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NY judge dismisses restaurant chain’s COVID-19 BI suit

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A New York judge has agreed to dismiss COVID-19-related business interruption litigation filed by a Dallas-based restaurant chain against a Swiss Re Ltd. unit.

Judge Jennifer G. Schecter of the New York Supreme Court in Manhattan dismissed Consolidated Restaurant Operations Inc. v. Westport Insurance Corp. in a one-page order Wednesday.

Consolidated Operations said in a complaint filed in August 2020 that it operates 27 full-service and 27 franchise restaurants in 12 states and the United Arab Emirates. It said it had purchased $50 million of per-occurrence business interruption insurance from Westport that covers “all risks.”

The complaint charged Westport had “given every indication it will not cover losses stemming from the pandemic. Its principal position is that neither the virus nor the attendant disease causes physical loss or damage to property as that terminology is insured in the All-Risk Policy.”

“That position contravenes the plain meaning of the coverage language and case law in New York and across the country interpreting the same or similar language,”  the chain said in its complaint, which charged the insurer with breach of contract.

Westport said in a May court filing that 16 New York courts, including four state and 12 federal courts, “have  unanimously concluded that dismissal is entirely appropriate because the actual or suspected presence of COVID-19 is not ‘direct physical loss or damage’ to property sufficient to trigger coverage.”

Last month, a  federal district court in New York dismissed COVID-19 business interruption litigation filed by a New York health system against American International Group Inc. and Allianz SE units, stating the losses had not been caused by direct physical loss or damage as required by the coverage.