Courts Dismiss COVID-19 Business Interruption Claims
On August 17, 2022, the Seventh Circuit affirmed the dismissal of a hotel operator’s COVID-19 business interruption claim. The court concluded that under Indiana law “a temporary denial of a plaintiff’s preferred use of its property, absent some physical alteration, does not fall within the plain meaning of ‘direct physical loss or damage.’” Opinion at 7. The case is Circle Block Partners, LLC, et al. v. Fireman’s Fund Ins. Co.
New Business Interruption Suits Against Insurers:
Commercial property and hotel operators sued Continental Insurance Company, Continental Casualty Company, Inc. and CNA Financial Corporation in Illinois state court (Cook County) for declaratory relief and breach of contract. The “all risk” policy allegedly provides business interruption, extra expense, and civil authority coverage. Complaint at ¶ 48. The Complaint alleges that COVID-19 closure orders required the plaintiffs to “make physical, detrimental alterations that materially impaired the functionality of their premises,” id. at ¶ 55, and “dispossessed [plaintiffs] of their tangible spaces and forced very real, material detrimental physical changes and alterations to [the plaintiffs’] premises.” Id. at ¶ 56. The case is SFM Realty, Corp., et al. v. Continental Ins. Co., et al.
Hotel owners and operators sued Continental Insurance Company, Continental Casualty Company, Inc. and CNA Financial Corporation in Illinois state court (Cook County) for declaratory relief and breach of contract. The “all risk” policy allegedly provides business interruption, civil authority, and extra expense coverage. Complaint at ¶ 121. The Complaint alleges that “[t]he presence of coronavirus droplets or nuclei on solid surfaces and in the air at the insured Locations, has caused and will continue to cause direct physical damage to physical property and ambient air at the premises” and by adhering to the surfaces of the plaintiffs’ properties, the virus “altered those properties.” Id. at ¶ 145. The case is Desai Hotel Group, LLC, et al. v. Continental Ins. Co., et al.
For further information, please contact:
Laura Foggan, Partner, Crowell & Moring
lfoggan@crowell.com
