COVID-19 LAWSUITS ADDRESSING BUSINESS INTERRUPTION COVERAGE BEGIN
Although not involving Texas law, last week, the first drop in what will be a giant bucket of business interruption cases related to COVID-19 began. In Cajun Conti LLC et al. v. Certain Underwriters at Lloyd’s, London et al., No. 2020-02558, complaint filed (La. Dist. Ct., Orleans Parish Mar. 16, 2020), a DJ action was brought in Louisiana state court by Oceana Grill Restaurant seeking coverage under their “all risks” property policy for coronavirus-caused losses after public-gathering restrictions were issued by the Louisiana governor and New Orleans mayor. While a decision has not yet been issued, we find the facts and legal posture of this case particularly interesting to the current climate of insurance law in the midst of the global virus crisis.
Oceana Grill argues in their complaint that because their policy includes business interruption losses in the event of closure by order of Civil Authority, and because it had to close under order of the mayor and governor, the coverage should apply. The complaint also seeks a declaration of coverage for physical loss for future Civil Authority shutdowns of restaurants, physical loss from coronavirus contamination (and potential decontamination), and business income coverage in the event that the coronavirus has contaminated the insured premises.
The complaint appears to argue that the mere presence of the coronavirus constitutes physical loss or property damage to the affected premises. It seems to argue if Oceana Grill is shut down, because other restaurants in the area have suffered physical losses on account of the presence of the coronavirus, then it is entitled to Civil Authority coverage for the interruption in their business and the resulting losses. On the other hand, if the coronavirus were present in their restaurant, then the restaurant claims they would be owed coverage for business interruption. Finally, the complaint also points out that Lloyd’s policy does not contain a “virus” exclusion.
Editor’s Note: While this is merely the beginning, it appears the two driving factors in similar cases will be the claimant’s ability to prove some physical loss to the affected premises and if the policy in question includes an applicable “virus” exclusion. We believe this case is first of tens of thousands, if not hundreds of thousands, of coverage lawsuits which will make identical coverage arguments in an effort to offset the economic losses created by virus closings across the country.