By Blake Orner, Grant & Grant
In the ongoing battle between businesses and insurance carriers for coronavirus business interruption coverage, the Court of Appeals for the Seventh Circuit will weigh in on an appeal recently filed from an Illinois district court decision. In Mashallah Inc. et al. v. West Bend Mutual Insurance Co., case number 21-1507, an Illinois bar and jewelry store argued that government shut-down orders caused physical loss to their businesses by preventing them to operate at their property and allege that West Bend Mutual’s denial of coverage constituted breach of contract, bad faith, and consumer fraud. The Illinois district court ruled in favor of West Bend. Read more here from Law360.
This is just the most recent case in the growing litigation over commercial property coverage for coronavirus related business losses While each case is fact sensitive and hinges on the particular policy terms, courts across the country have overwhelmingly found in favor of insurers that no coverage is owed under the policy language. Even several professional sports franchises and venues have challenged these coverage denials with varying results. There is currently pending litigation in New York and California relating to Madison Square Garden and the Staples Center, respectively, in which the owners have filed suits against their insurers following coverage denials. Read more here from Law360 and here.
From a local perspective, in March, the Marion County Superior Court weighed in on a similar suit filed by the Indiana Repertory Theater. In Indiana Repertory Theater Inc. v. The Cincinnati Casualty Co., Cause Number 49D01-2004-PL-013137, IRT seeks coverage and payment from Cincinnati Insurance Co. for its business related losses after having to close for the season following the initial outbreak. In line with the majority of rulings across the country, the Court ruled in favor of the insurer finding that IRT had failed to make a showing that the virus caused “direct physical loss or damage.” As part of its Order, the Court allowed IRT additional time to determine if there was evidence that the coronavirus had actually been on the property. Read more hear from Law360.
It does not appear that the underlying trial court decisions will be the end of the line for coronavirus coverage litigation. As with the recent matter now pending in the Seventh Circuit, the next step for many of these cases, regardless of the outcome of the trial court’s ruling, will be appeal. We will have to wait and see how these cases ultimately unfold throughout the country as the litigants and the courts deal with just another effect of the unprecedented pandemic.
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