On Wednesday, a federal judge in New York denied FM’s Rule 12(c) motion for judgment on the pleadings after finding the Contamination Exclusion in the Factory Mutual policy to be ambiguous as to whether it bars coverage for business interruption losses resulting from communicable disease.  The case is Thor Equities, LLC v. Factory Mutual Ins. Co., No. 20 Civ. 3380 (AT) (SDNY).  This is a critical decision under the Factory Mutual policy form, which is substantively the same as policies issued by Factory Mutual’s sister company, Affiliated FM Insurance Company.  Factory Mutual and Affiliated FM have maintained that the contamination coverages are “exceptions” to this exclusion, with the exclusion precluding coverage for communicable disease loss under other policy coverages.  But the ruling validates what policyholders have been arguing – that communicable disease “loss” is covered throughout the Factory Mutual policy, in addition to under the sublimited communicable disease emergency response coverages.

Continue Reading Factory Mutual’s “Contamination” Exclusion Is Ambiguous; May Not Limit Coverage For COVID-19 Business Interruption Loss

One year into the COVID-19 pandemic, courts have issued hundreds of rulings in COVID-19 business interruption lawsuits, many favoring insurers. Yet those pro-insurer rulings are not based on evidence, much less expert opinion evidence. For insurers, ignorance is bliss.

Continue Reading Hunton Insurance Recovery Partner Michael Levine Quoted on Why Courts Must Consider the Science of COVID-19

A California state court denied an insurer’s motion to dismiss Goodwill Industries of Orange County’s COVID-19 business-interruption claim after an apparent reassessment of how California’s federal courts have applied (or, rather, misapplied) California precedent to COVID-19 cases. The case is Goodwill Industries of Orange County, California v. Philadelphia Indemnity Insurance Co., No. 30-2020-01169032-CU-IC-CXC (Cal. Super. Ct. Jan. 28, 2021).

Continue Reading Good Result for Goodwill on Its Bid for COVID-19 Business-Interruption Claim

The Hunton Insurance Recovery Team recently issued a client alert analyzing how two Ohio federal judges ruled on COVID-19 coverage cases.

Continue Reading One Ohio Federal Court Serves COVID-19 Insurance Coverage Victory for Policyholders While Another Certifies Business Interruption Coverage Question to State Supreme Court

As previously reported, an Oklahoma state court recently granted summary judgment to the Cherokee Nation for its COVID-19 business interruption claim. The court has now issued a more substantive opinion, establishing the merits of the Cherokee Nation’s claim and providing yet another blueprint for policyholders seeking to recover COVID-19-related losses under “all risk” commercial property insurance policies.

Continue Reading Oklahoma Court Issues Reasoned Opinion, Adopts Policyholder View on “Physical Loss or Damage” as Only Reasonable One, in Cherokee Nation COVID-19 Coverage Win

A South Florida restaurant has asked the US Supreme Court to overturn a federal district court’s ruling that the restaurant is not entitled to coverage under an “all risk” commercial property insurance policy for lost income and extra expenses resulting from nearby road construction. In the underlying coverage action, the policyholder, Mama Jo’s (operating as Berries in the Grove), sought coverage under its all-risk policy for business income losses and expenses caused by construction dust and debris that migrated into the restaurant. Should the Supreme Court grant certiorari, the case will be closely watched by insurers and policyholders alike as an indicator of the scope of coverage available under all-risk policies and whether the principles pertinent to construction dust and debris (at issue in Mama Jo’s claim) have any application to the thousands of pending claims for COVID-19-related business interruption losses pending in the state and federal court systems.

Continue Reading Restaurant Wants SCOTUS to Dust Off Eleventh Circuit’s “Physical Loss” Ruling

In a resounding victory for policyholders, an Oklahoma state court granted partial summary judgment for the Cherokee Nation in its COVID-19 business interruption claim. The Cherokee Nation is seeking coverage for losses caused by the pandemic—specifically, the inability to use numerous tribal businesses and services for their intended purpose.

Based on the “all risks” nature of the policy and the fortuitous nature of its loss, the Cherokee Nation sought a partial summary judgment ruling that the policies afford business interruption coverage for COVID-19-related losses. The policy provided coverage for “all risk of direct physical loss or damage,” which the Cherokee Nation contended was triggered when the property was “rendered unusable for its intended purpose.” In support of this view, and consistent with established insurance policy interpretation principles, such as providing meaning to every term and reading the policy as a whole, the Cherokee Nation argued that a distinction must exist between “physical loss” and “physical damage.” This distinction demands an interpretation supporting the “intended purpose” reading of the policy language. Thus, the physical presence of COVID-19 depriving the Cherokee Nation of the use of covered property for its intended purpose triggered a covered loss.
Continue Reading Cherokee Nation Wins Summary Judgment in COVID-19 Business Interruption Claim

On December 9, 2020, in Elegant Massage, LLC v. State Farm Mut. Auto. Ins. Co., No 2:20-cv-00265-RAJ-LRL (E.D.V.A. Dec. 9, 2020) , a Virginia federal court refused to dismiss a majority of the policyholder’s breach of contract claim and its request for bad faith damages, declaratory judgment and class certification, all stemming from the insurers’ denial of coverage for COVID-19 related business income losses. The policyholder, a spa, purchased an all-risk property insurance policy with coverage for, among other things, loss of business income and extra expense. The spa, a non-essential business, closed on March 16, 2020 as a result of state orders requiring all non-essential businesses to close due to the COVID-19 pandemic. It did not reopen until May 15. Once re-opened, however, the policyholder was required to implement operational controls and precautions to ensure the safety of the public and its employees. Following its closure, the policyholder sought coverage under its all-risk insurance policy. The insurer denied coverage for the claim, contending first that losses due to the COVID-19 pandemic and subsequent closure orders did not constitute “property damage” within the meaning of the policy and, second, even if the losses were because of “property damage,” the claim implicated various exclusions to coverage. The policyholder then initiated suit against its insurers.

Continue Reading Federal Court Provides Soothing Comfort for Spa’s COVID-19 Business Income Claim

On November 10, 2020, a New York federal judge dismissed an insurer’s counterclaims seeking to cap its exposure under a $15 million sublimit and an order estopping the policyholder from pursuing any additional amounts.

Continue Reading Federal Judge Refuses to Limit Coverage and Moves Forward with Policyholder’s Claims Against Insurer and Broker

In another victory for policyholders, a Pennsylvania judge denied an insurer’s early attempt to avoid coverage for losses arising from the COVID-19 pandemic. Although the judge did not explain his reasoning, the denial is positive news for policyholders who are litigating whether COVID-19 causes “physical damage or loss” and whether so-called “virus” exclusions limit or bar coverage for pandemic-related losses.

Continue Reading PA Judge Takes A Step in the Right Direction Refusing Dismissal of COVID-19 Claim