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In a policyholder victory, a state court judge has refused to dismiss COVID-19 business interruption litigation filed by a Philadelphia pub against Lloyd’s of London, in a preliminary ruling.
In a brief order issued in Taps & Bourbon On Terrace, LLC v. Underwriters at Lloyds London and Main Line Insurance Offices, Inc. on Monday, the Court of Common Pleas of Philadelphia County said any preliminary objections to the complaint are overruled.
A footnote to the order issued by Judge Gary S. Glazer states, “At this very early stage, it would be premature for this court (to) resolve the factual determinations put forth by defendant to dismiss plaintiff’s claims.
“Taking the factual allegation made (by) the plaintiff’s complaint as true, as this court must at this time, plaintiff has successfully pled to survive this stage of the proceedings.
“Moreover, the law and facts are rapidly evolving in the area of COVID-19 related business losses. Accordingly, the preliminary objections are overruled.”
In its July complaint, the pub argued Lloyd’s had denied its business interruption claim “in spite of the clear language granting coverage” for the losses incurred when it was ordered to close by Pennsylvania Governor Tom Wolf’s executive order in March.
The complaint charges the defendants with bad faith and negligent breach of contract.
Lloyd’s had argued in seeking a “demurrer,” a finding the case should be dismissed on the basis there was an “insufficiency of a pleading,” that there was no “direct physical loss of or damage to” the pub’s property as required by its coverage, and also pointed to a virus exclusion in the coverage.
Plaintiff attorney Jonathan Wheeler, a principal with Wheeler, DiUlio & Wheeler P.C. in Philadelphia, said in a statement, “We are pleased that the court showed thoughtful consideration of the issues raised in this case, and recognized that there is a growing body of case law which support the policyholders’ right to receive benefits for which a premium has been paid.”
The attorney for Lloyd’s said he does not comment on pending litigation.
Commenting on the order, policyholder attorney Michael S. Levine, a partner with Hunton Andrews Kurth LLP in Washington, who is not involved in the case, said, “Basically, the judge punted, if you will, and said, ‘I’m not going to dismiss. I’m going to allow the parties to take discovery on these very issues.’”
Mr. Levine said, “The order is a “win for policyholders, and it shows that these cases should not be summarily dismissed, that there is potential merit in these cases, and that the facts of each case matter.”
In October, a North Carolina state court judge ruled in favor of a group of restaurants in pandemic-related business interruption litigation, holding the state’s order to close the restaurants was a covered physical loss under their policies.
However, to date insurers have prevailed in most cases, except for a few, most of them by state courts.
More insurance and risk management news on the coronavirus crisis here.