUSTICE PIERRE-LOUIS: DOES THIS
IS PATHOGEN AND MANY OTHER WORDS. STEPHEN M. ORLOFSKY: THAT'S A DECISION
REBIED LLIED THIS COURT'S DECISION IN NAV-ITS RELIED UPON BY THE JUDGE SAID THESE POLICY
EXCLUSIONS SHOULD BE NARROWLY CONSTRUED. JUSTICE PATTERSON: HERE YOU HAVE,
WHO ARE UFR THE WORD THTSDZ USED IN THE EXCLUSION WHICH IS CONTAMINATION WITH A DEFINITION
THAT INCLUDES A VIRUS AND YOU HAVE THIS ENTIRE CASE PREMISED ON A VIRUS. WHERE IS, YES,
YOU HAVE CONTAMINANT ALSO INSURANCE POLICIES CERTAINLY INCLUDE SOMETIMES DEFINITIONS OF
TERMS THAT AREN'T THE FOCUS OF THE CASE AND MAY NOT EVEN APPEAR IN THE --
STEPHEN M. ORLOFSKY: JUSTICE, LOOK, I THINK, FIRST OF ALL, I THINK THE NAV-ITS CASE
DECISION REQUIRES THE COURT TO CONSTRUE THESE EXCLUSIONS NARROWLY, BUT MORE IMPORTANTLY,
I THINK WHAT'S AT ISSUE HERE ARE THE REASONABLE EXPECT TATHSS OF A POLICYHOLDER READING
THE POLICY. JUSTICE WAINER APTER: IT SAYS COULDN'T MANY AT A NATION BY
A CONTAMINANT I WOULD TOTALLY BE WITH YOU, DOESN'T, HOW DO WE UNDERSTAND THIS BUT IT
DOESN'T ACTUALLY SAY CONTAMINANT IN ANY OF THE SUBSTANTIVE PROVISIONS THAT ARE BEING RAISED
IN THIS CASE. STEPHEN M. ORLOFSKY: BUT AULT LANGUAGE OF A POLICY SHOULD
BE GIVEN AND SHOULD BE INTR PRETED, IF THEY DECIDED TO AND CLUED A DEFINITION FOR
CONTAMINANT AND NOT AND CLUED A VIRUS, DON'T YOU THINK THAT'S CONFUSING TO A POLICYHOLDER?
CHIEF JUSTICE RABNER: IF AULT WORD OF A POLICY ARE TO BE GIVEN MEANING,
WHAT MEANING IS LEFT FOR THE WORDS VIRUS AND PATHOGEN UNDER YOUR READING OF THE POLICY?
STEPHEN M. ORLOFSKY: WELL, JUSTICE I'M NOT SURE THAT, I'M NOT SURE THAT
THAT QUESTION, THE ANSWER TO THAT QUESTION, YOU KNOW, LOOK, READING TO ME, I'M CONFUSED
BY READING THE POLICY, I READ THE EXCLUSION AND THEN I READ THE DEFINITION OF CONTAMINANT
AND THE WORD VIRUS APPEARS IN THE DEFINITION OF CONTAMINATION BUT NOT IN THE DEFINITION
OF CONTAMINANT AND SO I AS A REASONABLE POLICYHOLDER WOULD SAY, OH, WELL, THEN IT
DOESN'T, IT DOESN'T EXCLUDE VIRUSES BECAUSE THEY DON'T DEFINE A VIRUS AS A CONTAMINANT.
I THINK THAT'S A READ TLIS IN A PRACTICAL COMMON SENSE WAY. JUSTICE NORIEGA:
BUT COUNSEL THE POLICY, THIS WAS AGREED TO FAR BEFORE THE PANDEMIC AND NOBODY COULD HAVE
ANTICIPATED OBVIOUSLY A DMROEBL PANDEMIC OCCURRING, BUT CLEARLY THE PARTIES HAD
REACHED AN AGREEMENT THAT WOULD INCLUDE WHAT A VIRUS COULD DO. AND THESE ARE SOPHISTICATED
PARTIES. STEPHEN M. ORLOFSKY: WELL, FISHLGS LET ME JUST ADDRESS THAT ONE
POINT, YOUR HONOR. THERE'S NO EVIDENCE IN THE RECORD THAT THIS IS A SOPHISTICATED PARTY
SORE THAT COULDN'T TROE PRO DOESN'T APPLY, SUB STANLEY NO EVIDENCE IN RECORD THAT AC OCEAN
HAD ANY PARTICIPATION IN THE NEGOTIATION OR DRAFTING OF THIS POLICY LANGUAGE, THESE ARE
STARRED DARD FOFRM POLICIES, SO TO SAY LET'S NOT SAY THAT BECAUSE THIS WAS A SCHEDULE
ENTITY PURCHASING COMMERCIAL INSURANCE THAT IT DOESN'T GET THE BENEFIT OF COULDN'T TROE
QUO, THERE'S NO EVIDENCE TO THAT EFFECT. SO TO SAY THAT I THINK IS SIMPLY MISS LOADING
AND NOT TRUE. NOW, THE OTHER THING -- JUSTICE PATTERSON: TO
SAY WHAT, THAT IT IS MISLEADING AND NOT TRUE TO P SUGGEST THAT THIS WAS A COMMERCIAL POLICY
THAT WAS AGREED TO BY A COMMERCIAL -- STEVE TEEF NO JUSTICE, THAT'S NOT WHAT I'M SAYING,
THIS IS AC OESHGS CERTAINLY THIS IS A COMMERCIAL POLICY. BUT COULDN'T TROE PRO APPLIES
IN THE CONTEXT OF COMMERCIAL POLICIES AS WELL. AND TO TO DEPRIVE OCEAN OF THE BENEFIT
OF CONTRO PRO WHEN THERE'S NO EVIDENCE IN THE RECORD AT ALL THAT IT WAS INVOLVED IN THE
DRAFTING OR NEGOTIATION OF THE LANGUAGE OF THE POLICY, I JUST THINKING IS UNFAIR. THEY
SHOULD BE GIVEN THE SAME, YOU KNOW, BENEFIT, SAME BENEFIT OF CONTRO PRO IN NONCOMMERCIAL
POLICYHOLDERS RECEIVE. JUSTICE WAINER APTER: IS THAT WHAT THE CASE LAW SAYS? STEPHEN M. ORLOFSKY: WELL, THE CASE LAW THAT THE DEFENDANTS ARE RELYING
FIND AN AMBIGUOUS, DIDN'T FINE THE LANGUAGE IN THAT CASE WAS AMBIGUOUS AND THERE'S A
DISSENT BY JUSTICE ALBIN, SOMEWHAT SFRIEFD FIND THE I AGREE WITH JUSTICE ALBIN BUT I DO
IN THIS CASE, WHICH SAYS THAT THERE'S NO REASON TO, THERE'S SIMPLY NO EVIDENCE THAT THE
INSURED WAS, YOU KNOW, SHOULDN'T GET THE BENEFIT OF CONTRO PRO -- JUSTICE
PATTERSON: LET'S ASSUME THE STANDARD APPLIES THAT YOU WERE SAYING SHOULD APPLY. WE HAVE
ONE OPERATIVE WORD THAT WE'RE ALL TALKING ABOUT AND IT IS NOT AS JUSTICE WAINER APTER
POINTS OUT, THE WORD CONTAMINANT. IT IS THE WORD CONTAMINATION. SO POLICYHOLDER
GOES TO THE DEFINITION AND FINDS VIRUS AND CONTAMINATION. THE WORD THAT YOU'RE FOCUSED
ON COULD HAVE BEEN IN THIS POLICY, IN THIS SECTION OF THE POLICY, THE EXCLUSION BUT IT'S
NOT. SO YOU HAVE, RT UFR THE WORD CONTAMINATION APPEARING AND IT'S OBVIOUSLY THE MOST
CRITICAL WORD. YOU HAVE A DID HE HAVE NIS THAT INCLUDES VIRUSES AND YOU HAVE AN ALLEGATION
THAT IS FROM SOUP TO NUTS ALL ABOUT A VIRUS. STEPHEN M. ORLOFSKY: YOU HAVE
A DEFINITION OF, YOU HAVE -- WELL, YOU HAVE A DEFINITION OF CONTAMINANT WHICH DOESN'T
INCLUDE VIRUS AND TO ME THAT COULD BE VERY. JUSTICE PATTERSON: THAT COULD BE
VERY IMPORTANT IF THE WORD CONTAMINANT WERE IN THE EXCLUSION BUT I DON'T SEE IT.
STEPHEN M. ORLOFSKY: ARE YOU, JUSTICE ARE YOU SAYING TO ME THAT WHEN I READ AN EXCLUSION
CLAUSE FOR CONTAMINATION THAT IT DOESN'T COVER CONTAMINANT MATS PAT I'M NOT SAYING ANYTHING
TO YOU MR. ORLOFSKY, I'M NOT ARGUING TO YOU. STEPHEN M. ORLOFSKY: I'M SAYING
TO YOU, YOUR HONOR THAT, I DON'T THINK YOU CAN HAVE A DF NIGS OF CONTAMINATION AND THEN
HAVE A DEFINITION OF CONTAMINANT WHICH IS IVEN CONSISTENT WITH THE DEFINITION OF
CONTAMINATION -- CHIEF JUSTICE RABNER: LET'S FOLLOW UP ON THAT WITH YOU IF
I COULD. YOUR ESSENTIAL ARGUMENT IS VIRUS AND PATHOGENIC ORGANISM DID 0 TO THE APPEAR
IN THE DEFINITION OF CONTAMINANT, THAT LEADS TO CONFUSION SO WE SHOULDN'T CONSIDER THEM
UNDER CONTAMINATION, IS THAT FAIR? STEPHEN M. ORLOFSKY: YES.
CHIEF JUSTICE RABNER: I DID A QUICK COMPARISON BETWEEN THE TWO CLAUSES AND I'M LOOKING
AT THE DEFINITION FOR CONTAMINATION. OF IT IS REFERS TO OF THE ACTUAL PRESENCE OF ANY
FOREIGN SUBSTANCE, THAT DOESN'T APPEAR IN THE DEFINITION OF COULDN'T TAN NAPT, IMPURITY,
SAME. POLLUTANT DOES APPEAR. HAZARD TODAY'S MATERIAL DOESN'T APPEAR. POISON, TOK SIN,
PATHOGEN, PATHOGENIC ORGANISM. BACTERIA, NONE OF THEM APPEAR IN THE DEFINITION OF CAN'T
COME NAPT, VIRUS, SAME. DISEASE CAUSING LITTLENESS CAUSE, FUNGUS APPEARS, MOLD AND
MILDEW DO NOT. SO UNDER YOUR ARGUMENT, THIS POL SEESHG THE OHM WORDS THAT
MAY BE CONSIDERED OR POLLUTANT AND FUNGUS. IS THAT A SENSIBLE WAY TO READ THESE CLAUSES?
STEPHEN M. ORLOFSKY: WELL, JUDGE, THAT'S ONE WAY TO READ THEM. BUT OTHER
WAY TO READ THEM WHICH I RESPECTFULLY SUGGEST IS THAT THE DEF NIGS OF CONTAMINATION CAN'T
BE READ WITHOUT, CAN'T BE INTERPRETED WITHOUT READING THE DEFINITION OF CONTAMINANT AND
IT'S CONFUSING BAUFR IT DOESN'T, CONTAMINANT DOESN'T INCLUDE VIRUS. NOW,
INTERESTINGLY THAT YOU HAVE, THE OTHER INSURER, NATIONAL FIRE, HAD A FESHL VIRUS EXCLUSION
WHICH JUDGE STEIN UPHELD AND GRANTED THEIR MROEGS TO DISMISS. AND IN THAT CASE, IN THEIR
EXCLUSION IN THE NATIONAL FIRE EXCLUSION, IT WAS CLEAR THAT VIRUSES WERE EXCLUDED. DIDN'T
I THINK, YOU KNOW, THAT'S, TO ME THAT'S AN INTERESTING CONTRAST BECAUSE IN THE NATIONAL
FIRE INSTANCE, THERE COULD BE NO CONCLUSION BECAUSE THEY SPECIFICALLY ADDRESSED IT. AND
WE'RE TALKING ABOUT THE REASONABLE EX SMEKT TAGSS OF THE POLICY. NOW, JUSTICE PATTERSON
IS TORTURING ME WITH THE LANGUAGE HERE AND WHAT I'M. CHIEF JUSTICE RABNER:
NO, SHE'S NOT, I'VE SEEN OTHER ARGUE MANY, SHE'S NOT TORTURING YOU. STEPHEN M.
ORLOFSKY: JUST A FIGURE OF. JUSTICE PATTERSON: HE KNOWS WHAT THE TORTURE
IS ALL ABOUT. STEVE TEEF I'M JUST SAYING, WE'RE PARSING THE LANGUAGE AND FOR GETTING
THAT THESE NAV-ITS DECISION OF THIS COURT SAY THE POLLUTION EXCLUSION CLAUSES SHOULD BE
NARROWLY CONSTRUED. JUSTICE WAINER APTER: WASN'T THAT BASED ON A REGULAR
STORY ESTOPPEL ARGUMENT THAT BECAUSE THE INSURANCE INDUSTRY TOLD THE REGULATORS THAT
POLLUTION EXCLUSION CAUSES AN ISSUE WOULD ONLY AP PLAY TO ENVIRONMENTAL POLLUTION, THEY
SHOULDN'T BE ALLOWED TO GET AR WAY FROM THAT. IS THERE ANY EVIDENCE OF ANYONE
-- STEPHEN M. ORLOFSKY: THERE'S AN INTERESTING POINT THERE, IS SOME EVIDENCE
THAT THE LOUISIANA INSURANCE BODY WHEN REVIEWING THIS PARTICULAR EXCLUSION CLAUSE PRESENTED
BY SEWER RICK SAID THAT IT WAS INAPPROPRIATE, IT DOESN'T, CLUED VIRUSES AND THEY SHOULD
HAVE THEIR OWN, EXCLUDE VIRUSES YOU NEEDED A SPECIAL EXCLUSION. THEY CHOSE NOT TO DO
THAT, NATIONAL FIRE DID AND SO NATIONAL FIRE GOT, SO THERE IS SOME ASPECT.
JUSTICE WAINER APTER: THAT BASED ON NEW JERSEY REGULATOR THE AND STATEMENTS MRADZ TO NEW
JERSEY REGULATORS. STEPHEN M. ORLOFSKY: LOOK, JUSTICE, I UNDERSTAND, YOU
ASKED THE QUESTION, THERE WAS, IT'S TRUE THAT THE OPENLY REGULATORY BODY THAT RAISED THAT
QUESTION WAS LOUISIANA. BUT, YOU KNOW, THERE IS AN ELEMENT, AT LEAST WILL IS SOME EVIDENCE
IN THE RECORD THAT A REGULATOR, PERHAPS NOT A NEW JERSEY REGULATOR, DID LOOSHG AT THIS
LANGUAGE AND RAISE QUESTIONS ABOUT IT. AND NATIONAL FIRE, UNLIKE ZURICH, DECIDED TO
ADOPT ITS OWN SPECIAL EXCLUSION WHICH JUDGE STEIN UPHELD AND GRANTED THEIR MOTION TO DISMISS.
I THINK THAT I AM STRAITS THE PROBLEM HERE. JUSTICE PATTERSON: WHY WAS THAT
APPROPRIATE FOR A MOTION TO DISMISS UNDER THE NEW JERSEY STANDARD? WHY WAS THAT DECISION
FINE? STEPHEN M. ORLOFSKY: THE NATIONAL FIRE. JUSTICE
PATTERSON: JUDGE STEIN'S DISMISSAL OF THE CLAIMS AGAINST NATIONAL FIRE. WHY WAS, YOU WERE
SAYING THAT NONE OF THIS SHOULD BE RESOLVED ON A MOTION TO DISMISS. STEPHEN M.
ORLOFSKY: BECAUSE THAT EXCLUSION MADE IT CLEAR THAT IT COVERED, THAT IT COVERED VIRUSES.
LET ME SEE IF I CAN FINE THE LANGUAGE. JUSTICE PATTERSON: NO, I'M AWARE
OF THE LANGUAGE SHTHS I'M TALKING ABOUT THE PROCEDURAL MATTER YOU'RE TELLING US THAT A
MROEGS TO DISMISS IS NOT THE APPROPRIATE PROCEDURAL STAGE FOR A COVER RICHL
DETERMINATION IN THIS CASE, AND YET IT SOUNDS TO ME AS IF YOU'RE NOT DISPUTING --
STEPHEN M. ORLOFSKY: JUDGE, PLEASE DON'T PUT WORDS IN MY MOUTH MATS PAT I'M NOT, SIR.
I'M NOT, STEEFR STEVE WHAT I'M SAYING IS THAT THERE ARE DISPUTED FACTS ABOUT WHETHER THE
CLAIM FOR COVERAGE FALLS, THAT THE ASSERTION FOR COVERAGE FALLS WITHIN THE COVERAGE LANGUAGE.
THAT'S ALL I'M SAYING. WHEN FACTS ARE DISPUTED, IT CAN'T BE, IT CAN'T BE DISSPUTDED.
BUT LET ME TURN TO -- JUSTICE PATTERSON: LET'S. STEPHEN M.
ORLOFSKY: JUDGE STEIN'S -- CHIEF JUSTICE RABNER: IT'S NOT NECESSARY AND
WE'RE A LITTLE BIT BEYOND THE 15 MINUTES, WE CAN PASS ON THAT. STEPHEN M.
ORLOFSKY: I THINK THAT'S IMPORTANT BECAUSE, IT ADD DRETSDZ ADD DRETSZ THE NOIPT JUSTICE
PATTERSON IS RAISING AND, YES, YOU CAN RULE ON CERTAIN COVERAGE CLAIMS ON A MOEKS TO DISMISS
AND JUDGE STEIN'S RUTH IN FAVOR OF NATIONAL FIRE ILLUSTRATES THAT AND IF YOU LOOK AT THE
LANGUAGE OF THE NATIONAL FIRE EXCLUSION, THEN YOU CAN SEE THE DIFFERENCE AND WHY IT'S
CLEAR ON THE RECORD WHICH DOESN'T, AND AS A MATTER OF LAW THAT THE NATIONAL FIRE
EXCLUSION UNLIKE THE ZURICH EXCLUSION CLEARLY EXCLUDES VIRUSES. CHIEF JUSTICE
RABNER: IS THERE ANYTHING ELSE YOU WOULD LIKE T ADD TO YOUR ARGUMENT IS T NOT THE COURT.
NICHOLAS M. INSUA: NICHOLAS INSUA FOR THE WHERE DO YOU RESIDE
POLICYHOLDERS. WE MOVE THE COURT FOR ORAL ARGUMENT ON THREE POINTS AND I'D LIKE
TO COVER AT LEAST THOSE THREE POINTS VERY BRIEFLY RIGHT NOW, POSSIBLY IN A
LITTLE DIFSHT ORDER THAN WE PUT IN OUR MOTION TO ARGUE. THE FIRST IS THAT THE
PRE PANDEMIC UNDERSTANDING OF PHYSICAL LOSS OR DAMAGE WAS VERY VERY WELL
ESTABLISHED BEFORE THE CORONA VIRUS AND COVID-19 CASES BEGAN COMING INTO THE COURTS,
AND THIS WAS OVER MANY MANY MANY YEARS, DECADES, WHERE COURTS ANOTHER THAT AS
MR. ORLOFSKY TALKED ABOUT, FUMES, AMMONIA, ASBESTOS, DIFFERENT TYPES OF LOSSES
COULD BE CONSIDERED PHYSICAL LOSS OR DAMAGE UNDER THE POLICY. THE POLICY LANGUAGE
WAS ORIGINALLY CALLED FOR THE TRIGGER OF COVERAGE BEING DAMAGE OR DESTRUCTION,
IT WAS THEN BROADENED TO BE ALL RISKS OF PHYSICAL LOSS OR DAMAGE AND IT WAS VERY
WELL UNDERSTOOD BEFORE THE PANDEMIC THAT THAT COULD ENCOMPASS THE ABILITY
TO USE THE PROPERTY'S INTENDED USE OR INTENTIONALITY. THAT WAS DECADES BEFORE
THE PANDEMIC, WE THEN PUT IN THE BRIEF STATEMENTS BY INSURANCE COMPANIES,
WE TALKED ABOUT STRATHMORE AND ITS STATEMENTS TO REGULATORS IN NEW YORK ABOUT THE
VIRUS EXCLUSION AND IT NOT WANTING TO INCLUDE A VIRUS EXCLUSION BECAUSE IT
WANDERED TO HAVE COVERAGE THAT WOULD ACTUALLY ENSURE VIRUSS, WE TALKED ABOUT
STATEMENTS, ABOUT FM, FM BEING ONE OF THE LARGEST PROPERTY INSURERS IN THE WORLD,
STATEMENTS BY FM THAT VIRUSS COULD TRIGGER COVERAGE UNDER THESE ALL RISK
POLICIES, WE ALSO PUT STATEMENTS IN OUR BRIEF FROM AIG CINCINNATI INSURANCE COMPANY
THAT TALKED ABOUT AT THE BEGINNING OF THE PANDEMIC THAT THESE CLAIMS COULD
POTENTIALLY TRIGGER CLAIMS UNDER THE POLICY. JUSTICE WAINTER
APTER: WHEN YOU'RE REFERRING TO WELL SETTLED UNDERSTANDING THAT ANY LOSS OF
FUNCTION WOULD SUFFICE, ARE YOU RELYING ON PRIMARILY WAKEFERN AND THE APPELLATE
DIVISION CUSTOM DISTRIBUTION CASE OR ARE THERE OTHER CASES FROM OTHER JURISDICTIONS
THAT YOU'RE RELYING ON. NICHOLAS M. INSUA: SO THERE ARE OTHER
CASES FROM OTSDZ JURISDICTIONS BUT CERTAINLY FROM NEW JERSEY, CUSTOM
DISTRIBUTION, WAKEFERN, PORT AUTHORITY, ALL OF THESE DECISIONS W W PORT AUTHORITY
READS TO ME LIKE IT'S A DIFFERENT STANDARDS. JUSTICE
WAINTER APTER: ESPECIALLY AS TO AS BECHTS IT SAYS THAT IF THE BUILDING IS COMPLETELY
UNI KNOW HABTDABLE THAT WOULD BE COVERED BUT IF ONLY CERTAIN PORTION IT'S
OF THE BUILDING AREN'T, IT WOULDN'T TRIGGER THE POLICY, SO YOU'RE SAYING IT'S ALL
THE SAME STANDARD. NICHOLAS M. INSUA: I BELIEVE IT'S ALL PART OF
THE SAME STANDARD, WHICH IS THE ABILITY TO USE THE PROPERTY FOR ITS INTENDED PURPOSES,
YOU'VE LOST IT'S FUNCTIONALITY, I MEAN ESSENTIALLY IT'S THE SAME THING.
JUSTICE PATTERSON: DO ANY OF THOSE INVOLVE GOVERNMENT SHUTDOWN ORDERS
ANALOGOUS TO WHAT OCCURRED DURING THE PANDEMIC. NICHOLAS M.
INSUA: I BELIEVE GREGORY PACKAGING INVOLVED A CLOSURE WHERE THE BUILDING WAS
SHUTDOWN BECAUSE OF THE AMOUNT OF AMMONIA THAT WAS FOUND AND IT COULDN'T BE USED.
JUSTICE PATTERSON: SHUTDOWN BY A GOVERNMENT ORDER.
NICHOLAS M. INSUA: I BELIEVE THERE WAS AN ORDER TO CLOSE IT.
I WOULD ALSO JUST MENTION VERY BRIEFLY THAT IN THE SUPPLEMENTAL BRIEF OF THE DEFENDANTS
THEY SAY THAT, YOU KNOW, YOU DON'T NEED TO LOOK AT, ESPECIALLY THE STATEMENTS
OF THE OTHER INSURANCE COMPANIES, THIS IS EXTRINSIC EVIDENCE BUT THE COURT HAS
REGULARLY LOOKED AT INFORMATION TO PROVIDE CONTEXT AND CIRCUMSTANCES THAT WOULD
SURROUND INTERPRETING POLICY LANGUAGE, MORE INTERNATIONAL, NAV-ITS WE'VE BEEN TALKING
ABOUT WHERE REGULATORY HISTORY, WE KNOW IN THAT CONTEXT COURTS SHOULD ALWAYS
LOOK AT NOT OATH EXPRESS TERMS, TECHNICAL TERMS AND TERMS OF ART SHOULD BE GIVEN
THEIR MEANING IN A PARTICULAR INDUSTRY. THE SECOND POINT
I WANT TO TOUCH ON IS A LITTLE BIT OUT OF ORDER OF WHAT MR. ORLOFSKY TALKED
ABOUT, WHETHER THIS IS A SOPHISTICATED POLICYHOLDER AND WHETHER THIS IS AN
EXCEPTION THAT'S BEEN RECOGNIZED BY THIS COURT. WE BELIEVE THAT IT IS NOT, IN THE
OXFORD CASE CITED BY THE DEFENDANTS AS MR. ORLOFSKY SAID THERE WAS NO FINDING
THAT A RULE OF CONSTRUCTION HAD TO BE APPLIED AND THEREFORE THERE WAS NO NEED TO
APPLY AN EXCEPTION TO RULE OF CONSTRUCTION. WE'RE NOT AWARE OF ANY
DECISION OF THIS COURT THAT HAS HAD ARE HAS APPLIED A "SOPHISTICATED POLICYHOLDER
STANDARD, WE DON'T BELIEVE THAT THAT'S THE LAW OF THE STATE, WE DON'T BELIEVE
THAT'S THE MAJORITY RULE, WEE CITED IN OUR PAPERS THE RESTATEMENT OF THE
LAW OF LIABILITY INSURANCE, WE'VE TALKED ABOUT DECISIONS, NAV-ITS AND OTHER DECISIONS
WHERE RULES OF CONSTRUCTION HAVE BEEN APPLIED EVEN THOUGH LOTS OF INSURANCE
IS PURCHASED AND THERE COULD BE ARGUMENTS ABOUT WHETHER THE POLICYHOLDER WAS
SOPHISTICATED OR NOT, AND LEAVING ASIDE WHETHER A STANDARD HAS BEEN ADOPTED BY THIS
COURT, WHICH IT HASN'T, EVEN IF IT WERE, WE DON'T KNOW WHAT THE STANDARD IS,
WE DON'T KNOW WHAT THE PARAMETERS OF IT WOULD BE, IS IT A SOPHISTICATED POLICYHOLDER
JUST BASED ON HOW MANY LOCATIONS IT HAS, REVENUE, DOES IT HAVE A RISK
MANAGEMENT DEPARTMENT, DO THOSE PEOPLE HAVE TO BE TRAINED IN RISK MANAGEMENT, DOES
IT HAVE TO HAVE IN-HOUSE COUNSEL, DID IT HAVE TO HAVE WORKED WITH THE BROKER,
DOES IT HAVE TO HAVE WORKED WITH A LARGE BROKER OR COULD A SMALL BROKER ON THE
CORNER SUFFICE, WE DON'T KNOW ANYTHING ABOUT WHAT THAT WOULD BE AND THERE'S
CERTAINLY NO EVIDENCE IN THIS RECORD ABOUT ANY OF THOSE FACTORS, AND SO WE BELIEVE
THAT THERE SHOULD BE NO APPLICATION OF A SOPHISTICATED POLICYHOLDER STANDARD.
THE THIRD POINT WHICH I'LL TALK IT OUT WHICH IS THE SECOND
POINT ACTUALLY IN OUR MOTION FOR ARGUMENT IS THE COUCH SECTION WHICH IS SECTION
140 A:46, AND THAT WAS THE SECTION WHERE THE AUTHORS OF THE SECTION SAID THAT
PHYSICAL LOSS OR DAMAGE MEANT DEMONSTRABLE OR PHYSICAL ALTERATION OF THE PROPERTY,
THEY SAID THAT THIS WAS THE ESTABLISHED RULE, BUT AS IT TURNED OUT WHEN THAT
WAS FIRST PUBLISHED IN THE EARLY TO MID 1990'S, THAT WAS IN FACT NOT THE SFABLD
RULE AND ALL THE PRECEDENT FROM OTHER JURISDICTIONS WE TALKED ABOUT DID NOT TALK
ABOUT PHYSICAL ALTERATION BEING A REQUIREMENT OF PHYSICAL LOSS OR
DAMAGE. THOSE WORDS DON'T APPEAR IN THE POLICY. THE POLICY SAYS ALL RISK OF PHYSICAL
LOSS OR DAMAGE, IT DOESN'T SAY ALL RISKS OF PHYSICAL ALTERATION OR DEMONSTRABLE
ALTERATION. AS WELL, THIS COURT, AND COURTS BEFORE THE PANDEMIC
IN NEW JERSEY, HAVE NOT ADOPTED PHYSICAL ALTERATION REQUIREMENT, SO EVEN IF OTHER
COURTS IN OTHER STATES HAVE PREVIOUSLY OR DURING THE PANDEMIC ADOPTED THIS
STANDARD AND SAID THAT PHYSICAL LOSS OR DAMAGE REQUIRES A PHYSICAL ALTERATION,
THIS COURT HAS NOT, AND THEREFORE IT NEEDN'T BE BOUND BY THOSE OTHER DECISIONS
NOR NEED IT BE BOUND BY DECISIONS OF THIS STATE WHICH HAVE SAID OR SUGGESTED
THAT'S A STANDARD WHEN THIS COURT HAS NOT IN FACT ADOPTED THAT STANDARD.
JUSTICE PATTERSON: DOES WHERE DO YOU RESIDE POLICYHOLDERS HAVE A POSITION
ON THE APPLICABILITY OF THE CONTAMINATION EXCLUSION TO COVID.
NICHOLAS M. INSUA: TO COVID IN THIS CASE. JUSTICE PATTERSON: IN THIS
CASE. NICHOLAS M. INSUA: YES. OUR POSITION WOULD BE THAT
IT DOES NOT APPLY. UNDER NAV-ITS EXCLUSIONS LIKE THAT ARE MEANT TO BE CON TRUED
NARROWLY AND APPLIED TO INSTANCES OF TRADITIONAL ENVIRONMENTAL CONTAMINATION,
THAT IS NOT WHAT THIS WAS, YOU KNOW, IF MAYBE -- AND THIS IS NOT THE FACTS
HERE, BUT IF THERE WAS A DUMPING OF MEDICAL WASTE AND THE MEDICAL WASTE SOMEHOW
HAD OR CONTAINED VIRUS AND THEN THAT CAUSED A LOSS, MAYBE THAT WOULD BE
EXCLUDED, THAT'S NOT WHAT HAPPENED HERE, THIS IS A GLOBAL PANDEMIC THAT NO ONE
-- JUSTICE PATTERSON: SO YOUR CONTENTION ON BEHALF OF WHERE DO
YOU RESIDE POLICYHOLDERS IS IS THAT THIS CONTAMINATION EXCLUSION SHOULD BE LIMITED
TO ENVIRONMENTAL POLLUTION. NICHOLAS M. INSUA: YES, AND I WOULD
SAY -- I WOULD ALSO POINT OUT THAT IN IN THE MATTER OF IT IS, NAV-ITS DEALT
WITH A LOSS RELATED TO FUMES, THE EXCLUSION IN NAV-ITS CONTAINED THE WORD FUMES
AND THE COURTS STILL HELD THAT THE EXCLUSION WOULDN'T NECESSARILY APPLY
UNLESS IT WAS AN INSTANCE OF TRADITIONAL ENVIRONMENTAL CONTAMINATION.
JUSTICE WAINTER APTER: SO DO YOU DISAGREE THAT NAV-ITS WAS BASED ON SOME SORT
OF THEORY OF REGULATORY ESTOPPEL OR THE INSURANCE INDUSTRY SPECIFICALLY
TOLD REGULATORS THAT THE EXCLUSION AT ISSUE WOULD ONLY APPLY TO ENVIRONMENTAL POLLUTION?
NICHOLAS M. INSUA: SO I WOULD DISTINGUISH NAV-ITS AND MORE
TO KNOW. IN MORE TO KNOW THE COURT ESTABLISHED CAUSE OF ACTION FOR REGULATORY
ESTOPPEL, AS I READ NAV-ITS I SEE THAT WE'RE LOOKING AT REGULATORY HISTORY
TO GLEAN THE MEANING OF THESE WORDS, JUST AS YOU MIGHT LOOK AT WHAT STRATHMORE
SAID OR WHAT FM SAID SO WE CAN UNDERSTAND WHAT THESE WORDS MEAN AND THEY LOOKED
AT THE WORDS AND THEY LOOKED AT WHAT WAS SAID TO REGULATORS AND THERE WAS
A DETERMINATION MADE THAT THIS SHOULD BE READ NORMALLY. JUSTICE
WAINTER APTER: BUT WHY WOULD IT APPLY BEYOND THAT CIRCUMSTANCE, SO JUST BECAUSE
IN A PARTICULAR CIRCUMSTANCE INSURANCE COMPANIES SAY A PARTICULAR THING
TO REGULATORS AND THEREFORE THEY SHOULD BE HELD TO WHAT THEY SAID, HERE IF THERE IS
NO SIMILAR HISTORY, WHY ARE WE APPLYING THE SAME RULE. NICHOLAS
M. INSUA: SO A COUPLE OF THINGS. FIRST THAT -- I BELIEVE THE MORE TIN DECISION
WHICH DEALT WITH SUDDEN AND ACCIDENTAL POLLUTION EXCLUSIONS, THAT HOLDING
THAT IT WOULD APPLY TO ONLY TRADITIONAL ENVIRONMENTAL POLLUTION APPLIED TO OTHER
TYPES OF POLLUTION EXCLUSIONS THAT DIDN'T USE THE EXACT SAME LANGUAGE BECAUSE
THE COURT HELD THAT THESE EXCLUSIONS NEEDED TO BE READ NARROWLY.
JUSTICE PATTERSON: THAT'S A POLLUTION EXCLUSION. NICHOLAS M.
INSUA: THAT WAS A SUDDEN AND ACCIDENTAL EXCLUSION, YES. JUSTICE
PATTERSON: BUT THIS IS A CONTAMINATION EXCLUSION. NICHOLAS M.
INSUA: IT DOES SAY CONTAMINATION BUT I THINK THAT GIVEN THAT IT HAS THE WORDS
POLLUTANTS IN IT AND TOXINS THAT IT SHOULD BE CONSTRUED CONSISTENTLY WITH THE COURT'S
PRIOR DECISION. JUSTICE WAINTER APTER: CAN INSURANCE
COMPANIES NOT DO ANYTHING TO HAVE AN EXCLUSION THAT IS BEYOND ENVIRONMENTAL
EXCLUSIONS, EVEN IF THEY SAID WE ARE TRYING TO EXCLUDE ALL VIRUSS BECAUSE IT'S GOING
TO TJ TO INCLUDE EXCLUSION, NAV-ITS IS GOING TO SAY THAT IT'S ONLY
ENVIRONMENTAL? NICHOLAS M. INSUA: WELL THERE IS A SPECIFIC HE
KNOW VIEMENT AL EXCLUSION THAT I S O DRAFTED AND IT WAS PUT BEFORE REGULATORS AND
THAT SAID ESSENTIALLY VIRUSES AREN'T INSURED UNDER THIS POLICY, IT WASN'T IN
THE CONTEXT OF ALL THESE TYPES OF LOSSES AND THEN POLLUTANTS AND THEN A LIST AFTERWARDS,
AND THAT'S WHAT THE DISCUSSION IN OUR BRIEF ABOUT STRATHMORE, RIGHT, THERE
WAS A SPECIFIC VIRUS EXCLUSION AND STRATHMORE SAID WE DON'T WANT TO YOUR KNOWLEDGE
TO PUT THIS ON OUR POLICY BECAUSE WE WANTS TO BE ABLE TO PROVIDE COVERAGE FOR
VIRUS VENTHS. JUSTICE PATTERSON: SO WHEN WE SEE PATHOGEN,
PATHOGENIC ORGANISM, VIRUS, THE OATH EFFECT OF THOSE WORDS IS IF VIRUSES, PATHOGENS,
ARE IN MEDICAL WASTE THAT SOMEHOW ENDS UP BEING POLLUTEING, THAT'S HOW WE'RE
SUPPOSED TO READ THOSE WORDS? NICHOLAS M. INSUA: THAT WAS AN EXAMPLE
I GAVE BUT IF IT WAS IN SOME CONTEXT THAT COULD BE CONSIDERED AN EVENTS
OF TRADITIONAL ENVIRONMENTAL CONTAMINATION OR POLLUTION I THINK THAT THIS EXCLUSION
MIGHT APPLY, BUT THAT'S NOT WHAT THIS IS. CHIEF JUSTICE RABNER:
I THINK WE HAVE YOUR POSITION, ANYTHING YOU'D LIKE TO ADD?
NICHOLAS M. INSUA: NO YOUR HONOR. CHIEF JUSTICE RABNER: TWO HOUSEKEEPING
MATTERS, WE'RE GOING TO BREAK AROUND 1230, I DON'T KNOW WHETHER THE ARGUMENT
WILL BE COMPLETED AT THAT POINT OR NOT, BUT I WANTED TO ALLOW ALL COUNSEL TO PREPARE
FOR THAT, AND TO THE EXTENT COUNSEL ON THIS SIDE OF THE AISLE ARE ABLE TO
INCORPORATES ARGUMENTS FROM ONE ANOTHER, PLEASE DO SO, OUR BREAK WILL BE AROUND
30 MINUTES. MR.LY ROTH. DAVID ROTH: GOOD MORNING, YOUR HONORS,
DAVE ROTH FOR AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY. MAY IT
PLEASE THE COURT, IT'S APPELLATE DIVISION'S DISMISSAL OF OCEAN WALK RS
COMPLAINT SHOULD BE AFFIRMED FOR TWO REASONS, FIRST, OCEAN WALK DIDN'T
ALLEGE FACTS THAT AMOUNT TO DIRECT PHYSICAL LOSS OF OR DAMAGE WHICH IS REQUIRED
FOR ALL THE CONVERSATION AT ISSUE IN THIS CASE, AND SECONDS EVEN IF IT HAD ALLEGED
PHYSICAL LOSS, COVERAGE WOULD BE BARRED BY THE CONTAMINATION EXCLUSION WHICH
SPECIFICALLY INCLUDES VIRUS. I'D LIKE TO BEGIN WITH THE PHYSICAL LOSS ISSUE,
AS THE APPELLATE DIVISION HELD IN THE MAC PROPERTY GROUP CASE, THE OERD MEANING
OF THAT FACE, PHYSICAL LOSS OR DAMAGE TO PROPERTY IS THE PROPERTY HAS SUFFERED
A DETRIMENTAL PHYSICAL ALTERATION RAGS OF SOME KIND OR THERE'S BEEN A PHYSICAL
LOSS OF THE INSURED PROPERTY AND THAT PLAIN ORDINARY MEANING IS REINFORCED BY THE
PERIOD OF LIABILITY PROVISION WHICH MAKES CLEAR THAT PHYSICAL LOSS OR DAMAGE
TO PROPERTY MEANS SOMETHING REQUIRING REPAIRS OR REPLACEMENT OF THE PROPERTY IN
ORDER TO RESTORE IT TO ITS PRE LOSS CONDITION. NOW MAC PROPERTY ISN'T
ALONE IN INTERPRETING THE WORDS THAT WAY, 10 APPELLATE DIVISION PATHS HAVE AGREED
WITH MAC PROPERTY, 14 SUPREME COURTS HAVE CONSIDERED WHAT THESE WORDS MEAN IN
THIS EXACT CONTEXT, THEY HAVE ALL COME TO THE SAME CONCLUSION, AS HAS THE WILSON
CASE, THE THIRD CIRCUIT APPLYING NEW JERSEY LAW AND EVERY NUCHLD FEDERAL
CIRCUIT. SO ONCE YOU ESTABLISH WHAT THOSE WORDS MEAN, WHAT DIRECT PHYSICAL LOSS
TO PROPERTY IS, OCEAN WALK'S CLAIM FAILS. SO THEY HAVE ESSENTIALLY TWO THEORIES
IN THEIR BRIEFS, WHAT THEY CHARACTERIZE AS THEIR MAIN THEORY IN THEIR BRIEF
IS THAT THEY LOST THE INTENDED USE OF THEIR PROPERTY DUE TO THE GOVERNMENT ORDERS
OR THE PANDEMIC. SPECIFICALLY THEY COULDN'T USE THEIR PROPERTY FOR IN
PERSON GAMING OR THERE WERE RESTRICTIONS ON ITS USE. AND THE BASIC PROBLEM WITH THAT
THEORY IS THAT IS SIMPLY NOT A PHYSICAL LOSS, THE LOSS OF A PARTICULAR
INTENDED USE OF PROPERTY IS A LOGS OF A LEGAL RIGHT, AN ECONOMIC RIGHT, IT'S NOT
A TANGIBLE LOSS OF PROPERTY, THEY HAVEN'T BEEN PHYSICALLY DPRIECHD OF IT, IT'S
NO DIFFERENT FROM ANYWAY OTHER GOVERNMENT REGULATION OR ORDER WHICH MAY
IMPAIR HOW A POLICYHOLDER USES THEIR PROPERTY. AND THAT'S PARTICULARLY SO IN THIS
CASE BECAUSE THIS POLICY CONTAINS EXPLICIT EXCLUSIONS FOR LOSS OF USE AND
EXPLICIT EXCLUSIONS FOR LOSS DUE TO GOVERNMENT ORDERS REGULATING THE OCCUPANCY
OR USE OF PROPERTY. EVERY SUPREME COURT NOW 14 AND COUNTING THAT'S LOOKED
AT THIS ISSUE HAS HELD THAT THE USE OF USE OF PROPERTY IS NOT A COVERED LOSS NOT
COVERED UNDER A POLICY SUCH AS THIS ONE SO THEY'VE REJECTED CLAIMS UNDER THAT
THEORY. TODAY THEY FOCUS MOSTLY ON WHAT THEY CHARACTERIZE
ASSIST A SECOND THEY'RE RE OF THEIR COMPLAINT WHICH IS THAT THE VIRUS WAS
ACTUALLY PRESENT AT THEIR PROPERTY AND CAUSED PHYSICAL DAMAGE, SPECIFICALLY
THEIR GUESTS OR EMPLOYEES ASK HAILED VIERLGS PARTICLES, THOSE VIRUS PARTICLES HUNG
IN THE AIR AND FELD ON SURFACES AND WERE IN THE PROPERTY AND THAT THAT AMOUNTS
TO PHYSICAL DAMAGE. NOW, ASSUMING THE VIRUS PARTICLES WERE ACTUALLY PRESENT IN
THEIR CASINO AND THEIR ALLEGATIONS ARE FAIRLY VAGUE ABOUT THAT, THE KEY
IS WHAT IMPACT THOSE VIRUS PARTICLES ACTUALLY HAD. AND THE OEM FACT THAT THEY
PLEAD IN THE COMPLAINT IS SIMPLY THAT MICROSCOPIC VIRUS PARTICLES RESTED ON THE
SURFACE OF THEIR PROPERTY. THEY DON'T PLEAD THAT THOSE VIRUS PARTICLES
KAUFLD SOME DISCERNIBLE ALTERATION, THAT IT MADE THE PROPERTY CHANGE COLORS, MADE
AN ODOR, CAUSED SOME SORT OF INVISIBLE HARM, CAUSED THE PROPERTY TO DEGRADE
AND DETERIORATE, THEY DON'T ALLEGE THAT THEY HAD TO REPAIR OR REPLACE A SINGLE
ITEM IN THE PROPERTY AND THEY CONCEDE THAT THOSE PARTICLES BECAME INERT AND
HARMLESS IN HOURS OR AT MOST DAYS. THE COURTS IN OTHER STATES HAVE CONSISTENTLY
AGREED WITH APPELLATE DIVISION THAT ALLEGATIONS OF VIRUS PARTICLES BEING PRESENT
IN PROPERTY WITHOUT CAUSING ANY ALTERATION ON IT AND ABATING WITHIN A MATTER
OF HOURS OR DAYS SIMPLY DOESN'T MEET THE DEFINITION OF PHYSICAL DAMAGE, THE THIRD
CIRCUIT IN WILSON UNDER NEW JERSEY LAW, 19 SUPREME COURTS HAVE CONCLUDED
THE SAME THING. ORDINARY MEANING OF PHYSICAL DAMAGE IS THE SAME IN NEW JERSEY
AS IT IS IN ALL THOSE OTHER STAILTS SO THERE'S NO REASONING THAT THIS COURT
SHOULD DISAGREE. I WANT TO TALK A LITTLE BIT ABOUT THE PLEADING
STANDARDS. A LOT OF THEIR ARGUMENTS SOUNDED LIKE THE ASSERTION THAT SO LONG AS
THEY ASSERT THE PRESENCE OF A VIRUS IS PHYSICAL DAMAGE, THIS COURT IS BOUND
TO ACCEPT THAT FOR THE PURPOSES OF A MOTION TO DISMISS AND THEN WE HAVE THE CASE
PROCEEDS TO DISCOVERY. AND THAT JUST FUNDAMENTALLY MISUNDERSTANDS IT'S ISSUE ON
APPEAL AND THE ISSUE FACING THE COURT ON A MOTION TO DISMISS. THE QUESTION
IS WHAT DIRECT PHYSICAL LOSS OVER DAMAGE MEANS, THAT'S A LEGAL QUESTION ABOUT THE
INTERPRETATION OF A CONTRACT AND IT'S ALSO A LEGAL QUESTION WHETHER A PARTICULAR
SET OF ASSUMED FACTS MEET THAT DEFINITION. SO THEIR ASSERTION THAT THOSE FACTS
SATISFY THE LEGAL DEFINITION IS JUST A LEGAL CONCLUSION, AND THAT'S NOT
ENTITLED TO THE PRESUMPTION OF TRUTH. INSTEAD LOOK AT WHAT THEY ACTUALLY ALLEGE
ABOUT THE VIRUS'S IMPACT ON THEIR PROPERTY, THEY ONLY ALLEGE THAT A
VIRUS PARTICLE WAS THERE AND THAT DOES NOT MEET THE DEFINITION OF PHYSICAL DAMAGE.
SO THE APPELLATE DIVISION WAS RIGHT TO FIND THAT THESE ALLEGATIONS WERE
SIMPLY LEGALLY INADEQUATE, IT WAS NOT RESOLVING FACTUAL DISPUTES AGAINST THEM.
JUSTICE PATTERSON: THE FACTS THAT WE SHOULD ASSUME THE TRUTH
OF FOR THE PURPOSES OF THE MOTION TO DISMISS ARE THE FACTS ABOUT WHAT ACTUALLY
OCCURRED, IN OTHER WORDS THAT THERE WAS A VIRUS PRESENT, THE COVID PANDEMIC,
AND I ASSUME WE SHOULD ASSUME AS TRUE THE ALLEGATIONS WITH RESPECT TO THE GOVERNMENT
CLOSURES AS WELL. DAVID ROTH: YES. SO THE ACTUAL FACTS
THAT THEY PLEAD, SO WHAT THE VIRUS DID TO THEIR PROPERTY, THE FACT THAT
THEY SHUTDOWN ON PARTICULAR DAYS, THOSE FACTS YOU HAVE TO ACCEPT AS TRUE, BUT WHETHER
THOSE FACTS MEET THE DEFINITION OR FALL WITHIN THE SCOPE OF PHYSICAL LOSS OR
DAMAGE AS THOSE TERMS ARE USED IN THIS POLICY, THAT'S A LEGAL QUESTION.
JUSTICE PATTERSON: SO WHEN YOUR ADVERSARY REFERS TO A FACT THAT WE NEED
TO ASSUME TO BE TRUE, USING THE POLICY LANGUAGE, YOU'RE SAYING THAT'S ACTUALLY
A LEGAL CONCLUSION THAT WE NEED NOT ACCEPT AS TRUE. IS THAT CORRECT?
DAVID ROTH: YES. SO THE ULTIMATE QUESTION IS DO THESE FACTS
AMOUNT TO PHYSICAL DAMAGE WITHIN THE MEANING OF THIS POLICY, AND THAT IS A LEGAL
QUESTION, IT'S WHAT IS PHYSICAL DAMAGE MEAN, WHAT FACTS ARE PHYSICAL DAMAGE,
AND SIMPLY ASSERTING THAT A PARTICULAR SET OF FACTS AMOUNT TO PHYSICAL DAMAGE IS
NOT ENOUGH. IF THERE WERE ENOUGH, AS YOUR HONOR WAS INDICATING, IT'S HARD
TO IMAGINE HOW ANY MOTION TO DISMISS COULD EVER BE GRANTED, NOT ONLY AN INSURANCE
CASE, BUT A BREACH OF CONTRACT CASE, IN A STATUTORY INTERPRETATION CASE, IT
SEEMS THE UPSHOT OF THEIR ARGUMENT IS SO LONG AS A PLAINTIFF ALLEGES A PARTICULAR
SET OF FACTS, SATISFIES SOME LEGAL TERM, WELL YOU HAVE TO ASSUME THAT'S TRUE AND
PROCEED TO DISCOVERY AND THAT'S NOT HOW THIS COURT UNDERSTANDS PLEADINGS
STANDARDS, AS IT'S MADE CLEAR YOU HAVE TO PLEAD ESSENTIAL FACTS AND THEN WHETHER
THOSE ESSENTIAL FACTS CREATE A CAUSE OF ACTION IS A LEGAL QUESTION SO IT'S
REALLY NO DIFFERENT THAN ANY OTHER BREACH OF CONTRACT CONTEXT.
JUSTICE PATTERSON: OUTSIDE OF COVID ARE THERE CASES THAT HAVE DEALT -- I'M ASSUMING
PRE COVID, WITH GOVERNMENT CLOSURES AND SITUATIONS WHERE A BUILDING HAS
BECOME UNUSABLE FOR ASBESTOS OR FOR SOME MORE TRADITIONAL ENVIRONMENTAL REASON?
DO YOU SEE WHAT I'M SAYING? DAVID ROTH: YES.
JUSTICE PATTERSON: BUT ALSO COUPLED WITH A GOVERNMENT CLOSURE. OBVIOUSLY YOU HAVE
GOVERNMENT REMEDIATION ORDERS THAT OCCUR ALL THE TIME IN THAT TYPE OF
SITUATION, BUT WE'RE DEALING HERE WITH SOMETHING DIFFERENT WHICH IS YOU MUST CLOSE
ON THIS DATE, YOU MUST CEASE TO DO BUSINESS ON THIS DATE, EVERYBODY ACROSS THE
BOARD MUST DO SO THAT ARE ADMITTING THE PUBLIC. DAVID ROTH:
SO I'M NOT AWARE OF A CONTEXT EXACTLY LIKE THIS ONE BUT THERE ARE PRE COVID KALSZ
DEALING WITH GOVERNMENT SHUTDOWN ORDERS AND COURTS CONSISTENTLY HELD THAT
THE INTERFERENCE OF THE USE OF PROPERTY DUE TO A SHUTDOWN ORDER IS NOT A PHYSICAL
LOSS. AND I'D START WITH A DECISION FROM THE NEW YORK APPELLATE DIVISION
ROUND ABOUT, THAT'S A CASE WHERE THE POLICYHOLDER WAS A THEATRE, THERE WAS A
CONSTRUCTION ACCIDENT DOWN THE STREET, THE CONSTRUCTION ACCIDENT DIDN'T ACTUALLY
DAMAGE THE THEATRE BUT AS A RESULT OF THE ACCIDENT, THE AUTHORITIES SHUTDOWN THE
ENTIRE STREET AND BECAUSE THE STREET WAS SHUTDOWN THE THEATRE COULDN'T HAVE
PERFORMANCES TO REMEMBER A PERIOD OF TIME, SOLE IT ALLEGED THAT'S A PHYSICAL LOSS
OF ITS PROPERTY, WE COULDN'T USE THE PROPERTY AS INTENDED BECAUSE OF THE
SHUTDOWN ORDER, NEW YORK APPELLATE DIVISION HELD THLGS NOT A PHYSICAL LOSS.
JUSTICE PATTERSON: I'M SURE MR. ORLOFSKY WOULD ABLY DISTINGUISH THAT BECAUSE
IT WASN'T DEALING WITH A SITUATION WHERE THERE'S A HAZARD WITHIN THE PROPERTY.
IS THERE ANYTHING CLOSER TO THAT? I'M JUST ENVISIONING THERE'S TOO MUCH ASBESTOS
IN A PARTICULAR LOCATION, YOU HAVE TO SHUTDOWN THE BUILDING NOW AND KEEP IT
CLOSED UNTIL WE TELL YOU OTHERWISE, IS THERE ANYTHING LIKE THAT IN ANY OF THESE
COVERAGE CASES THAT YOU'RE AWARE OF. DAVID ROTH: SO THERE WERE
THE PRE COVID CASES INVOLVING CONTAMINATION OF THE PREMISES AND SOME
OF THE QUESTIONING WAS TALKING ABOUT THINGS LIKE ASBESTOS, AMMONIA CONTAMINATION
AND THE LIKE, AND THOSE HAVE BEEN DISCUSSED BY MANY OF THE COVID CASES, WILSON
TALKED ABOUT THEM AT LENGTHS, THE RECENT KNIFE IN A VA TODAY, ALL OF THOSE
CASES ARE DEALING WITH A SUBSTANCE PHYSICALLY IN THE PROPERTY, THERE IS ASBESTOS
IN THE WALLS, AMMONIA LEAKING OUT OF A PIPE AND THAT SUBSTANCE IS MAKING
THE PROPERTY UNINHABITABLE AND UNUSABLE UNTIL YOU BRING IN SPECIALIZED REMEDIATION
TO RESTORE THE PROPERTY, YOU HAVE TO TEAR OUT THE WALLS, REMOVE THE ASBESTOS,
USING TRAINED HAZMAT CREWS IN ORDER TO RETAIN THE PROPERTY TO USE ABILITY AND THAT
MIGHT BE PHYSICAL LOSS BECAUSE THERE'S ESSENTIALLY A DISPOSSESSION. WE DON'T
HAVE THAT HERE, WE'RE NOT COMPLAINING ABOUT SOME CONDITION OF THE PROPERTY, THE
REASON WHY COVID VIRUS IS THERE IS BECAUSE THEIR PATRONS AND GUESTS COME IN AND
ASK HAIL VIRUS PARTICLES, THOSE PARTICLES DON'T MAKE THE PROPERTY UNINHABITABLE
AND UNUSABLE, WE KNOW THAT BECAUSE ALL MANNER OF PROPERTY REMAINED OPEN, GROCERY
STORES, FACTORIES, EVEN LIQUOR STORES REMAINED OPEN, SO WHATEVER IMPACT
COVID-19 VIRUS HAS ON PROPERTY DOESN'T AMOUNT TO UNINHABIT ABILITY, AND WE KNOW
THAT SPECIFICALLY BECAUSE OF WHAT THEY ALLEGE, THEY ALLEGE THEY CLOSED ON
MARCH 16TH IN COMPLIANCE WITH THE EXECUTIVE ORDER THAT DAY ISSUED THAT DAY
REQUIRING CASINOS LIKE OCEAN WALK TO REMAIN CLOSED TO THE PUBLIC. THEY REMAINED
CLOSED UNTIL JULY 2ND WHEN IN COMPLIANCE WITH THE EXECUTIVE ORDER THEY REOPENED
TO THE PUBLIC. SO THE ONLY TIME PERIOD WHEN THEY WEREN'T ABLE TO OPERATE
THEIR CASINO AND BE OPEN TO THE PUBLIC WAS WHEN THE GOVERNOR REQUIRED THEM TO BE
CLOSED. OTHER THAN THAT THERE IS NO ALLEGATION THAT THE VIRUS EVER DID
ANYTHING TO THEIR PROPERTY THAT MADE THEM PHYSICALLY INCAPABLE OF OPERATING AND
PLAINLY IF IT DID, IF IT DID HAVE THAT SORT OF PHYSICAL IMPACT, THEY WOULD NOT
HAVE BEEN OPEN ON JULY 3RD 2020, THEY WOULD NOT HAVE BEEN OPEN FOR THE LAST
3 YEARS, SO THERE'S NO WAY TO READ THIS COMPLAINT AND SEE AN ALLEGATION THAT THE
VIRUS HAD A PHYSICAL IMPACT ON THEIR PROPERTY THAT MADE IT UNI KNOW
HABLTABLE AND UNUSABLE. THERE'S ALSO NO CLAIM THAT THEY HAD TO TAKE SOME REMEDIATION
TO REMOVE THE VIRUS, THAT'S NOT IN THE COMPLAINT AND WE KNOW THAT'S NOT TRUE
BECAUSE AS THEY CONCEDE IN PARAGRAPH 114 THE VIRUS BECOMES INERT AND HARMLESS ON
ITS OWN IN A MATTER OF DAYS, SO EVEN IF THEY HAD DONE NOTHING AT ALL, THE VIRUS
WOULD A BAIT, AND THAT'S NOT THE SITUATION WITH ASBESTOS AND RELEASE OF
AMMONIA, ET CETERA, AS CASES LIKE WILSON HAVE EXPLAINED. CHIEF
JUSTICE RABNER: WHAT ABOUT THE ALLEGATIONS IN 118 AND 119, WHERE THEY ALLEGE CORONA
VIRUS CAUSES PHYSICAL LOSS TO PROPERTY AND THAT A RISK OF SIGNIFICANT HARM
AND DAMAGE TO PERSONS IS WHY IT IS NECESSARY TO CLOSE THE SPACE.
DAVID ROTH: SO THERE'S NO ALLEGATION OF WHAT THE ACTUAL PHYSICAL DAMAGE IS
AND IF YOU GO THROUGH THE ENTIRE COMPLAINT, I THINK THE ONLY ALLEGATION YOU
WILL SEE OF SOME KINDS OF REAL ALTERATION OF THEIR PROPERTY, OR SUPPOSED REAL
ALTERATION OF THEIR PROPERTY, IS IN PARAGRAPH 113 WHERE THEY SAY THE VIRUS
ALTERED THEIR PROPERTY BECAUSE MICROSCOPIC PARTICLES WERE RESTING ON IT,
SO THAT'S THE OATH ESSENTIAL FACT THAT IS PLED HERE, A VIRUS PARTICLE RESTED ON
THIS PROPERTY, THAT IS WHAT THEY SAY AMOUNTS TO PHYSICAL ALTERATION.
JUSTICE WAINTER APTER: BUT DIDN'T THE GREGORY DECISION THAT YOU'VE REFERENCED
BEFORE HOLD THAT PROPERTY CAN SUSTAIN A PHYSICAL LOSS OR DAMAGE WITHOUT
EXPERIENCING ANY STRUCTURAL ALTERATION? DAVID ROTH: SO THAT'S SOMETHING
THAT GREGORY PACKAGING SAYS BUT IT'S A SITUATION WHERE THERE IS A RELEASE
OF A DANGEROUS SUBSTANCE FROM THE FACILITY, THAT SUBSTANCE NOT ONLY REQUIRES THE PROPERTY ITSELF TO BE EVACUATED, IN THAT CASE AN ENTIRE ONE MILE RADIUS AROUND
PARTIES IN THAT CASE THAT THE PROPERTY IN QUESTION COULD NOT BE USED, IT WAS
COMPLETELY UNINHABITABLE AND UNUSABLE FOR A WEEK UNTIL SPECIALIZED REMEDIATION EFFORTS
HAD RESTORED THE PROPERTY. SO THAT IS A CASE WHERE THERE WAS AN ASSUMPTION
THAT THE PROPERTY WAS RENDERED UNI KNOW HABLT AND UNUSABLE DUE TO A CONDITION OF
A SUBSTANCE. JUSTICE WAINTER APTER: IN TERMS OF THE FACT THAT
THE AMMONIA RELEASED FROM THE STRUCTURE ITSELF FROM THE PIPE RATHER THAN PATRONS
COMING IN AND BREATHING AMMONIA, ARE YOU SAYING THAT THAT MAKES A DIFFERENCE FOR
THE PURPOSES OF THE POLICY, SO THE STRUCTURE, THE PHYSICAL DAMAGE TO THE
STRUCTURE HAS TO BE CAUSED BY THE STRUCTURE ITSELF, AND CANNOT BE CAUSED BY
PATRONS CAUSING DAMAGE? DAVID ROTH: SO THAT'S SOMETHING THAT
THE KNIFE TODAY SUPREME COURT FOUND IN ITS DECISION LAST WEEK, ULTIMATELY
IT'S WHETHER THERE'S PHYSICAL DAMAGE TO PROPERTY, SO IT'S QUITE LOGICAL THAT YOU
WOULD LOOK TO WHETHER THERE'S A CONDITION OF THE PROPERTY ITSELF THAT IS
CREATING THE DANGER IF THE RISK IS SOMETHING THAT'S NOT RELATED TO THE PROPERTY
IN ANY MATERIAL RESPECT, THAT SUGGESTS IT'S NOT PHYSICAL LOSS THAT WOULD BE
COVERED BY A PROPERTY INSURANCE POLICY. JUSTICE PATTERSON: WELL YOU CAN
HAVE PHYSICAL LOSS TO A PROPERTY THAT ORIGINATE FROM OUTSIDE THE PROPERTY,
SOMEONE COMES IN AND DAMAGES THE PROPERTY, AND THAT WOULD BE COVERED. IN OTHER WORDS
IT DOESN'T HAVE TO ORIGINATE IN THE ACTUAL STRUCTURE OF THE BUILDING, DOES
IT. DAVID ROTH: NO, BUT IN THOSE CASES YOU HAVE A PHYSICAL
ALTERATION, THE PROPERTY HAS BEEN PHYSICALLY ALTERED BY THAT EXTERNAL FORCE, IT'S
CHANGED ITS STRUCTURE, IT'S BURNED DOWN THE WALLS, WHATEVER, AND THAT'S
AGAIN WHAT WE JUST DON'T HAVE HERE OTHER THAN THIS ALLEGATION THAT A MICROSCOPIC
PARTICLE RESTED ON THE SURFACE FOR A COUPLE OF HOURS NICHLT WE'RE USING
2020 HINDSIGHT TO EVALUATE THAT, TAKING A SIDE THE EXECUTIVE ORDER, IF IT HADN'T
EXISTED AND WHAT WE KNOW ABOUT THE CORONA VIRUS TETHER THAT THEY DIDN'T KNOW HOW
FAST IT COULD SPREAD FROM PERSON TO PERSON, IF THEIR POSITION HAD BEEN TO
CLOSE THE CASINO ON THEIR OWN BASED ON THE FACT THAT THE EXISTING SCIENCE WAS THAT
THERE WAS SOME QUICK SPREADING NATURE TO THIS AND THAT IT COULD GO FROM
SURFACE TO INDIVIDUAL AND THAT THAT HAD BEEN THEIR CHOICE INDEPENDENT OF THE
EXECUTIVE ORDER BECAUSE IT WAS PREVENTER GO THEM FROM SAFELY HAVING INDIVIDUALS
USE THEIR TABLES BECAUSE OF THE POSSIBILITY OF THE MICROSCOPIC
PARTICLES REMAINING THERE FOR LONGER THAN DAYS, HOURS, WEEKS, WE DIDN'T KNOW AT THAT
TIME, WOULD THAT CHANGE YOUR ARGUMENT AT ALL IF THAT HAD BEEN WHAT WAS PLED.
DAVID ROTH: NO, THAT SITUATION WOULD NOT BE COVERED EITHER,
AND THE EASIEST WAY IS JUST TO WALKTHROUGH THE POLICY, SO THIS CASE IS MOSTLY ABOUT
WHAT'S CALLED TIME ELEMENT COVERAGE WHICH COVERS THE LOST INCOME THE
POLICYHOLDER MAY EXPERIENCE WHEN IT SPENLDZ ITS OPERATIONS, BUT THE POLICY SPECIFICALLY
SAYS, 4.1.1, IT ONLY APPLIES WHEN THE SUSPENSION IS DUE TO PHYSICAL LOSS
OR DAMAGE TO THE PROPERTY, AND EXPLICITLY EXCLUDES SUSPENSIONS OF BUSINESS FOR
ANY OTHER REASON, AND THAT'S IN SECTION 3.3.2.5. SO THE QUESTION IS NOT
DID THEY SUSPENDS THEIR BUSINESS, IT'S DID THEY SUSPEND THEIR BUSINESS BECAUSE OF
SOME PHYSICAL ALTERATION OF THEIR PROPERTY AND IF THEY SUSPEND THEIR BUSINESS
BECAUSE OF SOME CONCERN OR SOME FEAR, THAT IS NOT COVERED. THE ALTERATION OF ITS
PROPERTY ITSELF WOULD NEED TO BE THE CAUSE OF THE CLOSURE. AND HERE THEY
-- NICHLT BUT IN MY HYPOTHETICAL THE IDEA WAS AT THE TIME WHEN THE BUILDING WAS
CLOSED WAS BECAUSE THE MICROSCOPIC PARTICLES THAT EXISTED ON THE SURFACES MADE
THEM UNUSABLE FOR THEIR INTENDED PURPOSE WHICH IS TO HAVE PEOPLE SURROUNDING
THEM. DAVID ROTH: SO FIRST, YOUR HONOR, THE LOSS OF INTENDED
PURPOSE IS NOT A PHYSICAL LOSS, IT'S NOT PHYSICAL DAMAGE, THERE NEEDS TO BE A TANGIBLE
ALTERATION OF THEIR PROPERTY, SO WHAT THAT SORT OF COVERAGE PROVISION EXISTS
FOR IS THE SITUATION WHERE THERE IS A FIRE IN A RESTAURANT AND THE BASIN SHORING
AGREEMENT IS GOING TO COVER THE PHYSICAL DAMAGE ITSELF. AND THEN PROVISIONS
LIKE THE TIME ELEMENT COVERAGE, WHAT THEY DO IS THEY COVER THE LOST INCOME IF THAT
FIRE FORTSZ THE POLICYHOLDER TO CLOSE, TO SUSPEND THEIR OPERATIONS, BUT AGAIN
THAT SUSPENSION HAS TO BE CAUSED BY THE PHYSICAL DAMAGE ITSELF, YOU SUSPEND YOUR
BUSINESS FOR SOME OTHER REASON, YOU KNOW, JUST A GENERAL CONCERN ABOUT SAFETY OR
WHATEVER, THAT'S NOT CAUSED BY ANY PHYSICAL DAMAGE, ANY PHYSICAL
ALTERATION TO THE PROPERTY. IT'S NOT CAUSED BY ANY PHYSICAL DISPOSSESSION OF THE
PROPERTY, SO THAT IS NOT COVERED. JUSTICE PATTERSON: NOW,
YOUR ADVERSARY SAYS WE SHOULD ALLOW DISCOVERY TO GO FORWARD BECAUSE THERE'S
A FACTUAL DISPUTE AS TO WHY THE FACILITIES WERE CLOSED. WHAT'S YOUR RESPONSE TO THAT?
DAVID ROTH: WELL, I FRANKLY DON'T SEE HOW THERE COULD BE
A FACTUAL DISPUTE GIVEN THAT THEY EXPLICITLY ALLEGE THEY CLOSED ON ARE MA 16TH
IN COMPLIANCE WITH A GOVERNMENT ORDER ISSUED THAT DAY REQUIRING THEM TO
CLOSE, THEY EXPLICITLY PLEAD THAT THEY OPENED ON JULY 2ND IN COMPLIANCE WITH A
GOVERNMENT ORDER ISSUED THAT DAY ALLOWING THEM TO REOPEN, AND OTHER THAN THAT
PERIOD, THERE IS NO ALLEGATION IN THIS COMPLAINT THAT THEY WERE EVER FORCED TO
CLOSE DUE TO ANYTHING, DUE TO ANY -- AND MUCH LESS DUE TO ANY PHYSICAL ALTERATION
OR PHYSICAL LOSS OF THEIR POLICY -- OF THEIR PROPERTY. SO THEIR OWN
COMPLAINT PLEADS WHY THEY CLOSED, THEIR OWN COMPLAINT PLEADS THAT THEY CLOSED IN
COMPLIANCE WITH THE GOVERNMENT ORDER. CHIEF JUSTICE RABNER:
DON'T THEY SAY THAT THERE WERE MULTIPLE REASONS AND THAT THE GOVERNOR'S
EXECUTIVE WAS BUT ONE OF THEM. DAVID ROTH: THE ONLY THING THEY SAY
IN THEIR COMPLAINT IS THE GOVERNOR'S ORDER AND THE RISKS OF THE PANDEMIC,
SO THE GENERAL RISK OF THE SPREAD OF THE VIRUS IN SOCIETY. CHIEF
JUSTICE RABNER: AND IN PARAGRAPH 130 THEY SAY INCLUDING DIRECTOR LOSS TO COVERED
PROPERTY. DAVID ROTH: BUT THEY DON'T ALLEGE ANY ESSENTIAL
FACTS OF WHAT THAT IS, THE ONLY ALLEGATION OF PHYSICAL ALTERATION OF THEIR PROPERTY
IS THE VIRUS PART COALS BEING PRESENT ON IT, THEY PLEAD THAT THEY PERSISTED
AFTER THEY REOPENED, SO WHATEVER THE VIRUS PARTICLES DOING ON THE PROPERTY, HOWEVER
YOU CHARACTERIZE THAT, THERE WAS NO ALLEGATION THAT THAT CAUSED THEM TO
CLOSE IN THIS COMPLAINT, AND IF IT DID CAUSE THEM TO COMPLAINT THEY WOULDN'T HAVE
BEEN OPEN ON JULY 3RD AND THEY WOULDN'T HAVE BEEN OPENED FOR THE LAST 3 YEARS.
JUSTICE WAINTER APTER: BUT ISN'T THAT A DISPUTE OF FACT AS
TO WHETHER THE PROPERTY WAS UNINHABITABLE AND IT SEEMS THAT YOUR CO-DEFENDANTS
PAID 850,000.00 UNDER THE COMMUNICABLE DISEASE PROVISION WHICH I THOUGHT
WOULD ONLY APPLY IF "THE PREMISES WAS CLOSED DUE TO THE THREAT OF COMMUNEABLE
DISEASE TO THOSE OH PORTIONS OF THE LOCATION" SO HOW DOES THAT SQUARE WITH
THE ARGUMENT THAT THEY'RE NOT ALLEGING ANY FACTS THAT IT WAS UNINHABITABLE.
DAVID ROTH: SO A COUPLE OF THINGS, FIRST THAT INTERRUPTION BY COMMUNICABLE
DISEASE PROVISION, THAT'S AN OPTIONAL FORM OF COVERAGE THAT THEY ELECTED TO
PURCHASE IN THIS CASE, AND AS YOUR HONOR INDICATED, WE PAID THE LIMIT OF
LIABILITY UNDER THAT PROVISION, SO WHETHER THERE'S COURT AND JURY RIDGE UNDER THAT
PROVISION IS NOT SOMETHING THAT'S ACTUALLY AT ISSUE HERE. NOW THE KEY TO THAT
PROVISION IS THAT UNLIKE ALL THE COVERAGE WE'RE TALKING ABOUT TODAY IT DOESN'T
REQUIRE THAT THERE BE PHYSICAL LOSS OR DAMAGE TO THE PROPERTY, IT DOESN'T
REQUIRE THAT ANY LOSS BE DUE TO A COVERED CAUSE OF LOSS WHICH GOES WHAT INCORPORATES
THAT CONTAMINATION EXCLUSION, THAT I'D LIKE TO TALK ABOUT IN A LITTLE BIT.
SO BECAUSE THE PAYMENT, BECAUSE THAT COVERAGE ISN'T TRIGGERED BIOPHYSICAL LOSS
OR DAMAGE, WHETHER THAT WAS -- WHETHER THAT PROVISION WAS TRIGGERED DOESN'T
BEAR ON WHETHER THERE WAS PHYSICAL LOSS OR DAMAGE. JUSTICE WAINTER
APTER: SO ARE YOU ARGUING THAT EVEN IF A BUILDING IS UNINHABITABLE YOU STILL
WOULDN'T PAY BECAUSE THAT'S NOT PHYSICAL LOSS OR DAMAGE, I THOUGHT THE CASE LAW
ESTABLISHED THAT IF A BUILDING IS UNINHABIT THAT IS A LOSS OR DAMAGE TO THE
BUILDING. DAVID ROTH: YES, IF THERE IS A PHYSICAL ALTERATION
OR CONTAMINANTS IN THE BUILDING THAT MAKES IT COMPLETELY UNI KNOW HABLTABLE AND
UNUSABLE UNTIL THERE IS REMEDIATION,S COURTS HAVE HELD THAT THAT'S LOSS OR
DAMAGE. JUSTICE WAINTER APTER: BUT IT DOES SAY THE LOCATION
HAS TO BE UNINHABITABLE. IF UNINHABITABLE EQUALS PHYSICAL LOSS OR DAMAGE, THEN
ONCE YOU'RE SAYING YOU ALSO HAVE THE ACQUIRED -- DAVID ROTH:
IT DOESN'T SAY UNINHABITABLE DUE TO A LOSS OF A SUBSTANCE, IT HAS TO KNOW DOES
CLAFD HOOUNLD HOOUNLD DUE TO THE SPREAD OF A SDEEDZ, SO IF THE AUTHORITIES
ISSUE AN ORDER BECAUSE OF THE NATIONWIDE OR NEW JERSEY WIDE SPREAD OF A DISEASE
THAT MAKES THEIR PROPERTY UNUSABLE, THAT MAY TRIGGER THE INTERRUPTION BY
COMMUNICABLE DISEASE COVERAGE. BUT AS FAR AS WHETHER THEIR PROPERTY HAS BEEN
PHYSICALLY LOST OR DAMAGED, THEN THERE NEEDS TO BE SOME SORT OF CONTAMINATION OF THE
PREMISES THAT SPECIFICALLY MAKES THEIR PROPERTY UNINHABITABLE AND UNUSABLE.
IT'S NOT LOOKING TO SOME GOVERNMENT DECREE, IT'S LOOKING TO THE ACTUAL PHYSICAL
CONDITION OF THE PROPERTY, AND THAT'S WHAT THEY DON'T HAVE IN THIS COMPLAINT.
JUSTICE PATTERSON: SO DID YOU PAY THAT ASPECT OF THE COVERAGE
BECAUSE YOU -- BECAUSE YOUR CLIENTS VIEWED THE GOVERNMENT ORDERS TO BE A DECLARATION
THAT THE PROPERTY WAS UNINHABITABLE AND UNUSABLE BY VIRTUE OF THE COVID
PANDEMIC. DAVID ROTH: THERE'S NO FACTOR IN THE COMPLAINTS
WHY WE PAID IT, MY UNDERSTANDING IS WE PAID IT BECAUSE THE GOVERNMENT ORDERS DECLARE
D THEIR PROPERTY UNINHABITABLE AND UNUSABLE DUE TO THE STATEWIDE, NATIONWIDE
SPREAD OF THE PANDEMIC, NOT BECAUSE OF ANY PHYSICAL CONDITION OF THE PROPERTY ITSELF,
IT'S THE GOVERNMENT ORDERS ARE THE SOURCE OF THAT COVERAGE, PAID. THE SECOND
POINT IS BY PAYING THAT COVERAGE THAT IS NOT A CONCESSION OF ANY LEGAL CONCLUSIONS,
IT IS NOT A CONCESSION OF ANY FACTS, THEY BELIEVE THEY ARE ENTITLED TO COVERAGE
BECAUSE THEY SUFFERED PHYSICAL LOSS OR DAMAGE, THEY NEED TO PLEAD FACTS OF IFCC P
AL LOSS OR DAMAGE, AND BY PAYING, UNDER A COMPLETELY A DIFFERENT SET OF
POLICY PROVISIONS -- NICHLT YOUR ARGUMENT IS THE PHYSICAL LOSS OR DAMAGE CAN ONLY
BE PROVED BIOPHYSICAL ALTERATION TO THE PROPERTY. DAVID ROTH:
THERE COULD ALSO BE A PHYSICAL LOSS IF THERE'S A PHYSICAL DISPOSSESSION NICHLT
WE'RE GENERALLY TALKING ABOUT SOME KIND OF ALTERATION WOULD HAVE NEEDED
TO BE PLEADED IN YOUR ARGUMENT. DAVID ROTH: IN ORDER TO BE SOME
ALTERATION OF THE PROPERTY THAT IS ALLEGED, SHORT OF AN ALLEGED RAGS THAT
REQUIRES REPAIRS OR REPLACEMENT IN ORDER TO RESTORE THE PROPERTY --
JUSTICE NORIEGA: ISN'T THAT THE ALLEGATION, THE ALLEGATION IS THAT THE MICROSCOPIC
PARTICLES CHANGED THE NATURE OF THE PROPERTY BY MAKING IT DANGEROUS RATHER
THAN A USABLE ENTERTAINMENT VEHICLE. DAVID ROTH: THAT'S SOMETHING
THAT THE NEW HAMPSHIRE SUPREME COURT TALKED ABOUT AT SOME LENDER, YOUR
HONOR, THE QUESTION WASN'T WHETHER THERE WAS A DANGER TO THE PROPERTY, IT'S NOT
WHETHER THERE WAS A RISK OF USING THE PROPERTY, IT'S WHETHER THE PROPERTY
ITSELF HAS BEEN PHYSICALLY ALTERED. SO IT MAY WELL BE THAT THE VIRUS POSED A RISK
TO HUMANS BUT THEY DID NOT TANGIBLY CHANGE THE PROPERTY IN ANY WAY REQUIRING IT
TO BE REPAIRED OR REPLACED. JUSTICE PATTERSON: WHY IS RADON
DIFFERENT THAN THAT, IN OTHER WORDS A RAY TO KNOW AS I UNDERSTAND THE DANGER
OF IT IS TO PEOPLE WHO MAY BE NEARBY, IT DOES -- OR IN THE BUILDING, IT DOES NOT
PHYSICALLY ALTER WALLS OR DRY WALL OR WHATEVER IT MAY BE.
DAVID ROTH: SO THAT'S COMING INTO THE CONTAMINATION CASES, YOUR HONOR, AND, YOU
KNOW, THE PRESENCE OF RADON COULD POSSIBLY GIVE RISE TO A PHYSICAL LOSS IF
THERE'S RADON EMANATING FROM THE STRUCTURE AND IT'S SO SEVERE THAT IT MAKES THE
BUILDING UNINHABITABLE AND UNUSABLE UNTIL IT'S REMEDIATED. JUSTICE
PATTERSON: EVEN IF IT'S NOT FLOOD DAMAGE, FIRE DAMAGE, IT DOESN'T DAMAGE THE WALLS,
THE STRUCTURE OF THE BUILDING THAT REQUIRES A REPAIR TO BE ELIMINATED,
IT'S JUST IN THE AIR, AND I DON'T MEAN TO MAKE ANY STATEMENTS ABOUT RADON HERE,
I'M JUST USING THAT AS AN EXAMPLE AND ASKING YOU TO TELL US WHY THIS IS
DIFFERENT. DAVID ROTH: SO RADON WOULD ARGUABLY BE DIFFERENT
AND I DON'T KNOW OF ANY CASES DEALING WITH RADON, BUT RADON WOULD ARGUABLY BE DIFFERENT
BECAUSE I THINK IT'S COMING OUT OF THE GROUND, THE RADON PARTICLES PHYSICALLY
COME FROM UNDERNEATH THE STRUCTURE. JUSTICE PATTERSON: AND NOT FROM
A PERSON. DAVID ROTH: NOT FROM A PERSON, THEY NEED TO BE
REMEDIATED IN ORDER TO RESTORE THE PROPERTY TO INHABITABLE STATUS AND WE DON'T
HAVE ANY OF THAT HERE, WE DON'T HAVE A SUBSTANCE COMING OUT OF THE BUILDING, WE
DON'T HAVE IT MAKING THE BUILDING UNINHABITABLE AND UNUSABLE, WE DON'T
HAVE A NEED FOR REMEDIATION TO RESTORE THE BUILDING, AND THIS IS WHAT THE THIRD
CIRCUIT TALKED ABOUT IN THE WILSON CASE THE LOGIC OF THOSE CONTAMINATION
CASES IS THAT THE PRESENCE OF THAT SUBSTANCE MAKES THE PROPERTY UNINHABITABLE
AND UNUSABLE AND ESSENTIALLY DISPOSSESSES THE POLICYHOLDER OF THAT PROPERTY.
JUSTICE WAINTER APTER: HERE THEY ARE ARGUING THAT COVID DID
MAKE THE PROPERTY UNINHABITABLE AND UNUSABLE, THAT'S WHAT I'M NOT UNDERSTANDING,
IF IT IS MADE UNINHABITABLE BY SOME SUBSTANCE, THAT'S WHAT THEY'RE
ALLEGING -- DAVID ROTH: THEY DO NOT HAVE ANY ALLEGATION IN
THEIR COMPLAINT THAT THE VIRUS FIFK SATISFACTORILY ALTERED THEIR PROPERTY
OR PHYSICALLY MADE THEIR PROPERTY UNINHABITABLE AND UNUSABLE THE ONLY TIME THEY
WERE UNABLE TO CONDUCT THEIR PROPERTY OR CONDUCT GAMING, IS WHEN THE GOVERNMENT
ORDERED IT TO BE CLOSED. JUSTICE WAINTER APTER: SO FOR EXAMPLE IN
GREGORY PACKAGING WHERE I THINK THAT ONE IS THE AMMONIA ONE, IF OSHA COMES
IN AND SAYS THE RADON LEVEL IN THIS BUILDING IS TOO HIGH, YOU CANNOT USE THIS
BUILDING FOR THE NEXT 30 DAYS, DOES THAT AUTOMATICALLY EXCLUDE COVERAGE BECAUSE
OSHA ACKNOWLEDGED THAT THE BUILDING WAS UNINHABITABLE AND UNUSABLE BECAUSE OF THE
RADON. DAVID ROTH: THAT'S A DIFRPTS SCENARIO THAN IS HERE
BECAUSE THEN YOU'RE DEALING WITH AN ORDER ISSUED BECAUSE OF THE PHYSICAL CONDITION
OF THAT PROPERTY, WE'RE NOT DEALING WITH THAT HERE, THIS IS AN EXECUTIVE ORDER
THAT WAS ISSUED BY GOVERNOR MURPHY BECAUSE OF THE SPREAD OF COVID THROUGHOUT THE
ENTIRE COUNTRY, IT'S NOT DIRECTED AT OCEAN WALK'S PROPERTY, IT APPLIES TO EVERY
SINGLE CASINO, EVERY SINGLE REST RANTSDZ IN THE STATE, SO IT'S A GENERALIZED
GOVERNMENT ORDER NOT RESPONDING TO SOME PHYSICAL CONDITION, JUST LIKE COUNTSLESS
GOVERNMENT REGULATIONS THAT WOULD AFFECT THE USE OF PROPERTY. YOU KNOW,
YOU CAN IMAGINE ZONING RESTRICTIONS, NOISE ORDINANCES, CHANGES IN GAMING LAW THAT
MIGHT MAKE IT NO LONGER FEASIBLE TO OPERATE A CASINO, ALL OF THOSE MAY
IMPAIR THE INTENDED USE OF THE PROPERTY, BUT THEY'RE NOT PHYSICALLY DISPOSSESSING
THE OWNER OF IT, THEY'RE NOT PHYSICALLY ALTERING THE PROPERTY, AND SO THEY'RE NOT
A PHYSICAL LOSS. CHIEF JUSTICE RABNER: BEFORE WE MOVE ON
TO THE CON TAM FLAGS EXCLUSION ARE THERE OTHER QUESTIONS IN THIS AREA?
DAVID ROTH: SO THE SECOND REASON THE APPELLATE DIVISION'S
DECISION SHUSH CONFIRMED IS CONTAMINATION EXCLUSION, AS YOU NOTED IT INCLUDES
COVERAGE FOR CONTAMINATION, AND IT EXPLICITLY DEVICE CONTAMINATION AS ANY
CONDITION OF THE PROPERTY DUE TO THE PRESENCE OF ANY VIRUS.
JUSTICE PATTERSON: SO MR. ORLOFSKY TELLS US THAT CONTAMINANT THROWS A PROVERBIAL
MONKEY WRENCH INTO THIS BY NOT INCLUDING VIRUS AND THE OTHER SORT OF RELATED
WORDS THAT ARE IN THE CONTAMINATION EXCLUSION AND THEREFORE THAT CREATES AMBIGUITY
AND THE INSURED IS NOT PUT ON NOTICE AS TO WHAT IS AND WHAT IS NOT WITHIN THE
POLICY, WHY IS HE WRONG? HE'S WRONG BECAUSE THE WORD CONTAMINANT IS NOT USED IN THE
CONTAMINATION EXCLUSION AT ALL, SOMEONE WANTS TO UNDERSTAND WHAT THE CON
TAMINATION EXCLUSION EXCLUDES THEY WOULD SIMPLY LOOK AT THE DEFINITION OF
CONTAMINATION AND SEE THAT IT IS SPECIFICALLY DEFINED AS ANY SOMETHING OF
PROPERTY DUE THE TO YOU'LL VIRUS, NOTHING IN THAT SDLOOUGS LANGUAGE SUGGESTS
THAT IT'S LIMITED TO TRADITIONAL ENVIRONMENTAL POLLUTION, IT'S NOT A POLLUTION
EXCLUSION, IT DOESN'T USE TERMS OF ART THAT WOULD SUGGEST MROOUGS, AND HALF
THE SUBJECTS THAT ARE PRESENTS AND LISTED AS CONTAMINATION EXAMPLES ARE DISEASE
CAUSING SUBSTANCES THAT ARE NOT ORDINARILY ASSOCIATED WITH ENVIRONMENTAL MROOUGS.
JUSTICE PATTERSON: IS CONTAMINANT IN THE POLICIES SOMEWHERE
ELSE. DAVID ROTH: YES, SO CONTAMINANT IS USED IN THE POLICY
IN SEVERAL SPECIALIZED GRANTS OF COVERAGE. SO COVERAGE IS GRANTED FOR CERTAIN
INSTANCES INVOLVING CONTAMINANTS. FOR EXAMPLE, THERE'S A PROVISION FOR I
BELIEVE IT'S LANDS AND WATER DEBRIS CLEAN UP OR SOMETHING LIKE THAT. AND SO THE
DEFINITION IS SOMEWHAT TAILORED TO THOSE SPECIFIC GRANTS OF COVERAGE WHICH IS
WHY THIS POLICY DEFINED CONTAMINANT IN A SLIGHTLY DIFFERENT WAY THAN CON
TAMINATION, BUT ULTIMATELY IF YOU WANT TO UNDERSTAND WHAT CONTAMINATION MEANS YOU
SIMPLY LOOK AT THE DEFINITIONS, IT'S DEFINED IN NO UNCERTAIN TERMS, AND
WE ADMIT SMTS EXACTLY WHAT IT MEANS AND EXACTLY HOW IT SHOULD BE APPLIED HERE
-- JUSTICE PIERRE-LOUIS: AND WE SHUNTHD BE CONCERNED WITH ALL
OF THE TERMS LISTED AS CONTAMINANTS IN READING THE CONTAMINATION EXCLUSION POLICY
AS MR. ORLOFSKY HAS INDICATED, THAT THERE'S SOME CONFUSION THAT RESULTS
FROM ALL OF THESE DIFFERENT TERMS BEING USED IN CONTAMINATION AND IN THE TERM CON
TAMINANT, BECAUSE CONTAMINANT IS USED IN OTHER PORTIONS OF THE POLICY THAT HAVE
NOTHING TO DO WITH THE EXCLUSION -- THE EXCLUSION PROVISION THAT WE'RE DISCUSSING?
DAVID ROTH: YES, ESSENTIALLY THAT, YOUR HONOR, IT'S A
SEPARATE PROVISION USED IN OTHER PARTS OF THE POLICY, IF YOU WANT TO UNDERSTAND
WHAT IT MEANS YOU SIMPLY LOOK AT THE DEFINITION, THE FACT THAT -- THE MERE
FACT THAT A RELATED WORD IS USED IN A DIFFERENT CONTEXT IN THE POLICY DOESN'T IMPORT
AMBIGUITY WHEN CONTAMINATION IS EXPLICITLY DEFINED. JUSTICE
PATTERSON: WOULD IT BE A DIFFERENT ANALYSIS OF CONTAMINANT DIDN'T APPEAR
ANYWHERE ELSE AND IT'S OATH POSSIBLE -- THERE'S A DEFINITION THERE,
HYPOTHETICALLY THE ONLY POSSIBLE RELEVANCE TO THIS POLICY WOULD BE THAT CONTAMINANT
IS A RELATED WORD TO CONTAMINATION. DAVID ROTH: IT MIGHT BE
DIFFERENT BUT I THINK YOU WOULD HAVE TO USE THE WORD CONTAMINANT IN THIS
SPECIFIC CONTAMINATION EXCLUSION IN ORDER FOR THERE TO BE AMBIGUITY, BUT YOU HAVE
A FAIRLY UNAMBIGUOUS DEFINITION OF WHAT IT IS, PLAINLY ENCOMPASSES VIERSZ AND
OTHER DISEASE CAUSING AGENTS, AND THERE'S NO WAY TO READ THAT SINCE YOU READ
THOSE WORDS OUT OF THE POLICY BECAUSE OF SOME OTHER WORD THAT'S NOT ACTUALLY USED
IN THAT PROVISION. CHIEF JUSTICE RABNER: PERHAPS AFTER THE
BREAK COUNSEL CAN TELL US WHERE IT ELSE IT APPEARS IN THE POLICY. IS THERE
ANYTHING ELSE -- JUSTICE WAINER APTER: I HAD ONE MORE QUESTION
ON THAT. WHAT ABOUT YOUR ADVERSARY'S ARGUMENTS THAT REGARDLESS OF WHAT THE POLICY
SAYS UNDER NAV-ITS IT CAN OERNL APPLY TO TRADITIONAL ENVIRONMENT MROOUGS.
DAVID ROTH: NAV-ITS IS ABOUT THE MEANING OF A SPECIFIC POLLUTION HAVRD
EXCLUSION THAT'S FOUND IN SOME COMMERCIAL LIABILITY POLICYS, THIS ISN'T A
COMMERCIAL LIABILITY POLICY, IT'S A DIFFERENT TYPE OF POLICY, THIS ISN'T A MROOUGS
HAZARD EXCLUSION, IT'S A CONTAMINATION EXCLUSION. ESSENTIALLY NAV-ITS IS -- IT
DOESN'T APPLY TO EVERY EXCLUSION THAT COULD POSSIBLY BE AN INSURANCE POLICY
THAT IN ANY WAY RELATES TO POLLUTION OR CONTAMINATION. NAV-ITS EXPLICITLY RELIED
ON THE FACT THAT THE POLLUTION HAZARD EXCLUSION IN THAT CASE CONTAINED WORDS
THAT DENOTED TRADITIONAL POLLUTION, IT USED TERMS LIKE SEEPAGE, DISPERSAL, ESCAPE,
TERMS OF ART TO REMEMBER ENVIRONMENTAL POLLUTION AND IT SPECIFICALLY RELIED
ON THE REGULATORY ESTOPPEL DOCTRINE WHICH IS THAT IN THE CONTEXT OF THAT CASE INSURER'S
HAD REPRESENTED THAT THAT EXCLUSION WOULD BE LIMITED TO TRADITIONAL
ENVIRONMENTAL POLLUTION, IT WOULD NOT RELY ON THE POLLUTANTS INHERENT IN OF THE
POLICY HOELTS BUSINESS, AND THIS COURT HELD THAT SINCE INSURERS HAD REPRESENTED
IT WOULDN'T APPLY IN THAT FACTUAL CIRCUMSTANCE INSURERS WERE ESTOPPED
FROM ASSERTING THAT IT DID. THERE'S NO ALLEGATIONS OF ANYTHING LIKE THAT HERE,
THERE'S NO EVIDENCE OF ANYTHING LIKE THAT HERE, SO THAT WHOLE REGULATORY
ESTOPPEL PIECE OF NAV-ITS IS ABSENT. ULTIMATELY AS THIS COURT HAS AFFIRMED SEVERAL
TIMES EXCLUSIONS ARE AN INTEGRAL PART OF THE INSURANCE CONTRACT AND THEY HAVE
TO BE ENFORCED WHEN THEIR MEANING IS CLEAR, HOLDING THAT ANY EXCLUSION 24 RELATES
TO POLLUTION AS A MATTER OF LAW WOULD BE LIMITED TO ENVIRONMENTAL POLLUTION
WOULD BE A -- THAT GO INTEREST THE -- I'LL BE HAPPY TO ADDRESS ANY OTHER POINTS
BUT IF NOT WE'LL REST ON OUR BRIEFS.