The federal appeals court in Atlanta issued another pro-insurer ruling in a COVID-19 business interruption case last week, while a New Mexico state court refused an insurer’s motion to dismiss another case.

In the federal appeals case, the 11th U.S. Circuit Court of Appeals upheld a ruling by the U.S. District Court in Birmingham, Alabama, and ruled that Liberty Mutual Insurance Co. and a subsidiary were not obligated to provide business interruption coverage to Buford, Georgia-based Ascent Hospitality Management Co., according to the decision in Ascent Hospitality Management Co., LLC v. Employers Insurance Co. of Wausau, Liberty Mutual Insurance Co.

Ascent Hospitality manages and operates hotels and restaurants in 35 locations in five states, Alabama, Georgia, Indiana, Mississippi and Tennessee.

Stating both sides agree New York law applied, the decision cited December’s ruling by the 2nd U.S. Circuit Court of Appeals in New York in 10012 Holdings Inc. DBA Guy Hepner v. Sentinel Insurance Co., which held that a theater was not entitled to coverage.

“Ascent’s alleged losses are not covered under the all-risks provision as a matter of New York law” and while Ascent advances several counterarguments, “none are persuasive,” the ruling said.

The 11th Circuit had previously issued a pro-insurer ruling on the issue.

The ruling in the New Mexico case dismissing the litigation against Cincinnati Insurance Co. was filed in Bernalillo County Court in Albuquerque, New Mexico.

According to court papers in the case, which was first filed in U.S. District Court in Albuquerque before being transferred to state court, the lawsuit was filed by more than a dozen New Mexico eye surgery centers against Cincinnati Insurance, according to Eye Associates of New Mexico Ltd., Eye Surgery Centers of NM, LLC and Pecos Valley Surgery Center, LLC v. The Cincinnati Insurance Co., an Ohio Insurance Co., and Erica N. Johnson, a New Mexico ruling.

In his brief ruling, the judge said that “having heard oral arguments and having otherwise been fully advised in the premises, the Court finds that the motion is not well taken and should be denied.”

Eye Associates attorney Kristin Davis, a partner with Thompson Hammerman Davis LLP in Washington, said, “We believe the judge reached the right result, that this case presents a clear instance of a covered claim” and that the insurer  “did not treat their client fairly in the way they handled this claim.” 

Ms. Davis said the ruling is “part of a growing trend where state courts” are ruling differently than federal courts on the issue.

The insurer’s attorneys did not respond to a request for comment.

In December, for instance, a judge in New Jersey state court in Atlantic City ruled in favor of a casino, AC Ocean Walk LLC, in litigation filed against Allianz, Zurich Insurance Group and American International Group Inc. units, according to the ruling in OC Ocean Walk, LLC vs. American Guarantee and Liability Insurance co. et al.

In its 20-page ruling, the court refused to dismiss the case against Zurich, one of the AIG defendants, AIG Specialty Insurance Co., and Allianz.

It said it concludes “that the term ‘direct physical damage’ in the carriers’ policies in this case could support either plaintiff’s or defendants’ positions of what constitutes a direct physical loss; in other words, it is ambiguous.

“The carriers could have defined the term physical damage but declined to do so.”

The court did agree to dismiss the case against AIG unit National Fire & Marine Insurance Co. on the basis of a biological or chemical substances exclusion endorsement in its coverage.