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Mississippi restaurant loses COVID-19 business interruption case

covid court

A Hattiesburg, Mississippi, restaurant became the latest plaintiff to be denied COVID-19-related business interruption coverage by an insurer, when a federal district court ruled Wednesday there was no physical damage under the terms of its policy and that there was also no coverage because of a virus exclusion.

Real Hospitality LLC, which does business as Ed’s Burger Joint, had filed a federal suit against Travelers Casualty Insurance Co. of America after the Travelers Corp. unit had denied coverage for its COVID-19-related business interruption losses, according to the ruling by the U.S. District Court in Hattiesburg in Real Hospitality, LLC d/b/a Ed’s Burger Joint v. Travelers Casualty Insurance Co. of America.

The insurer had contended that the plaintiff had not shown any physical loss of property or property damage that would trigger the restaurant’s business income/extra expense coverage in its all-risk commercial property insurance policy, and that coverage was also excluded by the policy’s virus exclusion.

The restaurant said it was entitled to coverage because it had suffered a loss of the use of its business premises, and that the virus exclusion did not “clearly and unambiguously exclude coverage,” according to the ruling.

In ruling in the insurer’s favor, the court said, “Reading the Policy as a whole, the Court finds that Plaintiff’s complaint fails to state a claim because it does not allege that any insured property was damaged, or that Plaintiff was permanently dispossessed of any insured property. Consequently, Plaintiff’s contention that ‘loss of property’ reasonably includes loss of usability is not sustainable.”

The ruling also said that coverage would be precluded under the policy’s virus exemption even if the plaintiff had been able to show it suffered property loss or damage under the policy.

The decision cites several other recent court rulings in insurers’ favor in comparable cases, including the Oct. 19 ruling by the U.S. District Court in Los Angeles in Travelers Casualty Insurance Co. of America v. Geragos and Geragos, which was filed by a law firm; an Oct. 7 ruling against a dentist by the U.S. District Court in San Antonio in Louis G. Orsatti, DDS P.C. v. Allstate Insurance Co.; and an Oct. 6 ruling against an Acworth, Georgia, restaurant by the U.S. District Court in Atlanta in Henry’s Louisiana Grill Inc. et al. v. Allied Insurance Co. of America, among others.

Attorneys in the Ed’s Burger case could not be reached for comment.