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Six COVID business interruption rulings side with insurers

Posted On: Jun. 6, 2022 2:46 PM CST


Four U.S. Circuit Courts of Appeal continued insurers’ unbroken winning record in COVID-19-related business interruption cases on Friday and Monday, with all unanimously ruling against policyholders in six cases. 

The rulings were: 

- The 1st U.S. Circuit Court of Appeals in Boston affirmed a ruling by the U.S. District Court in Boston in litigation filed against New York-based Strathmore Insurance Co., a unit of the Greater New York Group, by 34 Boston-based restaurants in Legal Sea Foods, LLC v. Strathmore Insurance Co.  

- The 1st Circuit also ruled in favor of a Berkshire Hathaway Inc. unit in litigation filed by a British-based metal ceiling manufacturer in SAS International Ltd. v. General Star Indemnity Co., affirming a decision by the Boston district court. 

- The 7th U.S. Circuit Court of Appeals in Chicago affirmed a ruling by the U.S. District Court in Chicago in a lawsuit filed by a Chicago jewelry business against a Hartford Financial Services Group Inc. unit in ABC Diamonds Inc. v. Hartford Casualty Insurance Co. 

- The 8th U.S. Circuit Court of Appeals in Cincinnati affirmed a ruling by the U.S. District Court in Kansas City, Missouri, and ruled against a group of 14 sandwich shops in Missouri, Kansas and Oklahoma against a Liberty Mutual Insurance Co. unit in Planet Sub Holdings, Inc. v. State Auto Property & Casual Insurance Co., Inc. 

- The 11th U.S. Circuit Court of Appeals in Atlanta affirmed a ruling by the U.S. District Court in Atlanta in favor of a Zurich Insurance Group Ltd. unit in a lawsuit filed by a group of metropolitan Atlanta restaurants in Restaurant Group Management LLC v. Zurich American Insurance Co

- The 11th Circuit also affirmed a ruling by the U.S. District Court in Birmingham, Alabama, in litigation filed against Cincinnati Insurance Co. by two clothing stores in Tuscaloosa, Alabama, and Mountain Brook, Alabama, in Dukes Clothing, LLC v. The Cincinnati Insurance Co.

Dukes Clothing attorney Ted Colquett, founding partner of CLAW Colquett Law LLC in Birmingham, said in a statement, “While we are disappointed, we knew it was an uphill battle from the trial court to appellate levels because of the sheer volume of COVID business interruption cases decided in favor of insurers on same or similar grounds as in our case.

“Closer to home, Alabama state courts have never defined property damage as requiring a tangible, physical change to property. Federal courts at the district and appellate levels have now done that for them.”

Michael S. Levine, a partner with Hunton Andrews Kurth LLP in Washington, who represented Legal Sea Foods, said in a statement, "We’re obviously very disappointed with the court’s decision which, in our view, continues to break from more than 50 years of precedent finding coverage for similar-type losses.”  

He said, “Despite this, we remain optimistic that courts will recognize the infirmity of making factual determinations without evidence and begin to look at the evidence as cases with more fully developed records matriculate though the appellate courts and, ultimately, reach the correct conclusion.”

Plaintiff attorney J. Robert Persons, counsel with Lindsey & Lacy P.C. in Peachtree City, Georgia, who represented Restaurant Management Group, said in a statement, “The opinion in this case simply continues the practice of insurance company removal of these cases filed in state courts in the Eleventh Circuit to federal trial courts, which promptly dismiss them. 

“The Eleventh Circuit then rubber stamps the dismissals and both the federal trial and appellate courts also routinely refuse to let state supreme courts consider the coverage questions. Insurance is a state law issue, but the federal judiciary is effectively blocking state supreme courts from determining the correctness of these assembly line rulings."

Other attorneys in the cases had no comment or did not respond to a request for comment. Liberty Mutual Insurance said in a comment it does not publicly discuss litigation.