Another appeals court rules for the insurer in the COVID BI case

Another appeals court rules for the insurer in the COVID BI case

The U.S. Fifth Circuit Court of Appeals in New Orleans became the eighth federal court of appeals Wednesday to rule that an insured was not entitled to COVID-19 business interruption coverage, in a lawsuit filed by two barbecue restaurants.

As with the decisions made by its sister courts of appeals, the New Orleans-based Fifth Circuit ruled that Terry Black’s Barbeque LLC and Terry Black’s Barbecue Dallas LLC, who own and operate two barbecue restaurants in Austin and Dallas, failed set the virus. had caused physical damage to the restaurants, according to the ruling in Terry Black’s Barbecue LLC; Terry Black’s Barbecue Dallas, LLC. v. State mutual auto insurance, which upheld a decision of the United States District Court in Austin.

The restaurants had argued that they were entitled to their business income and additional expense coverage and their extension coverage, which covered the suspension of operations due to an order from the civil authority.

The restaurant business additional income / expense coverage requires TBB to “allege that it suffered a direct physical loss of property in its restaurants. These words, however, are not defined in politics, “said the ruling.

“TBB has not alleged any tangible alteration or deprivation of its property,” it said. “Nothing physical or tangible happened with the TBB restaurants.

“In fact, TBB had the ownership, access, and ability to use all physical parts of its restaurants at all times. Most importantly, the ban on dining services did nothing to physically deprive TBB of any property in its restaurants, ”the opinion said, affirming the lower court’s ruling.

The three-judge panel also says: “Because civil authority orders did not ‘result’ from TBB’s exposure to COVID-19,” the restaurant’s extension provision also provides no coverage.

Kenneth B. Chaiken, of Chaiken & Chaiken, PC in Plano, Texas, who represented the restaurants, said in a statement: “We are in the process of evaluating this obviously disappointing decision and do not expect to complete that evaluation in the immediate future. “

Adam H. Fleischer, a partner at BatesCarey LLP in Chicago, who represented Rome, Georgia-based State Automobile Mutual, said in a statement: “We are very pleased with the court’s thoughtful and thorough analysis of the issues, and for cunningly finding the exact intersection where jurisprudence is consistent with the context of the language of politics. “

He said: “This opinion shows that the simple meaning of ‘direct physical loss’ does not in fact change when politics crosses a state border.

“The decision will help insurers and policyholders alike achieve common policy interpretations and expectations in Texas, Louisiana, Mississippi and beyond.”

Other courts that have ruled in favor of insurers on the issue include the United States Court of Appeals for the Second Circuit in New York, which ruled last week. Similar rulings have been issued at the tenth circuit in Denver, the sixth in Cincinnati, the seventh in Chicago, the eighth in St. Louis, the ninth in San Francisco and the eleventh in Atlanta.

On Tuesday, the Indiana Court of Appeals upheld a lower court ruling that the Indiana Repertory Theater is not entitled to COVID-19 related business interruption coverage from a unit of Cincinnati Insurance Co.

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