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Court Permits Parties to Cure Defective Diversity Jurisdiction in Suit Against Underwriters at Lloyd’s

In MAve Hotel Investors LLC d/b/a The MAve Hotel, et al. v. Certain Underwriters at Lloyd’s, London, et al., 2024 WL 2830909, (S.D.N.Y. 2024), to preserve diversity jurisdiction, the United States District Court for the Southern District of New York permitted a plaintiff insured to drop non-diverse, dispensable defendant Underwriters at Lloyd’s, London (“Underwriters”) which subscribed to a commercial property insurance policy. About The Authors

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Court Differentiates Vandalism from Theft in First Party Insurance Policy

The United States District Court for the Western District of Washington decided an insurance coverage case involving Plaintiffs Benny and Guangying Cheung and Defendant Allstate Vehicle and Property Insurance Company.  Cheung v. Allstate Vehicle & Prop. Ins. Co., No. C22-1174 TSZ, 2023 WL 9000432 (W.D. Wash. Dec. 28, 2023). The Court considered whether the Plaintiffs’ loss was caused by theft or vandalism, as neither term was defined in the policy. About The Author

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Oklahoma Supreme Court Rejects “Loss of Use” Argument, Nixes COVID-19 Business Interruption Suit

There is a clear nationwide trend of federal courts disposing of COVID-19 business interruption suits.[1]  Insureds are not clearing their initial burden to establish direct physical loss or damage to property, or they are running afoul of virus and contamination exclusions.  Relatively few state supreme courts, however, have weighed in to resolve the issue, thereby providing guidance to their own lower courts and federal courts that must follow state law.[2]  Insurers and insureds alike have been watching to see which way the Oklahoma Supreme Court would hold.  In Cherokee Nation v. Lexington Ins. Co., 2022 OK 71, the Court joined the national mainstream and ruled against the insured.  About The Author

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Texas Court of Appeals Adds Confusion to Post-Appraisal Litigation Under the TPPCA

Ever since the Texas Supreme Court changed the landscape of Texas law regarding appraisal in Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) and Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019), practitioners and courts have been struggling to apply the Texas Supreme Court’s holdings.  Barbara Technologies and Ortiz answered some questions but raised others.  About The Authors

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Florida Property Insurance Reform Round Three Brings Big Changes

For the third time since 2019, the Florida Legislature has enacted broad property insurance reforms with the goal of stabilizing the insurance market and curbing litigation filed by unscrupulous contractors. The bill, S.B. 2D, creates a reinsurance program, amends certain prohibited advertisement practices for contractors, permits issuance of personal lines policies with separate roof deductibles, and reigns in property insurance bad faith litigation and litigation by assignees. In this article, we will focus on the statutory changes that affect the handling and litigation of property insurance claims. About The Authors

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Major Victories for Insurers in Fifth Circuit Regarding COVID-19 Business Interruption Claims

The Fifth Circuit Court of Appeals has joined seven other Circuits in finding no coverage for COVID-19 business interruption claims.[1]  In Terry Black’s Barbecue, L.L.C. v. State Auto. Mut. Ins. Co., 2022 U.S. App. LEXIS 287 (5th Cir. Jan. 5, 2022) and Aggie Invs., L.L.C. v. Continental Cas. Co., 2022 U.S. App. LEXIS 393 (5th Cir. Jan. 6, 2022), the Fifth Circuit considered claims under all-risk policies.  In Terry Black’s Barbecue, the policy included provisions for loss of business income and extra expense.  To trigger such coverages, the policy required that the suspension of operations “must be caused by direct physical loss of or damage to property at the premises.”  The policy’s definition of “period of restoration” was the period

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COVID-19 Business Interruption Claims: First California Court of Appeal Decision Holds That Closure Orders Are Not “Direct Physical Loss”

California has been a hotbed of litigation regarding COVID-19 business interruption claims.  The vast majority of the trial courts have held in favor of insurers and against businesses.  Now, the California Court of Appeal has weighed in.  In a published decision, The Inns by the Sea v. California Mutual Insurance Company (November 15, 2021, Case No. D079036), the Fourth Appellate District held that a hotel’s business income loss resulting from the COVID-19 pandemic was not covered. About The Author

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Federal Court Holds that the Voluntary Payment of an Appraisal Award Plus Penalty Interest Defeats TPPCA Claims Under Texas Law

In 2019, the Supreme Court of Texas issued a pair of decisions that allowed policyholders to prosecute claims under the Texas Prompt Payment of Claims Act (“TPPCA”) even after the insurers paid appraisal awards. The decisions were a modification of law and so post-appraisal litigation has and continues to evolve. One such example is a recent decision from District Judge Tipton of the Southern District of Texas in White v. Allstate Vehicle and Property Insurance Company, which has provided a potential road map for insurers looking to curb post-appraisal demands and litigation after the payment of an appraisal award.[1] About The Author

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Ninth Circuit Holds COVID-19 Business Interruption Losses Require Direct Physical Damage To The Property

In March 2020, Mudpie Inc.—a San Francisco children’s store—ceased operations when California Governor Gavin Newsom ordered all “non-essential” businesses to close due to the COVID-19 pandemic. Because of the shut-down, Mudpie sought coverage for loss of “business income” and “extra expense” under a commercial property policy issued by Travelers Casualty Insurance Company of America (“Travelers”). The Travelers policy provided coverage during the “period of restoration” for loss of business income due to the necessary suspension of the insured’s operations caused by “direct physical loss of or damage to the [insured’s] property.” About The Authors

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When Better Late Than Never Isn’t Good Enough: Florida Federal Court Grants Summary Judgment For Insurer In Late-Reported Hurricane Claim

On September 27, 2021, Judge Jose Martinez of the U.S. District Court for the Southern District of Florida granted summary judgment in favor of Scottsdale Insurance Company in LMP Holdings Inc. v. Scottsdale Ins. Co., case no. 20-24099. The case arose out of a Hurricane Irma claim reported more than two years after the storm. The insured, LMP Holdings, Inc., owned a commercial property located in Miami. The insured claimed the property sustained damage from Hurricane Irma, which struck South Florida on September 10, 2017. The insured’s handyman and one of the insured’s officers inspected the property the day after the storm. The handyman noticed punctures on the roof, which he patched, and a panel from one of the air

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About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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