Madison Sourdough suing insurance company over rejected COVID-19 claim

By: A. J. Bayatpour, Reporter, WKOW 27 | April 23, 2020

MADISON (WKOW) — Madison Sourdough, a popular Williamson Street bakery, has filed a lawsuit in federal court against its property insurer. The bakery claims Society Insurance rejected its claim for damages from lost business due to the COVID-19 pandemic and subsequent “safer at home” order in Wisconsin.

“American businesses are going to be experiencing billions and billions of dollars of losses and these same businesses paid a lot of money to have business interruption insurance,” said Tim Burns, the attorney representing Madison Sourdough in the lawsuit.

According to the federal suit, filed in the Eastern District of Wisconsin, Madison Sourdough claims that “in the special property coverage form, Society Insurance did not exclude or limit coverage for losses from viruses.”

Rebecca Kollman, Corporate Marketing Manager for the Fond du Lac-based insurer said Thursday that the company does not comment on ongoing litigation.

“We look forward to a favorable resolution of this situation in the near future,” Kollman said.

Andy Franken, President of the Wisconsin Insurance Alliance, said it is not reasonable to expect property insurers to cover losses related to COVID-19.

“Under the contracts that are vastly used in the industry, virus protection is excluded,” Franken said. “Premiums were not collected to pay for this type of payout.”

The lawsuit argues that “contamination” is cause for the insurer to pay out a claim; Burn said COVID-19 constitutes contamination as it resulted in the closure or suspension of business.

Madison Sourdough is currently allowing customers to place orders ahead of time and pick them up on Fridays and Saturdays.

“(Insurers are) not behaving in the way they promised to behave, they aren’t behaving in the way they told regulators their policies worked,” Burns said.

Burns said he is combining the lawsuit with several other similar cases in a Chicago federal court. He said his goal is to help create a large class action case involving numerous businesses and their insurers.

Burns said he suspects the end result will be a large single settlement with insurers funding a payout to each of the plaintiff businesses.

“The defendant, in this case, the insurance companies, will eventually come to the point where they agree to put up X amount of money that ensures their survival but still gives a large portion of these claims paid,” Burns said. “And that’s likely what will happen here.”

 

Lawyers suing insurance firms over COVID-19 coverage seek MDL

By Amanda Bronstad | April 23, 2020

Efforts to coordinate business-interruption lawsuits against insurance firms focus on 16 cases so far filed in federal courts against eight insurance firms, but Richard Golomb, of Golomb & Honik, predicts an “avalanche of cases.”

Anticipating a flood of business-interruption lawsuits against insurance firms in the wake of COVID-19, two groups of lawyers have sought to create a multidistrict litigation proceeding that would coordinate all the cases.

Anticipating a flood of business interruption lawsuits against insurance firms in the wake of COVID-19, two groups of lawyers have sought to create a multidistrict litigation proceeding that would coordinate all the cases.

Dozens of small businesses have sued a spate of insurance firms, including Certain Underwriters of Lloyd’s of London and Admiralty Indemnity Co., alleging they rejected coverage for economic losses caused by government shutdowns over coronavirus.

“This issue—whether business interruption insurance policies will cover losses incurred by businesses forced to shutter their business as a result of the governmental orders—is one of national importance and great significance to the ultimate survival of many businesses,” wrote plaintiffs’ attorney Richard Golomb, in a motion filed on Monday before the U.S. Judicial Panel on Multidistrict Litigation. “This is a monumental issue.”

Golomb’s firm, Golomb & Honik, and Levin Sedran & Berman, which joined in the motion, represent Philadelphia eateries River Twice and Chops in two lawsuits. They want to coordinate all the cases in the Eastern District of Pennsylvania and have suggested Judge Timothy Savage, who has not handled multidistrict litigation before.

“The Covid-19 business interruption litigation is obviously a complex case that has national ramifications and requires a national solution,” Golomb said in an email. “As a result, we believe there is no better method than multi-district litigation to efficiently work toward a fair and timely resolution for all small businesses involved.”

On Tuesday, attorneys Adam Levitt, of Chicago’s DiCello Levitt Gutzler, and Mark Lanier, of The Lanier Law Firm, who filed six class actions against insurance firms, filed a motion that sought a multidistrict litigation proceeding in the Northern District of Illinois before Judge Matthew Kennelly, who sits on the MDL panel. Joining them were Burns Bowen Bair in Madison, Wisconsin, and Daniels & Tredennick in Houston.

The cases are in federal courts in Illinois, Florida, Pennsylvania, New York, Wisconsin, Ohio, California, Oregon and Texas. One motion references another nine lawsuits in state courts in Oklahoma, Louisiana, California, Texas, Indiana, Wisconsin and Washington D.C.

The motions focus on 16 cases so far filed in federal courts against eight insurance firms, but Golomb predicted an “avalanche of cases.” Tuesday’s motion referenced statements from The Hartford and Travelers, neither of which is one of the defendants, insisting that their business interruption coverage included losses from physical damage caused by hurricanes, fires, winds or theft—not a virus. They also noted that Allstate, Zurich and Allianz, none of which are named in the suits, have headquarters in Illinois.

Acknowledging the potentially large number of defendants in such an MDL, both motions said the cases were all about the common issue of business interruption insurance policies. They also referenced the cases brought against more than a dozen companies that distribute and manufacture opiate pharmaceuticals. More than 2,700 lawsuits over the opioid crisis are coordinated in multidistrict litigation in the Northern District of Ohio.

Insurance defendants are due to respond to the MDL panel next month.

 

https://www.law.com/2020/04/23/lawyers-suing-insurance-firms-over-covid-19-coverage-seek-mdl/?slreturn=20200324092141

Litigation over business interruption insurance heats up

By Alicja Grzadkowska |April 22, 2020

The business interruption litigation landscape continues to heat up in the midst of COVID-19, with big names like Chef Thomas Keller jumping in to sue his insurer over coronavirus business interruption claims and other businesses following suit.

In a recent development, two motions were filed on April 20 with the Judicial Panel on Multidistrict Litigation (JPML) that asked the panel to consolidate federal suits accusing insurers of dodging claims by businesses that were shut down by government orders, according to Reuters. Motions for JPML consolidation are typically a way for plaintiffs’ firms to name themselves as the leaders of developing litigation, added Reuters’ Alison Frankel.

The first of these motions involves Levin Sedran & Berman and Golomb & Honik, and argues that the question of whether business interruption insurance policies will cover losses incurred by these businesses can’t be answered in piecemeal by different courts around the US because of its significant national importance. The second bid, which was filed by DiCello Levitt Gutzler, the Lanier Law Firm, Burns Bowen Bair and Daniels & Tredennick, underscored the efficiency of centralized expert epidemiology discovery and legal analysis.

The key issues across the complaints filed against insurers so far are whether COVID-19 causes physical damage or property loss, and whether insurance coverage is triggered when the virus is present on or near a policyholder’s property, as argued in the brief.

However, Frankel noted in the Reuters report that it’s not definitive that the cases will be consolidated. Law professors Alexandra Lahav of the University of Connecticut and Elizabeth Burch of the University of Georgia told the reporter that the JPML has become reluctant to create new multidistrict litigation (MDL). Lawsuits involving contract disputes, which includes insurance policies, only have a 40% chance of consolidation, said Burch.

Read more: Travelers fires back against law firm suing for business interruption cover

Meanwhile, Daniel Schwarcz, a University of Minnesota law professor who specializes in insurance law and regulation, said that the plaintiffs’ firms are correct that some “important legal and factual issues” span policyholders’ claims. For example, if businesses were ordered shut because of the physical presence of the virus, this could be covered by business interruption insurance, but if they were ordered shut because of the risk of the virus spreading, this would likely not be covered.

However, insurance law questions are matters of state law, according to Schwarcz, and each state has their own precedent on how they define physical loss or damages. Similarly, language on business interruption insurance is varied across policies and so is the language around shutdown orders issued by state governors.

“It is difficult to see how a consolidated action would deal with these variations,” Schwarcz told Reuters. “There are immense complications … that may ultimately prove insurmountable.”

At the same time, some plaintiffs’ lawyers are resisting consolidation. John Houghtaling of Gauthier Murphy & Houghtaling filed the first business interruption suit around the coronavirus shutdown and is working with Thomas Keller and other celebrity chefs to advocate for restaurants demanding cover from insurers. These cases are not removable to federal court and would thus not be part of an MDL in federal court. The lawyer is also opposed to consolidation, calling it “inefficient and inappropriate.”

Read more: Six insurers face federal class action lawsuits for denying business interruption claims

Insurance defense lawyer James Martin of Zelle added that a business interruption coverage MDL might make sense down the road, but the recent requests seem premature since less than two dozen business interruption suits have been filed in federal court.

“With that limited subset, how can the JPML identify the common questions of fact to fashion an order that will identify which of the hundreds or thousands of later-filed cases will get transferred for coordinated or consolidated pretrial proceedings?” said Martin. “Should the MDL include class actions (which we think are particularly ill-suited for business interruption claims)?  Should the MDL be limited to certain types of policies or particular questions?”

But plaintiffs’ lawyer Levin said consolidation in an MDL would ensure consistency across what he expects to be significant litigation.

“It’s a managerial tool,” he said to Reuters. “The courts are going to have to look at it and say, ‘What do we want? Do we want this litigated in every jurisdiction? In every division of every jurisdiction?’”

The DiCello Levitt group’s brief argued that a business interruption insurance MDL could address important questions about property insurance, COVID-19, and government-ordered shutdowns, stating that “the same type of evidence will be needed in every case to consider and ultimately to determine whether COVID-19 caused or constituted ‘physical damage or loss to property.’”

Related stories:

 

https://www.insurancebusinessmag.com/us/news/breaking-news/litigation-over-business-interruption-insurance-heats-up-220358.aspx

Five more food service operators take to court to compel coverage of business interruption claims for COVID-19

Joanna Fantozzi | Apr 20, 2020

A wave of lawsuits seeking class-action status argue restaurants have been unfairly denied business interruption insurance claims

Another five lawsuits seeking class-action status have been filed by restaurants and hospitality groups against the insurance companies that are denying business interruption insurance claims in response to COVID-19-related restaurant closures.

The initial named plaintiffs in these cases include Gio Pizzeria and Bar Hospitality (owner of Nick’s New Haven Style Pizzeria & Bar in Cold Springs and Boca Raton, Fla.); Caribe Restaurant and Nightclub Inc. (owner of La Luz Ultralounge in Bonita, Calif.); Rising Dough Inc. (owner of Madison Sourdough bakery in Madison, Wis.) and Will McCoy’s (owner of seven prohibition-themed taverns in the Twin Cities area, Minn.); Troy Stacy Enterprises (owner of Craft & Vinyl in Columbus, Ohio), and Dakota Ventures LLC (owner of Kokopelli Grill in Port Angeles, Wash.)

These lawsuits, which were filed Friday, are the latest in a string of similar cases filed by foodservice businesses that have been denied business interruption insurance coverage, including that of chef Thomas Keller, who sued his insurance company for declaratory judgments on behalf of business interruption insurance claims. The wave of lawsuits filed last week allege that the restaurants’ insurance companies are compelled to follow through in paying these claims because they either do not have virus exclusions in their contracts or because the case for the virus exclusion is not strong enough.

In response to the growing number of lawsuits, insurance providers have made the argument that COVID-19 is an exception, and that business interruption insurance was never meant to cover a universal catastrophe such as this pandemic, insurance groups wrote in a letter to members of Congress.

Related: Chefs, law firm form coalition to fight for insurance claims related to coronavirus

But attorneys for the restaurant operators contend that the businesses will not survive if insurance companies do not honor their policies.

“All of these companies paid a lot of money in monthly premiums for years for coverage with this very type of situation only to be told now when the rainy day actually comes that their insurance company is turning their backs on them,” said Adam Levitt, attorney at DiCello Levitt Gutzler LLC, one of several law firms representing the companies in these five cases. “If these insurers won’t honor their own policies, lots of businesses will be unable to survive. As we see it, these lawsuits represent these restaurants’ only means of compelling insurance companies to fulfill promises that they made to our clients and to thousands of other U.S. businesses.”

For example, in one of the lawsuits, Gio Pizzeria and Bar Hospitality alleges that their insurance company, Certain Underwriters at Lloyd’s of London, agreed to “pay for direct physical loss unless the loss is excluded or limited in the policies, and that viruses were not listed in the policy exclusions.

In another of the lawsuits, Caribe Restaurant and Nightclub’s insurance company, Topa Insurance Company, does have a virus exclusion, but the lawsuit alleges it only covers international acts of “nuclear, biological, bio-chemical, chemical or radioactive agent, substance, material, device or weapon.” The spread of a virus like COVID-19 would not be an intentional act or weapon, and therefore the insurance company’s claim of an exception is not legally applicable.

“Insurance companies are theoretically all about the evaluation and management of risk, so they charge businesses for their policies based on perceived risk,” Levitt said. “For an insurance company to now walk away from its obligations that it prospectively evaluated is wrong.”

 

https://www.nrn.com/news/five-more-foodservice-operators-take-court-compel-coverage-business-interruption-claims-covid

 

 

Latest Class Actions Over Business Interruption Target 6 Insurers

April 21, 2020

A Minnesota dentist, an Ohio bridal shop and a New York pizzeria are among six small businesses that are the latest to sue insurers seeking compensation for business interruption claims due to the coronavirus crisis.

The lawsuits, which are class actions, have been filed against Aspen American Insurance, Auto-Owners Insurance, Lloyd’s of London, Society Insurance, Oregon Mutual Insurance, and Topa Insurance Co.

The plaintiffs include a San Diego restaurant and nightclub; a Cleveland-area bridal retailer; a Madison, Wisconsin bakery and cafe; a Minnesota chain of restaurants and bars; a St. Paul, Minn. dental practice; a Portland, Ore. restaurant; and a New York restaurant group and pizzeria.

Each of the lawsuits claims that the businesses purchased business income insurance coverage, which promises to pay for losses due to necessary suspension of operations. In all instances, according to the lawyers, these coverages “either included or did not expressly or effectively exclude losses caused by viruses such as COVID-19,” which caused state and municipal governments to mandate widespread business closures.

“Despite these facts, the insurers have, on a broad and uniform basis, refused to uphold their contractual responsibilities for losses suffered due to COVID-19, as well as losses caused by executive orders by civil authorities and any efforts to prevent further property damage or to minimize the suspension of business and continue operations,” the plaintiffs contend.

The plaintiffs argue that their property insurance policies are all-risk property damage policies that “cover all risks of loss, except for risks that are expressly and specifically excluded.”

The law firms bringing the cases are DiCello Levitt Gutzler in Chicago; The Lanier Law Firm in Houston; Burns Bowen Bair in Madison, Wisconsin; and Daniels & Tredennick is a trial firm in Houston.

Litigation has been building against insurers over coronavirus business interruption. The cases are part of a series of cases that has the property/casualty insurance industry publicly arguing that most business interruption or contingent business interruption policies require that there is direct physical loss or damage. The industry also notes that many policies also exclude communicable diseases, although there are some policies with coverage options for fungi, bacteria or virus.

There are also some business interruption policies that provide coverage if government denies access to a property.

President Donald Trump commented on business-interruption claims last week, stating that unless the policy excludes pandemics, insurers should pay and several states are considering legislation to force insurers to pay, although“

The cases include:

  • Gio Pizzeria & Bar Hospitality, LLC and Gio Pizzeria Boca, LLC v. Certain Underwriters at Lloyd’s, London, U.S. District Court for the Southern District of New York
  • Rising Dough, Inc., et al. v. Society Insurance, U.S. District Court for the Eastern District of Wisconsin
  • Bridal Expressions LLC v. Owners Insurance Company, U.S. District Court for the Northern District of Ohio
  • Caribe Restaurant & Nightclub, Inc. v. Topa Insurance Company, U.S. District Court for the Central District of California
  • Dakota Ventures, LLC d/b/a/Kokopelli Grill v. Oregon Mutual Insurance Co.;U.S. District Court for the District of Oregon
  • Christie Jo Berkseth-Rojas DDS v. Aspen American Insurance Company; U.S. District Court for the Northern District of Texas

 

https://www.insurancejournal.com/news/national/2020/04/21/565507.htm

String of class actions claim pandemic risks not excluded from BI policies

By Adrian Ladbury |

The legal assault by US policyholders on business interruption (BI) policies to seek redress for the massive losses incurred by the Covid-19 pandemic has been stepped up a notch as four leading law firms filed a series of actions against six insurers, including underwriters at Lloyd’s of London, in what they describe as the “broadest effort yet” to force insurers to pay up on BI policies.

The insurance industry in the US and worldwide was quick to deny coverage under BI policies, pointing out that the pandemic risk had been excluded from virtually all policies since the SARS outbreak in 2003. Insurance associations in the US have warned that legislative efforts in seven states so far to retroactively open up the BI policies to the risk coupled with legal action could bankrupt the sector. The insurers also argued that such a retroactive change in contract law would be unconstitutional.

But these latest class actions and other recent suits being prepared in the US and UK suggest that many plaintiffs may not actually need a retroactive change in the BI contracts to win damages. It seems that the BI policy wordings issued by many insurers are not as watertight as they originally claimed and the plaintiff lawyers clearly smell blood.

“In all instances, these coverages either included or did not expressly or effectively exclude losses caused by viruses such as Covid-19, which caused state and municipal governments to mandate widespread business closures,” reads the statement issued by the four law firms carrying out the class actions.

In this case, the plaintiffs are represented by DiCello Levitt Gutzler, The Lanier Law Firm, Burns Bowen Bair, and Daniels & Tredennick. The insurers named in the lawsuits are Lloyd’s of London, Aspen American Insurance, Auto-Owners Insurance, Society Insurance, Oregon Mutual Insurance, and Topa Insurance Company.

Initial plaintiffs include a San Diego restaurant and nightclub; a Cleveland-area bridal retailer; a Wisconsin-based bakery and cafe; a local Minnesota chain of restaurants and bars; a St Paul, Minnesota dental practice; a Portland, Oregon restaurant; and a New York restaurant group and pizzeria.

The law firms issued a joint statement on 17 April that states: “US businesses decimated by the Covid-19 pandemic today filed federal class-action lawsuits against six insurance companies for denial of policy claims they had purchased to protect against business interruptions. The suits represent the broadest effort yet to compel insurance companies to fulfil promises made to hundreds of thousands of US businesses that purchased insurance coverage to protect against precisely this situation.

“Businesses nationwide have, for years, purchased expensive insurance policies to protect them from losses exactly like those they are currently enduring. Each of the lawsuits claims that the businesses purchased special property insurance coverage to protect against business interruptions or disruptions outside of their control. These policies included business income coverage, which promises to pay for losses due to necessary suspension of operations. In all instances, these coverages either included or did not expressly or effectively exclude losses caused by viruses such as Covid-19, which caused state and municipal governments to mandate widespread business closures.

“Despite these facts, the insurers have, on a broad and uniform basis, refused to uphold their contractual responsibilities for losses suffered due to Covid-19, as well as losses caused by executive orders by civil authorities and any efforts to prevent further property damage or to minimise the suspension of business and continue operations.”

Adam Levitt, co-counsel to the plaintiffs and a partner at DiCello, Levitt Gutzler, said: “For many small business owners trying to provide for their families and employees, this type of insurance coverage was an additional expense that they would have preferred not to carry but felt a responsibility to do so. For insurers to now tell them, in the most challenging of times, that the joke was on them and their policies were worthless, is unethical and abhorrent.”

The statement said that most property insurance policies sold in the US, including those sold by the defendants, are all-risk property damage policies. These types of policies cover all risks of loss, except for risks that are expressly and specifically excluded.

“Insurers will deny almost every claim – even the most legitimate ones – because that’s just how they operate,” said Mark Lanier, co-counsel to the plaintiffs and founder of The Lanier Law Firm. “But at the end of the day, this really is a straightforward issue about honouring their agreements. As our nation emerges from this horrific pandemic, businesses of all sizes will be critical to restarting the economy. In playing their usual claim-denial games, these insurers are threatening the welfare of not only small-business owners and their families, but the entire US economy.”

Timothy Burns, a partner at Burns Bowen Bair, added: “Countless businesses across the United States are pinning their hopes of reopening and rehiring laid-off or furloughed employees on proceeds from insurance. Insurance companies thrive by selling protection against maladies of all kinds. They pocket huge profits when material events are avoided but must bear the responsibility of honouring their policies on the rare occasions when these events occur. By refusing to do so, they are not running a business at all, but a large-scale rigged carnival game where no matter the scenario, the customer always loses. It’s just not right, and we will do everything in our power to ensure that these businesses are made whole.”

As suggested above, US insurers and international surplus lines insurers do appear to face a serious threat from these suits because of the nature of the all-risks policies sold in the US and a building case for the pandemic to be determined as a form of physical damage.

The suit filed on behalf of New York-based Gio Pizzeria against underwriters at Lloyd’s shows the scale of the threat posed to the BI policies.

It states: “In many parts of the world, property insurance is sold on a specific peril basis. Such policies cover a risk of loss if that risk of loss is specifically listed (such as hurricane, earthquake, H1N1, etc.). Most property policies sold in the United States, however, including those sold by underwriters insurance, are all-risk property damage policies. These types of policies cover all risks of loss except for risks that are expressly and specifically excluded. Under the heading ‘covered causes of loss’, underwriters agreed to pay for direct physical loss ‘unless the loss is excluded or limited’ in the policies.”

The suit continues: “Underwriters did not exclude or limit coverage for losses from viruses in plaintiffs’ policies or those of the other class members. Losses due to Covid-19 are a covered cause of loss under the underwriters’ policies with the special property coverage form.

And it adds: “In the special property coverage form, underwriters agreed to pay for insureds’ actual loss of business income sustained due to the necessary suspension of their operations during the ‘period of restoration’ caused by direct physical loss or damage. A ‘slowdown or cessation’ of business activities at the covered property is a ‘suspension’ under the policy, for which underwriters agreed to pay for loss of business income during the ‘period of restoration’ that begins 72 hours after the time of direct physical loss or damage.

“The presence of virus or disease can constitute physical damage to property, as the insurance industry has recognised since at least 2006. When preparing so-called ‘virus’ exclusions to be placed in some policies, but not others, the insurance industry drafting arm, ISO, circulated a statement to state insurance regulators that included the following: ‘Disease-causing agents may render a product impure (change its quality or substance), or enable the spread of disease by their presence on interior building surfaces or the surfaces of personal property.’

“When disease-causing viral or bacterial contamination occurs, potential claims involve the cost of replacement of property (for example, the milk), cost of decontamination (for example, interior building surfaces), and business interruption (time element) losses. Although building and personal property could arguably become contaminated (often temporarily) by such viruses and bacteria, the nature of the property itself would have a bearing on whether there is actual property damage. An allegation of property damage may be a point of disagreement in a particular case.”

For some time now, senior claims experts in the London market in particular have warned of the lack of investment made in recruitment, training and education of claims specialists as the insurers fought hard to win business and tightly control costs during the long soft market. Those insurers that shifted investment away from the claims function towards sales may soon be regretting the decision. It seems increasingly likely that equity analysts may soon be basing their advice to investors on which insurers and reinsurers to invest in based on the quality of their claims and wordings staff.

 

Coronavirus Update: Protests Erupt, Insurance Coverage Lawsuits and More

By Heather Turner | 

In the U.S.

According to John Hopkins University (as of April 20, 2020):

  • Total U.S. cases: 760,570
  • Total U.S. deaths: 40,724

RIMS issued a letter to the U.S. Department of the Treasury, Congress and President Trump requesting the creation of a pandemic risk insurance program to accelerate economic recovery. In the letter, RIMS asserts that a pandemic risk insurance program would provide greater access to capital from lenders and establish a viable insurance market. It would also provide greater resilience to U.S. organizations in the event of a future pandemic.

Rep. Mike Thompson (D-Calif.) introduced the Business Interruption Insurance Coverage Act of 2020, a bipartisan bill to ensure businesses that purchase interruption insurance won’t get their claims denied because of major events, such as the coronavirus pandemic. In response, industry leaders voiced opposition to the bill, with one saying the bill, and others like it, “would apply business interruption coverage where it doesn’t exist, exacerbating existing disruptions and further delaying our nation’s economic recovery.”

Six class-action lawsuits were filed on Friday (April 17) against insurance companies for denial of policy claims businesses had purchased to protect against business interruptions, according to a press release. The plaintiffs are represented by DiCello Levitt Gutzler LLC, Lanier Law Firm PC, Burns Bowen Bair LLP, and Daniels & Tredennick. The cases include:

  • Gio Pizzeria & Bar Hospitality, LLC and Gio Pizzeria Boca, LLC v. Certain Underwriters at Lloyd’s, London, U.S. District Court for the Southern District of New York
  • Rising Dough, Inc., et al. v. Society Insurance, U.S. District Court for the Eastern District of Wisconsin
  • Bridal Expressions LLC v. Owners Insurance Company, U.S. District Court for the Northern District of Ohio
  • Caribe Restaurant & Nightclub, Inc. v. Topa Insurance Company, U.S. District Court for the Central District of California
  • Dakota Ventures, LLC d/b/a/Kokopelli Grill v. Oregon Mutual Insurance Co.; U.S. District Court for the District of Oregon
  • Christie Jo Berkseth-Rojas DDS v. Aspen American Insurance Company; U.S. District Court for the Northern District of Texas

Boston Scientific Corp. will start manufacturing a low-cost ventilator.  The technology was recently approved for emergency use by the USDA.

More than 22 million Americans filed for unemployment within the past month — a level of job loss not seen since The Great Depression, says The Washington Post.

President Trump offered state governors a “road map” to reopen economies on Thursday (April 16) that includes three phases.

On Sunday (April 19), demonstrations in cities around the U.S. escalated as protesters demanded the reopening of their local economies, as House Conservatives call for the country to reopen immediately. According to Reuters, around 2,5000 gathered at the Washington state capitol to protest the state’s stay-at-home order. In Denver, health care workers stood in counter-protest against people who gathered at the state capitol demanding the end of the state’s shutdown. Maryland, Michigan, Ohio, Kentucky, Minnesota, North Carolina, Utah also saw protests over the weekend.

United Airlines said it expects a $2.1 billion loss in first-quarter 2020 as a result of dramatic declines in travel from the coronavirus.

The CEO of Chubb, Evan Greenberg, told Bloomberg this regarding pressuring insurers to cover business interruption losses: “The insurance industry is a fundamental part of the economic plumbing of this country. Forcing insurers to foot the bill for losses not covered by policies “would do great damage. It would bankrupt the industry.”

Around the world

According to the World Health Organization (as of April 20, 2020):

  • Total cases globally: 2.31 million
  • Total deaths globally: 157,847

The U.S. (760,570), Spain (195,944), Italy (178,972), Germany (141,672), and the U.K. (120,071) have the most reported coronavirus cases globally.

Catastrophe risk modeling firm AIR Worldwide launched its COVID-19 Projection Tool that provides COVID-19 case and death projections worldwide for the next four weeks. The data will be updated daily.

The Financial Conduct Authority in the U.K. says there are clear cases where insurers should pay claims to small and medium-sized enterprises for business interruption claims stemming from COVID-19.

The European Union has drafted plans for a partial lifting of restrictions and to get people back to work to help alleviate the economic pains brought on by COVID-19-caused shutdowns.

Greece is extending its ban on flights to and from the U.K., the Netherlands, Turkey, Spain and Itlay until May 15.

In an interview with Bloomberg Television, Allianz SE Chief Executive Officer Oliver Baete said, “The coronavirus has hit our industry like a meteorite impact… There will be huge losses for the industry coming, it just takes a while for those to materialize.”

The last three cruise ships at sea will finally arrive at land today. The MSC Magnifica will dock in the south of France; the Costa Deliziosa will dock in Barcelona, and the Pacific Princess will dock in Los Angeles.

Fitch Ratings downgraded Hong Kong’s long-term economic rating to ‘AA-’ from ‘AA,’ with real GDP falling by 5% in 2020.

 

https://www.propertycasualty360.com/2020/04/20/coronavirus-update-protests-erupt-insurance-coverage-lawsuits-and-more/?printer-friendly

Pizzeria Says Insurer Denied COVID-19 Closure Claim

By Steven Cohen | April 21, 2020

A class action lawsuit has been filed against certain underwriters at Lloyd’s by a pizza restaurant claiming that the insurance company has failed to pay for business loss claims that it suffered due to the worldwide COVID-19 pandemic.

Plaintiffs GIO Pizzeria & Bar Hospitality LLC and GIO Pizzeria Boca LLC say that they own Nick’s New Haven Style Pizzeria & Bar with locations in Coral Springs, Fla. and Boca Raton, Fla.

GIO states that it was forced to suspend or reduce operations for their restaurant due to COVID-19 and the orders issued by civil authorities in Florida which mandated the suspension of businesses for on-site services.

The plaintiffs alleges that certain underwriters from Lloyd’s London have refused to pay them under their Business Income, Civil Authority, Extra Expense, and Sue and Labor coverage for losses that have occurred due to the COVID-19 pandemic.

In fact, the plaintiffs state that the defendant has, “on a wide scale and uniform basis” refused to pay its insureds under these policies.

The business interruption lawsuit alleges that, in order to protect themselves if they suddenly had to suspend operations for reasons that were outside of their control, they purchased insurance coverage from LLoyd’s which includes specialty property coverage.

The pizzeria’s policy has a section on “Business Income” coverage, which promises to pay for losses due to the necessary suspension of operations following physical loss or damage to property, the GIO Pizzeria class action lawsuit maintains.

In addition, the policy also provides for “Civil Authority” coverage, in which underwriters will pay for losses incurred by the action of a civil authority that prohibits access to the premises, the plaintiffs state.

The business closure lawsuit claims that the Special Coverage Property Form does not include an exclusion for losses that could occur caused by viruses and communicable diseases.

The pizzeria argues that the presence of a virus or disease can constitute physical damage to a property, which the insurance industry has recognized since at least 2006.

“In the Special Property Coverage Form, Underwriters agreed to pay for its insureds’ actual loss of Business Income sustained due to the necessary suspension of its operations during the ‘period of restoration’ caused by direct physical loss or damage,” the GIO Pizzeria class action lawsuit states.

The restaurants’ policies constitute contracts in which Lloyd’s were paid premiums in exchange for the promise to pay for losses covered by the policy, the GIO pizzeria class action lawsuit argues. Despite this coverage, Lloyd’s underwriters allegedly refuse to provide coverage to the pizzeria.

GIO states that on March 17, 2020, Boca Raton put out a civil authority order which required the closing of bars and restaurants from selling alcohol as well as the suspension of dine-in eating. The plaintiff notes that this order has been in effect since that date and has not been lifted.

On the same date, the plaintiff alleges that Ron DeSantis, the Governor of Florida, issued a civil authority order which restricted bars from serving alcohol and ordered every restaurant to limit its capacity to 50 percent of their current building capacity.

On March 20, DeSantis issued another civil order which required the full suspension of alcohol sales for consumption on site as well as the full suspension of all dine-in eating at restaurants.

The plaintiff says that COVID-19 has caused direct and physical loss to their covered properties under their policies issued by Lloyd’s by denying use of and damaging the plaintiff’s property due to the necessary suspension of their activities. However, the insurance company reportedly won’t provide coverage.

“By denying coverage for any Business Income losses incurred by Plaintiffs and the other Business Income Breach Class members in connection with the COVID-19 pandemic, Underwriters has breached its coverage obligations under the policies,” the plaintiff alleges.

GIO Pizzeria says they have suffered damages as a result of Lloyd’s breaches of the policies and that the insurance carrier is liable for these damages, an amount which will be established at trial.

Prospective Class Members include: “All persons and entities that: (a) had Business Income coverage under a property insurance policy issued by Underwriters; (b) suffered a suspension of business related to COVID-19, at the premises covered by their Underwriters property insurance policy; (c) made a claim under their property insurance policy issued by Underwriters; and (d) were denied Business Income coverage by Underwriters for the suspension of business resulting from the presence or threat of COVID-19.”

The plaintiff is represented by Greg G. Gutzler, Adam J. Levitt, Amy E. Keller, Daniel R. Ferri, Mark Hamill, Laura E. Reasons, Mark A. DiCello, Kenneth P. Abbarno, and Mark Abramowitz of DiCello Levitt & Gutzler LLC, Mark Lanier, Alex Brown, Skip McBride, and Evan Janush of the Lanier Law Firm PC, Timothy W. Burns, Jeff J. Bowen, Jesse J. Bair, and Freya K. Bowen of Burns Bowen & Bair LLP, and Douglas Daniels of Daniels & Tredennick.

The GIO Pizzeria Class Action Lawsuit is GIO Pizzeria & Bar Hospitality LLC, et al. v. Certain Underwriters of Lloyd’s London Subscribing to Policy Numbers ARP-74910-20 and ARP-75209-20, Case No. 1:20-cv-03107, in the U.S. District Court for the Southern District of New York.

 

https://topclassactions.com/coronavirus-covid-19/pizzeria-says-insurer-denied-covid-19-closure-claim/

Six Insurers Face Federal Class Action Lawsuits For Denying Business Interruption Claims

By Lyle Adriano | April 20, 2020

Federal class action lawsuits have been filed against several insurance companies for denying policy claims the plaintiffs had made to protect against business interruptions – specifically claims related to the business closures mandated in the wake of the COVID-19 pandemic.

According to a joint release from the law firms DiCello Levitt Gutzler, The Lanier Law Firm, Burns Bowen Bair, and Daniels & Tredennick, six insurance companies have been named as defendants.

The six insurers are Aspen American Insurance, Auto-Owners Insurance, Lloyd’s of London, Society Insurance, Oregon Mutual Insurance, and Topa Insurance Company.

Plaintiffs for the lawsuit include a restaurant/nightclub in San Diego, CA; a bridal retailer in Cleveland, OH; a Madison, WI-based bakery; a chain of restaurants/bars in Minnesota; a St. Paul, MN-based dental practice; a restaurant in Portland, OR; and an NY-based restaurant group and pizzeria. Each of the plaintiffs are represented by lawyers from the three aforementioned law firms.

The law firms said that each of the lawsuits claim that the business purchased “special” property insurance coverage to protect against business interruptions, or disruptions outside of their control. These policies included business income coverage. The firms also noted that all of these coverages either included or did not expressly exclude losses caused by viral infections such as COVID-19.

But despite all this, the law firms said that the insurers “refused to uphold their contractual responsibilities for losses suffered due to COVID-19, as well as losses caused by executive orders by civil authorities and any efforts to prevent further property damage or to minimize the suspension of business and continue operations.”

“Businesses nationwide have, for years, purchased expensive insurance policies to protect them from losses exactly like those they are currently enduring,” said Adam Levitt, plaintiff co-counsel and partner at DiCello Levitt Gutzler. “For many small business owners trying to provide for their families and employees, this type of insurance coverage was an additional expense that they would have preferred not to carry but felt a responsibility to do so. For insurers to now tell them, in the most challenging of times, that the joke was on them and their policies were worthless, is unethical and abhorrent.”

The law firms’ release noted that most property insurance policies sold in the US – including those sold by the defendants – are all-risk property damage policies.

“Insurers will deny almost every claim – even the most legitimate ones – because that’s just how they operate,” said Mark Lanier, plaintiff co-counsel and founder of The Lanier Law Firm. “But at the end of the day, this really is a straightforward issue about honoring their agreements. As our nation emerges from this horrific pandemic, businesses of all sizes will be critical to restarting the economy. In playing their usual claim-denial games, these insurers are threatening the welfare of not only small-business owners and their families, but the entire US economy.”

“Countless businesses across the United States are pinning their hopes of reopening and rehiring laid-off or furloughed employees on proceeds from insurance,” added Timothy Burns, partner at Burns Bowen Bair.

Burns also commented that insurers thrive by selling protection against all sorts of maladies, pocketing profits when material events are avoided, but must honor policies on the occasion those incidents occur.

“By refusing to do so, they are not running a business at all, but a large-scale rigged carnival game where no matter the scenario, the customer always loses,” Burns remarked. “It’s just not right, and we will do everything in our power to ensure that these businesses are made whole.”

 

https://www.insurancebusinessmag.com/us/news/breaking-news/six-insurers-face-federal-class-action-lawsuits-for-denying-business-interruption-claims-220062.aspx

Lawyers File Multiple Class Actions Seeking Virus Coverage

By Gavin Souter | April 20, 2020

A group of law firms together filed six class-action lawsuits against insurers in federal courts from California to New York on Friday on behalf of commercial policyholders seeking business interruption coverage for coronavirus-related losses.

None of the policies contain a communicable disease exclusion, the suits allege.

In addition, another law firm filed two coronavirus-related class action lawsuits in a Pennsylvania state court on Friday.

The latest filings add to a growing tally of policyholder lawsuits against insurers seeking declaratory rulings that their policies cover income lost due to government-mandated business closures that began in March as various state and federal authorities sought to stem the spread of COVID-19.

Common themes in the dozens of suits include assertions that the presence of the coronavirus in or around a property constitutes physical damage under the terms of the policies and coverage is also triggered by the civil authority clauses in business interruption policies.

Insurer groups have generally held that coronavirus does not constitute physical damage and, therefore, coverage is not triggered.

In the latest batch of federal lawsuits seeking class-action status, policyholders represented by law firms DiCello Levitt Gutzler LLC in Chicago, The Lanier Law Firm PC in Houston, Burns Bowen Bair LLP in Madison, Wisconsin, and Daniels & Tredennick in Houston represent a variety of businesses including restaurants, a bakery, a bridalwear company and a dentist, in a variety of states. All of the law firms are listed as co-counsel on each of the suits.

The suits make similar allegations and hold that none of the policies have “any exclusion for losses caused by viruses or communicable diseases.”

The Insurance Services Office Inc. communicable disease exclusion was introduced about 15 years ago and is widely used.

The suits are: Gio Pizzeria & Bar Hospitality LLC and Gio Pizzeria Boca LLC v. Certain Underwriters at Lloyd’s, London in U.S. District Court for the Southern District of New York; Rising Dough Inc., et al. v. Society Insurance in U.S. District Court for the Eastern District of Wisconsin; Bridal Expressions LLC v. Owners Insurance Co. in U.S. District Court for the Northern District of Ohio; Caribe Restaurant & Nightclub Inc. v. Topa Insurance Co. in U.S. District Court for the Central District of California; Dakota Ventures, LLC d/b/a/Kokopelli Grill v. Oregon Mutual Insurance Co. in U.S. District Court for the District of Oregon; and Christie Jo Berkseth-Rojas DDS v. Aspen American Insurance Co. in U.S. District Court for the Northern District of Texas.

Aspen declined to comment; Society Insurance and Lloyd’s of London have previously said they don’t comment on litigation; Owners Insurance, Topa Insurance and Oregon Mutual did not immediately respond to a request for comment.

Meanwhile, also on Friday, a group of Pennsylvania personal injury lawyers filed two lawsuits seeking class-action status against Erie Insurance Group in state court in Pittsburgh. The two suits, Joseph Tambellini Inc. v Erie Insurance Exchange and HTR Restaurants Inc. d/b/a Siebs Pub v. Erie Insurance Exchange, assert that the all risks policies issued don’t exclude coronavirus-related losses.

Erie declined to comment.

The suits filed Friday follow a wave of coronavirus litigation by restaurants and other small businesses, a law firm in Los Angeles and various Chicago taverns.

Other suits filed this month include: one filed by various units of footwear company Marc Fisher Footwear Corp. in Moda LLC v. Hartford Fire Insurance Co. in state court in Santa Barbara, California, last week; a Tuscaloosa, Alabama, children’s shoe store in Wagner Shoes LLC v. Auto-Owners Insurance Co. filed in U.S. District Court for the Northern District of Alabama; a Redbank, New Jersey-based restaurant in Grand Cru LLC d/b/a Restaurant Nicholas v. Liberty Mutual Insurance Co. filed in state court in Freehold, New Jersey; a San Francisco-based restaurant in John’s Grill Inc. v. The Hartford Financial Services Group Inc. filed in state court in San Francisco; a Cleveland-based ice cream producer in Mitchell Brothers Ice Cream Inc. v. The Cincinnati Insurance Co.; a Cleveland-based restaurant group in Millennia Hospitality Group LLC v. The Cincinnati Insurance Co.; a Moreland Hills, Ohio-based clothing firm in Somco LLC v. Lightning Rod Mutual Insurance Co. The Ohio suits were filed in state court in Cleveland.

 

https://www.businessinsurance.com/article/20200420/NEWS06/912334128/Lawyers-file-multiple-class-actions-seeking-coronavirus-coverage-COVID-19#