Not every complaint is a request for accommodation

Courts Dismiss COVID-19 Business Interruption Claims

On March 4, 2022, the district court for the Middle District of Florida granted Westchester Surplus Lines Insurance Company’s motion for judgment on the pleadings in a COVID-19 business interruption claim filed by a bakery operator. The court concluded that the policy’s “plain and unambiguous provisions of coverage do not extend to purely economic harms without accompanying physical property damage.” Order at 1. The court further found that the plaintiff failed to plausibly allege that it suffered a covered cause of loss because its losses were not physical, and “[n]o matter how dangerous coronavirus may be to human health, virus particles do not and cannot cause direct physical loss or damage to property.” Id. at 6. The case is Walsh Haupt & Assocs., Inc. v. Westchester Surplus Lines Ins. Co.

On March 3, 2022, the district court for the District of Connecticut granted Continental Casualty Company’s and CNA Financial Corporation’s motion to dismiss several medical offices’ COVID-19 business interruption complaint. The court found none of the plaintiffs’ attempts to constitute the coronavirus “as a ‘physical loss of or damage to property’ succeeds.” Order at 27. The court held “the term ‘direct physical loss of or damage to property’ is reasonably susceptible to only one interpretation, and unambiguously requires a physical alteration to property” and thus it does not “extend to mere loss of use of a premises, where there has been no physical damage to such premises.” Id. at 18–19. It found the cases plaintiffs cited to be inapposite and unavailing. Id. at 24. Finally, the court held that the policyholders could not “create an affirmative right to coverage by pointing to the absence of a pandemic exclusion.” Id. at 27.

On March 10, 2022, the Circuit Court for the Eleventh Judicial Circuit in and for Miami-Dade County, Florida granted Endurance American Specialty Insurance Company, Certain Underwriters at Lloyd’s, London, General Security Indemnity Company of Arizona, United Specialty Insurance Company, Lexington Insurance Company, and Westchester Surplus Lines Insurance Company’s motions to dismiss a COVID-19 business interruption claim filed by a property management and maintenance company. The case is IMC Property Mgmt. & Maintenance, Inc. v. Westchester Surplus Lines Ins. Co., et al.

On March 11, 2022, the district court for the Eastern District of Louisiana ordered a clothing retailer replead its COVID-19 business interruption complaint. The court held the plaintiff failed to plead a direct physical loss under the policy because the plaintiff did not plead any tangible alteration or change to its premises. Order at 10. The court also found the plaintiff’s claims were unambiguously excluded by its policy’s virus exclusion. Id. at 19.

New Business Interruption Lawsuits Filed by Insurers:

North American Elite Insurance Company sued a financial services company for declaratory judgment in New York state court (New York County). The insured’s policy allegedly included attraction property, communicable disease response, contingent time element, crisis management, ingress and egress, and civil or military coverage. Complaint at 7. The insured had provided notice of a claim because governmental orders restricted access to the property. Id. ¶¶ 2–3. The insurer alleges it investigated and denied the claim and performed all its obligations under the policy. Id. ¶¶ 5, 12, 35. The insurer seeks a declaration inter alia that COVID-19 did not cause “direct physical loss or damage” to property under the policy and that the insured is not entitled to coverage for the claim. Id. ¶ 39. The case is North American Elite Insurance Co. v. Synchrony Financial.

New Class Actions Against Insurers:

Three New Jersey hotels filed a proposed class action against several insurers for declaratory judgment and breach of contract. The “all risk” policy allegedly provides coverage for business income, extra expense, civil authority, ingress/egress, attractions property, and decontamination expense coverage. Complaint, ¶¶ 6–10, 41. It also allegedly contains a mold, mildew & fungus clause and microorganism exclusion. Id. ¶¶ 75–76. According to the plaintiffs, the New Jersey Governor’s executive orders forced it to suspend its operations and did not allow them to physically use their insured properties. Id. ¶¶ 117, 120.

New Business Interruption Suits Against Insurers:

An indoor tennis facility and fitness center sued Cincinnati Insurance Company in Indiana state court (Marion County) for declaratory relief and breach of contract. The policy allegedly provides building, personal property, business income, extra expense, civil authority, and crisis event coverage. Complaint at ¶ 68. The Complaint alleges that the policy’s “physical loss” language “does not require policyholders to show physical alteration to their property,” id. at ¶ 63, and that if the insurer “had intended to exclude coverage for loss caused by a virus, it could have included a virus exclusion in the relevant coverages.” Id. at ¶ 69. The case is Indianapolis Racquet Club, Inc. v. The Cincinnati Ins. Co.

A nonprofit organization sued Cincinnati Insurance Company in Indiana state court (Marion County) for declaratory relief and breach of contract. The policy allegedly provides building, personal property, business income, extra expense, and civil authority coverage. Complaint at ¶ 65. The Complaint alleges that “SARS-CoV-2 physically alters both the surfaces and the air it comes into contact with,” id. at ¶ 22, and that if the insurer “had intended to exclude coverage for loss caused by a virus, it could have included a virus exclusion in the relevant coverages.” Id. at ¶ 66. The case is Saturday Evening Post Society, Inc. v. The Cincinnati Ins. Co.

The operator of a bar and performance venue sued Lexington Insurance Company in federal court (D. Conn.) for breach of contract and breach of the covenant of good faith and fair dealing. The “all risk” policy allegedly provides business interruption, expenses to reduce loss, rental value, and sue and labor coverage. Complaint at ¶ 26. The Complaint alleges that the pandemic “has caused ‘direct physical loss of or damage to property’ under the Policy by causing the necessary interruption of multiple engagements during the restoration period.” Id. at ¶ 48. The case is SKM Restaurants, Inc. v. Lexington Ins. Co.

The operator of a dental practice sued Pacific Employers Insurance Company in Indiana state court (Marion County) for declaratory relief and breach of contract. The policy allegedly provides building, personal property, business income, extra expense, and civil authority coverage. Complaint at ¶ 64. The Complaint alleges that the policy’s “physical loss” language “does not require policyholders to show physical alteration to their property,” id. at ¶ 60, and that even if physical alteration was required, “SARS-CoV-2 has physically altered and damaged the indoor air and surfaces of the Insured Locations.” Id. at ¶ 61. The case is United Dental Centers, Ltd. v. Pac. Employers Ins. Co.

The Chicago Bears American football team sued Affiliated FM Insurance Company in Rhode Island state court (Providence/Bristol County) for declaratory judgment, breach of contract, common law bad faith, and statutory bad faith. The plaintiff’s “all risks” policy allegedly provides business interruption, civil authority, communicable disease, protection and preservation of property, ingress/egress, extra expense, attraction property, supply chain, and rental income coverage. Complaint at ¶¶ 23, 27-28, 78-79, 88-112. The complaint alleges the plaintiff suffered covered physical losses in excess of the policy’s communicable disease sublimits because it “directly lost the functionality of its Covered Property for business purposes.” Id. at ¶ 10. The complaint also alleges that AFM engaged in bad-faith conduct by “predetermining” not to cover plaintiff’s business interruption claims and “developing a scheme to make Plaintiff believe that only the Communicable Disease Additional Coverages (with their sublimits) apply.” Id. at ¶ 131. The case is The Chicago Bears Football Club, Inc. v. Affiliated FM Ins. Co.

The owners and managers of six resorts sued eight insurers in Rhode Island state court (Providence/Bristol County) for declaratory relief and breach of contract. Plaintiffs’ “all risk” policies allegedly provide business interruption, extra expense, rental value, royalties, soft costs, civil authority, cancellation of bookings, decontamination costs, sue and labor, spoilages, hazardous substances, and professional fees coverage. Complaint at ¶¶ 147-193. The complaint alleges plaintiffs suffered covered physical losses because “Coronavirus [i]s an external force . . . that physically invaded and physically altered the air space” at plaintiffs’ covered properties, and because civil authority orders closed or limited operations at plaintiffs’ properties. Id. at ¶¶ 115-16, 126-27. The case is Auberge Resorts LLC v. Allianz Glob. Risks US Ins. Co.

The owners and operators of a hotel and related businesses sued Affiliated FM Insurance Company in Rhode Island state court (Providence/Bristol County) for declaratory judgment, breach of contract, breach of the covenant of good faith and fair dealing, violations of the Texas Insurance Code, statutory bad faith under Rhode Island law, and deceptive trade practices under Texas law. The plaintiffs’ “all risks” policy allegedly provides business interruption, attraction property, civil authority, communicable disease, ingress/egress, protection and preservation of property, and extended period of liability coverage. Complaint at ¶¶ 50-82. The complaint alleges plaintiffs suffered covered physical losses due to COVID-19 related civil authority orders, as well as the presence of COVID-19 at and near Plaintiffs’ property. Id. at ¶¶ 36-38. The complaint also alleges AFM “effectively den[ied]” plaintiffs’ claim in bad faith by “knowingly or recklessly fail[ing] to conduct a reasonable investigation of Plaintiffs’ entire claim.” Id. at ¶ 106. The case is Com. Statler Dev. v. Affiliated FM Ins. Co.

A real estate management company sued Affiliated FM Insurance Company in Rhode Island state court (Providence/Bristol County) for declaratory judgment and breach of contract. The plaintiff’s “all risk” policy allegedly provides business interruption, extra expense, attraction property, civil authority, protection and preservation of property, and supply chain coverage. Complaint at ¶ 17. The complaint alleges that the “presence, statistically certain presence, or suspected presence” of COVID-19 in or on plaintiff’s properties, as well as “the ubiquitous presence of the virions throughout the locales and states” where plaintiff’s covered properties were located causes direct physical loss under the policy. Id. Similarly, the complaint alleges that state civil authority orders caused physical loss or damage by preventing plaintiff from accessing and using covered properties “to conduct its ordinary business activities.” Id. at 18. The case is Lerner Corp. v. Affiliated FM Ins. Co.

A stadium owner and operator sued Affiliated FM Insurance Company in Rhode Island state court (Providence/Bristol County) for declaratory judgment, breach of contract, breach of the covenant of good faith and fair dealing, and statutory bad faith. The plaintiff’s “all risks” policy allegedly provides communicable disease, protection and preservation of property, business interruption, extra expense, attraction property, civil authority, ingress/egress, and supply chain coverage. Complaint at ¶¶ 53-72. The complaint alleges plaintiff suffered covered physical loss in excess of the policy’s communicable disease sublimits because plaintiff’s property “could not be used in the same way that it was used before the spread of COVID-19.” Id. at ¶ 48. The complaint also alleges AFM acted in bad faith by denying the plaintiff’s claim without reasonable basis or investigation. Id. at ¶¶ 143-48. The case is United Ctr. Joint Venture v. Affiliated FM Ins. Co.

The owner of two hotels sued Liberty Mutual Fire Insurance Company and Liberty Mutual Group for declaratory judgment and breach of contract. The plaintiff’s “all risks” policy allegedly provides business income, civil authority, ingress/egress, and contingent business income/extra expense coverage. Complaint at ¶¶ 17-26. The complaint alleges plaintiff suffered covered physical loss because the presence of COVID-19 at and near plaintiff’s hotels “prevented ingress and egress” to and from covered properties and because civil authority orders “imposed a physical limit” on operations at plaintiff’s hotels. ¶¶ 48-49. The case is Edinburgh Fund, LLC v. Liberty Mut. Fire Ins. Co.

A hotel management company sued Continental Casualty Company in Texas state court (Harris County) for declaratory judgment, breach of contract, breach of the covenant of good faith and fair dealing, and alleged violations of the Texas Insurance Code. The plaintiff’s policy allegedly provides business income, extra expense, civil authority, and ingress/egress coverage. Complaint at ¶ 22. The complaint alleges plaintiff sustained covered “loss(es) due to physical alteration of [its] properties” caused by COVID-19 “at, in, on, and/or around its premises,” and due to civil authority orders that “forc[ed] [plaintiff] to limit operations.” Id. at ¶¶ 24, 77. The complaint also alleges Continental acted in bad faith and in violation of the Texas Insurance Code because it “implicitly denied Plaintiff’s claim” by “failing to timely pay the claim” and failing to conduct a reasonable investigation. Id. at 163-169. The case is Am. Liberty Hosp. v. Cont’l Cas. Co.

A casino sued Affiliated FM Insurance Company in Washington state court (Snohomish County) for breach of contract, common law bad faith, alleged violations of the Washington Consumer Protection Act, and declaratory judgment. The plaintiff’s “all risks” policy allegedly provides communicable disease, property damage, protection and preservation of property, business interruption, civil authority, ingress/egress, extra expense, research and development, decontamination costs, demolition and increased cost of construction, expediting expense, and law and ordinance coverage. Complaint at ¶¶ 24-34, 111-12. The complaint alleges the plaintiff suffered a covered physical loss because it was “statistically certain” that COVID-19 was present on plaintiff’s property and because civil authority orders “caused the loss of functional use of the Casino property.” Id. at ¶¶ 99-100, 108-109. The complaint also alleges AFM acted in bad faith by denying plaintiff’s claim without conducting any investigation and by refusing to change its position after being “informed of historical precedent.” Id. at ¶ 114, 121. The case is Angel of the Winds Casino v. Affiliated FM Ins. Co.

A doctor’s office sued Trumbull Insurance Company in New York state court (Onondaga County) for breach of contract. Complaint, ¶¶ 38–42. The policy allegedly provided business interruption coverage. Id. ¶ 6. The plaintiff alleges the government closures severely limited its business. Id. ¶ 34. The case is Endodontics Associates, P.C. v. Trumbull Insurance Co.

A senior apartment complex sued Selective Insurance Company of New York in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is 80 Meyer Road LLC v. Selective Insurance Company of New York.

A trucking company sued Charter Oak Fire Insurance Company in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Anastasi Trucking Inc. v. Charter Oak Fire Insurance Co.

A townhouse complex and a restaurant sued Preferred Mutual Insurance Company in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insureds’ policies. Complaint at 2. They claimed losses because of COVID-19. Id. The case is AWSC LLC v Preferred Mutual Insurance Co.

Two doctors’ offices sued Main Street America Assurance Company in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insureds’ policies. Complaint at 2. They claimed losses because of COVID-19. Id. The case is Chiropractic Care of WNY, LLC v. Main Street America Assurance Co.

Several small businesses sued Sentinel Insurance Company, Ltd. in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insureds’ policies. Complaint at 2. They claimed losses because of COVID-19. Id. The case is Buffalo Spree Publishing v. Sentinel Insurance Co.

A technology and infrastructure company sued Travelers Indemnity Company of Connecticut in New York state court (Monroe County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Composite Technology & Infrastructure, LLC v. Travelers Indemnity Co. of Connecticut.

A construction company sued Technology Insurance Company Inc. in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Concept Construction Corp. v. Technology Insurance Co.

A realty group sued Insurance Company of Greater New York in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Glendale Realty Services Group v. Insurance Co. of Greater New York.

A gym sued Philadelphia Indemnity Insurance Company in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Larkin Fitness, LLC v. Philadelphia Indemnity Insurance Co.

A doctor’s office and fur retailer sued Travelers Casualty Insurance Company of America

in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insureds’ policies. Complaint at 2. They claimed losses because of COVID-19. Id. The case is Michael D. Calabrese Physician, PC v. Travelers Casualty Insurance Co. of America.

A brewer sued Continental Western Insurance Company in New York state court (Niagara County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is New York Beer Project LLC v. Continental Western Insurance Co.

Several small businesses sued Ohio Security Insurance Company in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of their policies. Complaint at 2. They claimed losses because of COVID-19. Id. The case is Certo v. Ohio Security Insurance Co.

A real estate developer sued Travelers Property Casualty Company of America in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Seneca Larkin 701, LLC v. Travelers Property Casualty Co. of America.

A Buffalo small business sued Merchants Mutual Insurance Company in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is SPE Clinton Square II, LLC v. Merchants Mutual Insurance Co.

A pub sued Michigan Millers Mutual Insurance Company in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Transit Lanes Inc. v. Michigan Millers Mutual Insurance Co.

A furniture company sued Zurich American Insurance Company in New York state court (Chautauqua County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Bush Industries Inc. v. Zurich American Insurance Co.

Several restaurants sued Erie Insurance Company in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of their policies. Complaint at 2. They claimed losses because of COVID-19. Id. The case is 4510 Lake Ave LLC v. Erie Insurance Co.

A Buffalo small business sued American Fire and Casualty Company in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Colgate Associates, LLC v. American Fire & Casualty Co.

A realty group sued Greater New York Mutual Insurance Company in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Glendale Realty Services Group v. Greater New York Mutual Insurance Co.

A hotel sued Fireman’s Fund Insurance Company in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Hart Hotels Inc. v. Fireman’s Fund Insurance Co.

An art gallery sued Citizens Insurance Company of America in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Larkin Gallery, LLC v. Citizens Insurance Co. of America.

A concrete contractor sued AGCS Marine Insurance Company in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of the insured’s policy. Complaint at 2. It claimed losses because of COVID-19. Id. The case is Surianello General Concrete Contractor Inc. v. AGCS Marine Insurance Co.

Two apartment complexes sued Erie and Niagara Insurance Association in New York state court (Erie County) for breach of contract for its “failure to honor the terms and conditions” of their policies. Complaint at 2. They claimed losses because of COVID-19. Id. The case is Thistle Apts LLC v. Erie & Niagara Insurance Ass’n.

The Jacksonville Jaguars sued Axis Surplus Insurance Company in Illinois state court (Cook County) for declaratory relief and breach of contract. The policy allegedly provides business income and extra expense coverage. Complaint at ¶¶ 35, 37. The Complaint alleges that “[t]he coronavirus has a material physical existence; is contained in respiratory droplets and aerosols; becomes absorbed into, chemically bonded with, and alters the surfaces of property from once-safe surfaces to fomites containing the virus; and alters the physical condition of air in buildings, all of which constitutes physical damage to the properties.” Id. at ¶ 79. The case is Jacksonville Jaguars, LLC v. Axis Surplus Ins. Co.