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5th Circuit again rules for insurer in COVID BI case


The 5th U.S. Circuit Court of Appeals in New Orleans on Thursday issued its second ruling this week in favor of an insurer in a COVID-19 business interruption case, ruling in favor of a CNA Financial Corp. unit in litigation filed by a Texas tea and spice store.

As with its ruling Wednesday in Terry Black’s Barbecue, LLC v. State Automobile Mutual Insurance Co., a three-judge appeals court panel held that the McKinney, Texas, store had failed to allege it suffered direct physical loss of property from its COVID-related closure, according to the ruling in Aggie Investments, LLC v. Continental Casualty Co. 

The decision affirms an April 2021 ruling by the U.S. District Court in Sherman, Texas.

The appeals court ruling referred to its earlier decision in the Terry Black’s Barbecue case. “Like in that case, Aggie Investments has not alleged a covered loss because it only complains of loss of revenue due to reduced capacity in its stores,” the ruling said.

“Throughout the pandemic, moreover, Aggie Investments had ownership of, access to, and ability to use the entirety of its property,” it said.

The business income and extra expense endorsement provision’s “‘direct physical loss of property’ unambiguously requires a tangible alteration of property.

“Because Aggie Investments only alleges that civil authority orders limited its in-store capacity without any tangible alteration to its property, its losses do not qualify for coverage” under the provision, the appeals court panel said, in affirming the lower court’s ruling.

Attorneys in the case did not respond to requests for comment.

The 5th Circuit became the eighth federal appeals court to rule against policyholders on the COVID-19 business interruption ruling with its Terry Black’s Barbecue ruling.





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