Blog Archives

Louisiana Supreme Court Reverses a Rare State Court of Appeals Win for COVID-19 Business Interruption Claimant

Posted on March 27, 2023 by Karl A. Schulz

COVID-19 business interruption claimants have had few state appellate court decisions upon which to rely. Louisiana produced one such decision in Cajun Conti, LLC v. Certain Underwriters at Lloyd’s, 2022 La. App. LEXIS 939 (La. App. 4 Cir., June 15, 2022). The insurer prevailed in the trial court in a dispute over whether coronavirus constituted “direct physical loss of or damage to” insured property. The insured restaurant appealed. Louisiana’s Fourth Circuit Court of Appeal reversed the trial court. The Court of Appeal’s opinion became widely-cited by other COVID-19 business interruption claimants. The insurer appealed to the Louisiana Supreme Court and Cajun Conti became a widely-followed dispute. As discussed below, the Court of Appeal’s analysis was out of step with the…

Tagged with: Coverage, covid, interruption, loss, Louisiana, Texas, use
Posted in Uncategorized

Accepting Coverage for Part of a Claim May Subject an Insurer to the Appraisal Process Under Tennessee Law

Posted on April 11, 2022 by Elliot Kerzner, Alycen A. Moss

Accepting coverage for part of a claim may subject an insurer to a policy’s appraisal process when the extent of covered damage is in dispute, according to a recent ruling issued by the Eastern District of Tennessee. In Morrow v. State Farm Fire & Cas. Co., Case No. 1:21-CV-00133-DCLC-CHS, 2022 WL 885863 (E.D. Tenn. Mar. 22, 2022), a severe storm with strong winds and tornadic activity damaged the insured’s home in Manchester, Tennessee. After the storm, the insured promptly reported the damage to her home to her insurer. The insured’s policy covered direct physical loss to her home, other structures on her property, and her personal property. The insurer acknowledged that the damage to the insured’s home was covered under…

Tagged with: amount of loss, appraisal, Coverage, estimate, Morrow, state farm, Tennessee
Posted in Uncategorized

Second Circuit Holds No Coverage for COVID-19 Business Interruption Losses

Posted on January 19, 2022 by Elliot Kerzner, Alycen A. Moss

The Second Circuit has now joined the Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits in holding that no insurance coverage exists for business interruption losses caused by the Covid-19 pandemic and the associated government orders. In 10012 Holdings Inc. v. Sentinel Insurance Co. Ltd., No. 21-80-cv, Slip. Op. (2d Cir. Dec. 27, 2021), the insured fine arts gallery and dealership in New York City sought coverage under three provisions of its insurance policy for losses and extra expenses incurred when it suspended its operations in accordance with government restrictions on non-essential businesses during the Covid-19 pandemic. When the insurer denied coverage, the insured filed suit asserting claims for breach of contract and declaratory judgment. The United States District…

Louisiana Federal Court Upholds Applicability of Anti-Concurrent Causation Exclusion for Hurricane Damage

Posted on September 07, 2021 by Paul Ferland, Vincent Passarelli

In a timely reaffirmation of the Fifth Circuit’s 2007 ruling in Leonard v. Nationwide Mut. Ins. Co., a Louisiana federal court recently upheld the application of an insurance policy’s Anti-Concurrent Causation Clause (“ACC”) in precluding coverage for property damage caused by a combination of storm winds and flooding. In Chad Little, et al. v. Aegis Security Insurance Co., Case No. 2:21-CV-00997 (W.D.La. July 9, 2021), the Western District of Louisiana granted defendant-insurer’s motion for summary judgment holding that the defendant-insurer proved that both a covered peril (storm winds) and an excluded peril (flooding) contributed to the losses claimed by the plaintiffs-insureds, and that as a result of the application of the policy’s ACC, all coverage was precluded. About The Authors

Tagged with: anti-concurrent causation, catastrophes, Coverage, efficient proximate cause, exclusions, flood insurance, homeowners coverage, Water, windstorm
Posted in Catastrophes, Water

New Jersey Federal Court Holds That Insurance Coverage Issues Do Not Need To Be Decided Before Appraisal

Posted on July 06, 2021 by Paul Ferland, Vincent Passarelli

A federal court recently held that ongoing insurance coverage issues should not prevent an appraisal from going forward as per an appraisal clause in the insurance policy. In DC Plastic Products Corp. v. Westchester Surplus Lines Insurance Co. Case No. 17-13092 (D.N.J. May 19, 2021), the District Court of New Jersey directed the parties to proceed with the appraisal process as set forth in the relevant policy, despite the defendant-insurer’s argument that appraisal is improper under New Jersey law where unresolved coverage issues exist. Plaintiff DC Plastics Products Corporation (“DC Plastics”) made an insurance claim to its insurance carrier Westchester Surplus Lines Insurance Co. (“Westchester”) after DC Plastics’ premises in Bayonne, New Jersey was damaged as a result of Superstorm…

Tagged with: Arbitration and Appraisal, Causation, Causes of Loss, Coverage, Valuation
Posted in Causation, Causes of Loss, Valuation

Southern District of New York Holds Contamination Exclusion is Ambiguous as Applied to Covid-19 Business Losses

Posted on April 16, 2021 by Paul Ferland, Elliot Kerzner

The Southern District of New York recently held that a contamination exclusion was ambiguous in the context of Covid-19-related business interruption losses. Accordingly, the court held that the issue was inappropriate to decide at the summary judgment stage and denied both parties’ cross-motions for summary judgment. In Thor Equities LLC v. Factory Mut. Ins. Co., No. 1:20-cv-03380 (S.D.N.Y. Mar. 31, 2021), an insured commercial property owner sought business interruption coverage under its property insurance policy. The parties filed cross-motions for summary judgment, asking the court to determine the applicability of two exclusions, one of which was a contamination exclusion. The exclusion excluded “contamination, and any cost due to contamination including the inability to use or occupy property or any…

North Carolina Court Finds Coverage for Restaurants’ COVID-19 Business Income Losses

Posted on October 23, 2020 by Paul Ferland

A trial level court in North Carolina recently found coverage under first-party property insurance policies for the insured restaurants’ COVID-19-related business income losses. In North State Deli, LLC et al. v. Cincinnati Ins. Co., et al., Case No. 20-CVS-02569 in the General Court of Justice, Superior Court Division, County of Durham, Judge Orlando F. Hudson, Jr. granted partial summary judgment to the plaintiff-insureds, finding that plaintiffs’ business income losses resulting from the governmental shutdown of its business constituted a “loss” to property, sufficient to trigger coverage under the Cincinnati policies. Although similarly situation insureds will undoubtedly rely on this decision in support of their claims for coverage, it is important to note that the North State Deli decision relies heavily…

Eleventh Circuit Confirms Cleaning is not Direct Physical Loss

Posted on August 20, 2020 by Alycen A. Moss, Elliot Kerzner

The Eleventh Circuit has provided some clarity to Florida businesses and their insurers dealing with COVID-19 claims. In Mama Jo’s Inc., d.b.a. Berries v. Sparta Ins. Co., No. 18-12887 (11th Cir. March 18, 2020), the Court held that a restaurant’s lost income and extra cleaning costs due to nearby roadwork did not trigger coverage because it did not involve direct physical loss or damage. In the underlying case pending in the Southern District of Florida, Mama Jo’s, Inc. v. Sparta Ins. Co., 17-CV-23362-KMM, 2018 WL 3412974, at *9 (S.D. Fla. June 11, 2018), the Court considered whether there was a direct physical loss when construction debris and dust from road work required the insured to clean its floors, walls, tables,…

JPML Will Not Allow Centralization of MDL Covid-19 Lawsuits

Posted on August 13, 2020 by Alycen A. Moss, Denise Bessellieu

On April 20, 2020, two policyholders involved in Covid-19 class action suits filed the first motion with the Judicial Panel on Multidistrict Litigation (MDL) asking for the transfer and coordination or consolidation of two class actions suits filed in the U.S. District Court for the Eastern District of Pennsylvania with nine so-called “related actions” filed in federal courts in Illinois, Florida, New York, Wisconsin, Ohio, California, Oregon, and Texas and “subsequent tag-along actions.”[1] Others followed suit in attempting to transfer, coordinate, and/or consolidate actions into several MDLs. There are currently more than 100 insurance companies named as defendants in the cases proposed for transfer. About The Authors

Tagged with: business interruption, coronavirus, Coverage, covid, covid-19, Insurance, multidistrict litigation, physical loss, property insurance, United States Judicial Panel on Multidistrict Litigation
Posted in Business Interuption, Direct Physical Loss or Damage

New Hurricane Harvey Opinion Provides a Roadmap to Defeating Common Policyholder Attorney Tactics

Posted on April 29, 2020 by Karl A. Schulz

Policyholders attorneys often try to skip the threshold steps of bringing their client’s claim within coverage and allocating between covered and non-covered causes of loss. Instead, the policyholder attorney would have the insurer first disprove coverage, or at least first justify its coverage position. These tactics unfold in a familiar way. The policyholder attorney will engage a consultant to write up an Xactimate estimate. Or, perhaps a public adjuster already wrote up the estimate and then brought the claim to the attorney. Everything that is wrong with the structure will go into the estimate. Every water-stained ceiling tile, bent AC condenser fin, and dent on the siding will go into the estimate regardless of causation. The bigger estimate, the better…

Tagged with: Allocation, Coverage, Hurricane Harvey, Investigation, Policy Interpretation
Posted in Catastrophes, Coverage, Hurricane