Policyholder pulls COVID-19 suit against broker, insurer

A legal services firm that sued its broker and insurer last week in a claims dispute over coronavirus-related business interruption losses is withdrawing the lawsuit.

In a statement Wednesday, Philadelphia-based Magna Legal Services LLC said that “after careful consideration” it had decided to withdraw the suit it filed in state court in Philadelphia on May 13 against a unit of Hartford Financial Services Group Inc., Nottingham Agency Inc. and a broker at the Hamilton, New Jersey-based brokerage.

“For 13 years, Magna has been a trusted partner of the insurance industry. It is now more important than ever that we work together to get through these trying times,” the statement said.

Magna’s services include court reporting, graphics design, jury consulting, record retrieval and translation services.

The firm will continue to use Hartford for liability and life insurance coverage and will maintain its relationship with Nottingham, a Magna spokeswoman said.

Magna, which closed its operations in March to comply with government lockdown orders, had alleged negligence by Nottingham, stating in the suit that it had engaged the broker to secure “all appropriate insurance coverage.”

In addition, Magna asserted in the suit that the coronavirus pandemic had caused direct physical loss to its property and, therefore, Hartford owes coverage under its commercial insurance policy.

Dozens of businesses have sued their insurers over the past two months seeking coverage for coronavirus-related business interruption losses. In at least one other case, the suit targeted the retail and wholesale brokers involved in the placement.

While most of the suits are still pending, a few decisions that have been made so far have favored insurers. Last week, a federal judge in New York denied a policyholder’s petition for a declaratory judgment confirming business interruption coverage, and in a separate case the Pennsylvania Supreme Court ruled in favor of an insurer in a COVID-19 dispute when it refused to fast track a dispute to the high court’s docket.

More insurance and risk management news on the coronavirus crisis here.