Business insurance

Federal and state courts divided over COVID BI rulings

The federal appeals court in Atlanta issued another pro-insurer ruling in a COVID-19 business interruption case last week, while a New Mexico state court denied the motion. of an insurer seeking to dismiss another case.

In the federal appeals case, the 11th United States Circuit Court of Appeals upheld a decision of the United States District Court in Birmingham, Alabama, and held that Liberty Mutual Insurance Co. and a subsidiary were not obligated to provide business interruption coverage in Buford, Georgia. based Ascent Hospitality Management Co., in accordance with the decision of Ascent Hospitality Management Co., LLC c. Employers Insurance Co. of Wausau, Liberty Mutual Insurance Co.

Ascent Hospitality manages and operates hotels and restaurants at 35 locations in five states, Alabama, Georgia, Indiana, Mississippi and Tennessee.

Stating that both parties agree that New York law applies, the decision cites the December decision of the 2nd U.S. Circuit Court of Appeals in New York in 10012 Holdings Inc. DBA Guy Hepner v Sentinel Insurance Co., which found concluded that a theater was not entitled to coverage.

“Ascent’s alleged losses are not covered by the all-risks provision under New York law” and while Ascent makes several counter-arguments, “none are persuasive,” according to the ruling.

The 11th Circuit previously issued a pro-insurer ruling on the matter.

The decision in the New Mexico case dismissing the lawsuit against Cincinnati Insurance Co. was filed in Bernalillo County Court in Albuquerque, New Mexico.

According to court documents in the case, which was first filed in U.S. District Court in Albuquerque before moving to state court, the lawsuit was filed by more than a dozen health centers. New Mexico eye surgery vs. Cincinnati Insurance, according to Eye Associates of New Mexico Ltd., Eye Surgery Centers of NM, LLC and Pecos Valley Surgery Center, LLC v. The Cincinnati Insurance Co., an Ohio Insurance Co., and Erica N. Johnson, a New Mexico decision.

In his brief decision, the judge said that “after hearing argument and being fully briefed at the scene, the Court finds that the motion is not well taken and must be dismissed.”

Eye Associates attorney Kristin Davis, a partner at Thompson Hammerman Davis LLP in Washington, said, “We believe the judge has reached the correct result, that this case presents a clear example of a covered claim” and that the insurer “did not treat their client fairly in the way they handled this claim.

Ms. Davis said the ruling was “part of a growing trend where state courts” are ruling differently than federal courts on the matter.

Lawyers for the insurer did not respond to a request for comment.

In December, for example, a New Jersey state court judge in Atlantic City ruled in favor of a casino, AC Ocean Walk LLC, in a lawsuit filed against Allianz units. , Zurich Insurance Group and American International Group Inc., according to the decision rendered in OC Ocean Walk, LLC v American Guarantee and Liability Insurance co. et al.

In its 20-page decision, the court declined to dismiss the case against Zurich, one of AIG’s defendants, AIG Specialty Insurance Co. and Allianz.

He said he finds “that the term ‘direct physical damage’ in the carriers’ policies in this case could support plaintiffs’ or defendants’ positions on what constitutes direct physical loss; in other words, it is ambiguous.

“The carriers could have defined the term physical damage but refused to do so.”

The court agreed to dismiss the case against the AIG National Fire & Marine Insurance Co. unit based on an endorsement excluding biological or chemical substances from its coverage.