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AIG wins COVID-related business interruption ruling


The 9th U.S. Circuit Court of Appeals in San Francisco ruled in favor of an American International Group Inc. unit Monday and affirmed a lower court ruling that an event and venue management business is not entitled to COVID19-related business interruption coverage, citing the plaintiff’s virus exclusion.

The lawsuit was filed by Palmdale States Inc., which operates the Casa Bella Event Center in Sunol, California, against AIG unit Blackboard Insurance Co., according to court papers in Palmdale Estates Inc. v. Blackboard Insurance Co. The decision affirmed a ruling by the U.S. District Court in San Francisco.

A unanimous three-judge panel cited two earlier 9th Circuit rulings in Mudpie Inc. v. Travelers Casualty Insurance Co. of America and  

The plaintiffs in Mudpie “made a similar argument – the government shutdown orders, not the virus caused the loss,” the ruling said. 

Similarly, in Chattanooga, “the plaintiffs argued that their losses ‘were attributable to other causes not implicated by the virus, including… governmental responses to the pandemic,’” the ruling said.

“Likewise, Palmdale cannot show that the government’s responses to the virus was the product of anything other than the virus.  The virus exclusion, therefore, precludes coverage,” the ruling said, in affirming the lower court.

Attorneys in the case did not respond to requests for comment.

On April 21, The Massachusetts Judicial Supreme Court joined federal appeals courts in ruling against policyholders in a COVID-19 business interruption case, becoming the first state high court to decide the issue, when it issued its decision in Verveine Corp. et. al v. Strathmore Insurance Co. et al.

The next day, it was joined by the Iowa Supreme Court, which issued two rulings, Jesse Embers LLC vs. Western Agricultural Insurance Co. and Wakonda Club v. Selective Insurance Co. of America, in ruling against policyholders in COVID 19-related business interruption litigation. 

Jesse Embers operates a bar and restaurant in Des Moines, while Wakonda Club operates a Des Moines private golf and country club.








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