While insurers are still winning four out of five cases in the early rounds, in the past month, two property owners with policies that included recommendations specifically covering illnesses have survived motions to overturn their business interruption claims of COVID-19 to reject.
On Thursday, the Stark County Court of Common Pleas in Ohio denied State Automobile Mutual Insurance Co.'s motion. to dismiss a lawsuit filed by the owners of Sylvester & # 39; s North End Italian Grille in Northern Canton to seek damages for lost earnings after they were forced to close the dining room due to the COVID-19 pandemic . Judge Taryn L. Heath cited an endorsement in the policy that specifically added coverage for loss of income due to "contagious or contagious diseases".
On December 21, the The US court in San Diego has approved the motion to dismiss Markel Insurance Co. turned down a business interruption lawsuit filed by the Baldwin Academy, a private kindergarten. Judge Marilyn L. Huff said she cannot conclude without further evidence that an endorsement of a & # 39; communicable disease & # 39; school policy does not cover income lost after the school was forced to close after one of the student's parents contracted COVID-19.
Tzangas Plakas Mannos law firm in Akron, Ohio, said in a press release that Sylvester's case is one of seven lawsuits the company is pursuing on behalf of restaurant owners in Stark and Summit Counties whose business interruption claims have been dismissed.
“Situations like these are exactly why Sylvester & # 39; s and other local businesses and their hard-working business owners have made the significant financial investment in business interruption coverage,” said attorney Gary A. Corroto. "We are committed to doing everything we can to achieve financial justice for Sylvester & # 39; s and our numerous other clients for whom we fight and whose business interruption claims have been falsely rejected."
An Iitigation tracker administered by the University of Pennsylvania Carey Law School shows 1,320 lawsuits have been filed in state and federal courts seeking cover for corporate income lost as a result of COVID-19 closings. In cases leading to initial rulings, insurers have won 107 motions for dismissal or summary proceedings, while plaintiffs won 25 of those motions.
Claims Journal previously reported that business owners with policies that didn't have virus exclusions fared better in the early rounds than those with exclusions in their policies – although there were still more wins for insurers than policyholders.
The lawsuits filed by Sylvester & # 39; s and Baldwin Academy claim they have even better protections than virus-exclusion policies: their policies had recommendations that said income lost due to disease is covered. In both cases, the judges ruled that because of those approvals, the policyholders 'arguments can survive the insurers' arguments that there must be actual physical damage, or at least that the coronavirus must be physically present on the property.
Sylvester's Grille policy with State Automobile included an approval entitled & # 39; Business Income – Limited Renewal for Food Portability. Under that title, the story says coverage is available for "actual or alleged exposure of the described property to an infectious or contagious disease". There is no mention of "food borne" other than in the title.
State Automobile cited previous Ohio cases claiming that there is no coverage under a property insurance policy unless there is a physical change to the property. The insurer cited a lawsuit that found no coverage for black mold stuck to the wall of a property.
However, Judge Heath said none of the policies in the cases cited by the insurer contained an endorsement specifically covering "communicable diseases." The judge also dismissed State Automobile's argument that the use of the term "foodborne illness" in the title shows that it was intended to cover only risks arising from food.
"The policy language does not contain a restriction that the risk must be related to food, but rather applies to" an infectious or contagious disease, "the judge said.
In the San Diego case, Baldwin Academy policy included an endorsement that provided coverage for "communicable diseases such as, but not limited to meningitis, measles, or Legionnaires' disease …"
The kindergarten filed a claim after deciding to close the school in March last year when a parent informed the school that she had tested positive for COVID-19. The state and the mayor of San Diego gave house arrest a few days later.
The insurer argued that no coverage was due because the policy language requires an actual outbreak to occur on the property. However, Judge Huff said the parent who contracted the virus could be considered an "outbreak" by a jury. In addition, state and local public health ordinances banned all gatherings of more than 50 people.
"At this point, without sufficient development of the record, the court is refusing to decide whether the plaintiffs' claim falls outside the scope of coverage of the Endorsement as a matter of law," Huff & # 39; s injunction denies the motion from the insurer to dismiss states.
The lawsuits from Baldwin Academy and Sylvester & # 39; s Grille have not been finalized. The Sylvester Grille case now continues with discovery and a possible trial. In the Baldwin Academy case, the judge suggested that the evidence might be better developed in a motion for interim relief rather than a motion to dismiss.
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