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Nevada judge rules for restaurant holding company in COVID case

covid litigation

A Nevada trial judge said Friday that policies issued to the owner of restaurant chains including Bonefish Grill and Outback Steakhouse potentially cover losses caused by the COVID-19 pandemic.

The judge presiding over Bloomin’ Brands Inc. v.  Ace American Insurance Co. et al., which was heard in the Eighth Judicial District Court for Clark County, said the policies included a provision that covers losses resulting from an “outbreak of infection or contagious disease manifested by any person while at an insured location including the expense of any necessary clean-up or decontamination.”

The judge said the provision in policies issued to Bloomin’ Brands by seven insurers, including units of Chubb Ltd., Liberty Mutual Holding Co. Inc. and Zurich Insurance Group Ltd., were different than those addressed by the Nevada Supreme Court in its September 2013 ruling in Starr Surplus Lines v. Eighth Judicial District Court of State of Nevada. In that case, the state’s high court said the presence of the coronavirus did not cause covered physical loss or damage.

Tampa-based Bloomin’ Brands purchased the policies in December 2019, and they were in effect when the COVID-19 pandemic began. The insurers denied coverage, prompting the restaurant holding company’s lawsuit.

The insurers moved for partial summary judgment based on the Starr ruling and the presence of a contamination exclusion.

The judge said the contamination exclusion was inapplicable because it did not use the term virus to define its scope and because applying the exclusion would “swallow coverage that is expressly afforded under the 2020 policies.”

Similarly, the judge said a loss of use exclusion in the policies was inapplicable.

“We are very pleased with the court’s decision and order, which recognizes the material differences among commercial all-risk insurance policies,” said Michael S. Levine, a Washington-based attorney with Hunton Andrews Kurth LLP, which represents Bloomin’ Brands.

Representatives for the insurers did not respond to requests for comment.