Robert Rutter Argues That the Term “Physical Loss or Damage To” Was An Expanding Coverage Concept Before the Covid Coverage Controversy 

One of the pleasurable aspects of my practice is meeting passionate, intelligent, and experienced colleagues in different parts of the country who have similar issues and problems. I learn a lot from them and enjoy the camaraderie. One of those attorneys is Robert Rutter of Ohio.  

In an amicus brief he filed in the case I have written about over the last two days, he noted the following:

“The best analysis of the term ‘direct physical loss of or damage to’ is contained in the attached article, Lewis, Couch’s ‘Physical Alteration’ Fallacy: Its Origins and Consequences, Tort Trial & Insurance Practice Law Journal, Fall 2021, p. 621. The article lists cases which held that “direct physical loss of or damage to” property resulted from many risks that did not cause structural alteration to the property, including risks such as:

• Oil fumes;

• Power outages;

• Carbon monoxide;

• Oats rendered unsaleable by FDA regulation;

• Bacteria;

• Ammonia fumes;

• Noxious smells;

• Spider infestation;

• Urine odor;

• Smoke from wildfires.

Owners discusses on page 22 of its brief the Mastellone case and correctly points out that Mastellone’s rationale was based on language in 10A Couch on Insurance (3rd Ed. 1998) §148.46 that equated ‘physical damage’ with ‘physical alteration.’ But, as the article cited above points out, Couch (actually the primary author Steven Plitt) had scant authority to make such a sweeping pronouncement, and ignored the weight of authority against this position.

The fallacy of the structural alteration requirement is also demonstrated by another leading insurance law treatise, Allan Windt’s Insurance Claims & Disputes (6th Ed. 2013), which summarizes the state of the law as follows:

[W]hen an insurance policy refers to physical loss of or damage to property, the ‘loss of property’ requirement can be satisfied by any ‘detriment,’ and a ‘detriment’ can be present without there having been a physical alteration of the object.”

I encourage those who read this blog to take a few minutes and read Rutter’s 11-page brief that succinctly explains why many of us legally disagree with the Ohio Supreme Court’s decision noted in Ohio Justices Obviously Do Not Have an Electrical Engineering Degree When They Rule Software Cannot Have a Physical Presence

Thought For The Day 

I love Ohio. 

—Dave Chappelle