In May, we highlighted uncertainties regarding COVID-19 claims for business losses. Since then, litigation has increased, and courts are ruling on motions to dismiss filed by insurers who denied coverage under business interruption policies. Despite an effort to consolidate more than 250 federal cases, in August the Judicial Panel on Multidistrict Litigation declined consolidation. As a result, cases will continue to proceed with potentially varying outcomes.
On August 26, 2020, in Williams/Torres Malube, LLC v. Greenwich Ins. Co., No. 20-22615-CIV, the Southern District of Florida granted a motion to dismiss in favor of an insurer. A restaurant sought coverage under a business interruption policy for losses from government shutdowns. After litigation was filed, the insurer filed a motion to dismiss arguing (1) the policy excludes coverage for viruses, (2) the business did not suffer physical loss or damage to property, and (3) shutdown orders did not prohibit access to the insured property. The court found the strongest argument was lack of direct physical loss or damage and noted the recent decision in Studio 417, Inc. v. Cincinnati Ins. Co., 2020 WL 4692385, *4 (W.D. Mo. Aug. 12, 2020). In that case, the court denied a motion to dismiss because the plaintiffs “plausibly argued” COVID-19 particles attached to and damaged property, making the premises unsafe and unsuable where in Williams/Torres, the plaintiff did not allege any physical harm, just that shutdown orders forced closures.
In Georgia, Johnson et al. v. The Hartford Financial Svcs. Group, Inc., No. 1:20-cv-02000, a class action filed in the Northern District of Georgia based on denial of COVID-19 claims, remains pending. The insurer has filed a motion to dismiss.
Please contact us to help your business with any claims or litigation arising from coverage issues.
