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Hilcrest Optical, Inc. v. Continental Casualty Co., 2020 WL 6163142 (S.D. Ala. Oct. 21, 2020)
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Alabama
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- Optometrist office’s coverage suit dismissed based on failure to allege “direct physical loss of or damage to property.” Temporary inability to use property due to government actions does not constitute a direct physical loss of property.
- Court rejects policyholder’s assertion that “extra expense” provision, which refers to “period of restoration,” contemplates an inability to use property as a direct physical loss.
- Court refuses to certify to the Alabama Supreme Court the question of whether Covid-related shut down orders allege “direct physical loss.”
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Seifert v. IMT Ins. Co., 2020 WL 6120002 (D. Minn. Oct. 16, 2020)
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Minnesota
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- Hair salon’s coverage suit dismissed based on failure to allege “direct physical loss of or damage to” property, noting that mere “loss of use or function” is not sufficient. “Actual physical contamination” of the insured property must be alleged.
- Civil authority coverage claims fail for the additional reason that policyholder was not prohibited from entering insured property because of any “actual contamination or damage.”
- Claims are also barred by virus exclusion that applies to any loss caused “directly or indirectly” by a virus. Thus, salon’s assertion that loss was caused by government orders rather than virus is unpersuasive. “Pursuant to the anti-concurrent loss provision, if a virus is any part of the casual chain causing a loss, then the loss is not covered.”
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It’s Nice, Inc. v. State Farm Fire and Casualty Co., No. 2020L000547 (Ill. Cir. Ct. Sept. 29, 2020) (Oral Transcript)
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Illinois
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- Restaurants’ coverage suit dismissed based on absence of allegations asserting “direct physical loss,” emphasizing that complaint did not allege presence of actual virus on the premises.
- Direct physical loss unambiguously requires “some form of actual physical damage to the insured premises.” Under Illinois law, interpretation of the word physical in insurance contracts “is widely held to exclude alleged losses that are intangible or incorporeal . . . such as detrimental economic impact unaccompanied by a distinct demonstrable physical alteration of the property.”
- Even if insured alleged direct physical loss, coverage would be barred by virus exclusion.
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North State Deli, LLC v. Cincinnati Ins. Co., No. 20-CVS-02569 (N.C. Superior. Ct. Durham Cnty. Oct. 7, 2020)
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North Carolina
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- Restaurants are entitled to lost business income and extra expense coverage stemming from government orders, based on court’s determination that “accidental physical loss or accidental physical damage” is ambiguous.
- Court concludes that “direct physical loss” includes “the inability to utilize or possess something in the real, material, or bodily world” and thus encompasses a business owner’s loss of use or access to its business property.
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Oral Surgeons, P.C. v. Cincinnati Ins. Co., 2020 WL 5820552 (S.D. Iowa Sept. 29, 2020)
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Iowa
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- Dental office’s coverage suit seeking business interruption coverage dismissed based on failure to allege “physical” or “accidental” loss.
- Court references recent decisions holding that “virus-related closures of businesses do not amount to direct loss to property by the Cincinnati policy of insurance.”
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Harvest Moon Distributors, LLC v. Southern-Owners Ins. Co., 2020 WL 6018918 (M.D. Fla. Oct. 9, 2020)
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Florida
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- Wine and beer distributor’s claim for coverage for losses incurred after Disney refused to accept shipment or make payment during Covid-related closure of park stated a plausible claim of “direct physical loss of or damage to” property based on allegations that beer spoiled and became undrinkable.
- Business income and extra expense claims nonetheless fail based on failure to allege “suspension” of business operations. While Disney may have suspended its operations, complaint fails to allege the policyholder terminated all of its business activities.
- Exclusion for losses caused by “[a]cts or decisions . . . of any person, group, organization or governmental body” bars coverage because Disney’s decision to refuse to accept product or issue payment was cause of policyholder’s loss.
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Urogynecology Specialist of Florida, LLC v. Sentinel Ins. Co., Ltd., 2020 WL 5939172 (M.D. Fla. Sept. 24, 2020)
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Florida
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- Medical office’s breach of contract claim against insurer is a “plausible claim at this juncture” given lack of “binding case law on the issue of the effects of COVID-19 on insurance contracts[’] virus exclusions.”
- Court deems exclusion ambiguous based on missing portions of policy that were not submitted to the court.
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Infinity Exhibits, Inc. v. Certain Underwriters at Lloyd’s London known as Syndicate PEM 4000, 2020 WL 5791583 (M.D. Fla. Sept. 28, 2020)
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Florida
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- Trade shows’ coverage claims dismissed with prejudice based on failure to allege “direct physical loss or damage to” property, noting that further amendment of complaint would be futile.
- Court relies on Eleventh Circuit’s decision inMama Jo’s (a non-Covid coverage decision denying coverage for cleaning expenses based on lack of “direct physical loss”) and a series of recent Covid-related decisions across jurisdictions, including Turek, 10E, LLC, Malube, Mudpie, and Pappy’s) (discussed in last month’s Alert).
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Travelers Casualty Ins. Co. of Am. v. Geragos and Geragos, 2020 WL 6156584 (C.D. Cal. Oct. 19, 2020)
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California
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- Law firm’s counterclaims for business income and civil authority coverage dismissed with prejudice based on lack of “direct physical loss of or damage to property.”
- Civil authority coverage is also barred by virus exclusion.
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Franklin EWC, Inc. v. Hartford Financial Servs. Grp., Inc., 2020 WL 5642483 (N.D. Cal. Sept. 22, 2020)
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California
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- Salon’s coverage claims dismissed based on virus exclusion, which applies to “presence, growth, proliferation, spread or any activity of ‘fungi,’ wet rot, dry rot, bacteria or virus.”
- Insured’s argument that civil authority coverage exists notwithstanding virus exclusion because the government closure orders (rather than the virus) prohibited access to their property is deemed “nonsense.”
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Henry’s Louisiana Grill, Inc. v. Allied Ins. Co. of Am., 2020 WL 5938755 (N.D. Ga. Oct. 6, 2020)
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Georgia
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- Restaurant’s claims for coverage under business loss and civil authority provisions dismissed based on absence of “direct physical loss of or damage to” covered property.
- Construing government orders as constituting a direct physical loss “exceeds any reasonable bounds of possible construction” and “would potentially make an insurer liable for the negative effects of operational changes resulting from any regulation or executive decree, such as a reduction in a space’s maximum occupancy.”
- Civil authority coverage also rejected because insured failed to allege a prohibition on access to the premises.
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Mark’s Engine Co. No. 28 Restaurant, LLC v. Travelers Indem. Co. of Conn., 2020 WL 5938689 (C.D. Cal. Oct. 2, 2020)
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California
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- Restaurant’s claims for coverage under business income and civil authority provisions dismissed based on lack of “direct physical loss [of] or direct physical damage [to]” property.
- Under California law, “losses from inability to use property do not amount to ‘direct physical loss of or damage to property.’”
- Government’s characterization of insured’s business as “non-essential,” resulting in economic consequences, does not satisfy physical alteration requirement.
- “Whatever physical alteration the virus may cause to property in general, nothing in the [pleadings] plausibly supports an inference that the virus physically altered Plaintiff’s property, however much the public health response to the virus may have affected business conditions for Plaintiff’s restaurant. Even if Plaintiff could somehow recover for physical loss or damage to other property, such loss or damage could hardly qualify as ‘direct.’”
- Even assuming the insured alleged direct physical loss, coverage is barred by a virus exclusion.
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Vandelay Hospitality Grp. v. Cincinnati Ins. Co., 2020 WL 5946863 (N.D. Tex. Oct. 7, 2020)
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Texas
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- Restaurant’s complaint dismissed based on failure to plausibly plead “direct physical loss or damage.” Dismissal is without prejudice, allowing policyholder opportunity to re-plead.
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Rhonda Hill Wilson v. Hartford Casualty Co., 2020 WL 5820800 (E.D. Pa. Sept. 30, 2020)
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Pennsylvania
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- Law office’s coverage claims dismissed as a matter of law. Even assuming (without deciding) that Covid-related claims allege direct physical loss, coverage is barred by a virus exclusion.
- Virus exclusion, which applies to “loss or damage caused directly or indirectly by . . . fungi, wet rot, dry rot, bacteria or virus” “regardless of any other cause or event that contributes concurrently or in any sequence to the loss” is unambiguous and applies to Covid-related claims, notwithstanding policyholders’ allegation that government orders were the direct cause of loss.
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Blue Springs Dental Care, LLC v. Owners Ins. Co., 2020 WL 5637963 (W.D. Mo. Sept. 21, 2020)
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Missouri
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- Dental care clinics’ claims for coverage under business income and civil authority provisions raise issues of fact as to whether complaint alleges “direct physical loss.”
- Policyholders’ allegations, accepted as true for purposes of ruling on the dispositive motion, claim that customers and employees were likely affected with virus, that there was “actual contamination by COVID-19,” and that the virus is “physically transmitted by air and surfaces through droplets, aerosols, and fomites that remain infectious for extended periods of time.”
- Court relies on Studio 417, Inc. v. Cincinnati Ins. Co., 2020 WL 4692385 (W.D. Mo. Aug. 12, 2020) (discussed in July/August 2020 Alert).
- Court declines to rule as a matter of law that “necessary suspension” of business, as set forth in business income provision, requires a total cessation of business activity.
- With respect to civil authority coverage, policyholders sufficiently alleged a prohibition on access based on government stay-at-home orders, noting that three clinics were closed entirely and that one clinic limited its operations to emergency services.
- Policyholders’ designation as an “essential business” (and therefore arguably exempt from the restrictions imposed by the stay-at-home orders) is not fatal to civil authority coverage claims, because issues of fact exist as to scope, applicability and impact of orders.
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Francois Inc. v. Cincinnati Ins. Co., No. 20CV201416 (Ohio Ct. Comm. Pl. Sept. 29, 2020) (Summary Order)
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Ohio
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- Restaurants’ “complaint states claims which arguably fit the terms and conditions of the insurance policy.”
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In re: National Ski Pass Ins. Litig., 2020 WL 5884793 (JPML Oct. 2, 2020)
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- The Judicial Panel on Multidistrict litigation created two multidistrict litigations (“MDL”) to centralize cases arising out of insurers’ refusal to cover ski trips that were canceled due to Covid. One MDL, in Missouri, is comprised of cases against Arch Insurance Company. The other, in California, is comprised of cases against United Specialty Insurance Company. The court declined to create a single nationwide MDL, citing a lack of factual commonality across the actions against each insurer.
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In re: Society Insurance Co. COVID-19 Business Interruption Protection Ins. Litig., 2020 WL 5887444 (Ill. Oct. 2, 2020)
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- The Judicial Panel on Multidistrict Litigation centralized more than 30 lawsuits against Society Insurance Company in Illinois, finding MDL to be an efficient path for resolution based on common legal and factual questions.
- The litigation includes individual claims and putative class actions, and application of six states’ laws.
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