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6th Circuit again rules in insurer’s favor in COVID case

Posted On: Dec. 1, 2021 2:25 PM CST


The 6th U.S. Circuit Court of Appeals in Cincinnati on Tuesday issued its fourth ruling holding that policyholders were not entitled to COVID-19 business interruption coverage, in a case filed by a bridal salon.

The ruling by the unanimous three-judge panel in Bridal Expressions LLC v. Owners Insurance Co. is the eighth by a federal appeals court to go against policyholders.

Three other federal appeals courts – the 9th Circuit in San Francisco, the 11th in Atlanta and the 8th in St. Louis – have also ruled against policyholders.

The case filed by the Mentor, Ohio, bridal shop was one of six class-action lawsuits filed against insurers by a group of law firms in April 2020.

In its latest decision, which upheld a lower court ruling by the U.S. District Court in Cleveland, the appeals court cited its earlier ruling in Santo’s Italian Café LLC v. Acuity Insurance Co., which held the virus had not caused “direct physical loss or damage to” property as required by its coverage.

“What was true for the restaurant in Santo’s Italian Café is true for the bridal shop today. Throughout the coverage period, Bridal Expressions retained possession of its property and could put it to use.

“The company’s inability to use the property in the same way as it did before the pandemic – not unlike the situation faced by restaurants at the time – does not satisfy the policy’s language,” and Bridal Expressions “identifies no reason why the text of this policy requires a different outcome.”

“One wrinkle remains,” the ruling said. The bridal store argues the virus’ presence “altered the structure of the air, the physical space, and the property surfaces at” the salon.

“This allegation does little more than repeat the language of the policy,” the ruling said. “For this theory to have traction, the complaint would need to allege at a minimum that the coronavirus was present in the store and materially altered specific property at the time.

“If that were the theory of coverage, moreover, the complaint presumably would seek coverage for replacing that property and only for the tine that property was damaged or lost,” the ruling said, in affirming the lower court’s decision.

The insurer’s attorneys had no comment, and the salon’s attorneys did not respond to a request for comment.