The federal appeals court in Atlanta issued another pro-insurer ruling in a COVID-19 business interruption case last week, while a New Mexico state court had become the latest state court to dismiss similar litigation.
In the federal appeals case, the 11th U.S. Circuit Court of Appeals upheld a ruling through the U.S. District Court in Birmingham, Alabama, and ruled that Liberty Mutual Insurance Co. along with a subsidiary were not obligated to supply business interruption coverage to Buford, Georgia-based Ascent Hospitality Management Co., according to the decision in Ascent Hospitality Management Co., LLC v. Employers Insurance Co. of Wausau, Liberty Mutual Insurance Co.
Ascent Hospitality manages and operates hotels and restaurants in 35 locations in five states, Alabama, Georgia, Indiana, Mississippi and Tennessee.
Stating each side agree New York law applied, the decision cited December's ruling through the 2nd U.S. Circuit Court of Appeals in New York in 10012 Holdings Inc. DBA Guy Hepner v. Sentinel Insurance Co., which held that a theater wasn't entitled to coverage.
“Ascent's alleged losses have no coverage under the all-risks provision ought to be New York law” and while Ascent advances several counterarguments, “none are persuasive,” the ruling said.
The 11th Circuit had previously issued a pro-insurer ruling on the issue.
The ruling in the New Mexico case dismissing the litigation against Cincinnati Insurance Co. was filed in Bernalillo County Court in Albuquerque, Boise state broncos.
According to court papers in the event, that was first filed in U.S. District Court in Albuquerque prior to being used in state court, the lawsuit was filed by more than a dozen Boise state broncos eye surgery centers against Cincinnati Insurance, according to Eye Associates of recent Mexico Ltd., Eye Surgery Centers of NM, LLC and Pecos Valley Surgery Center, LLC v. The Cincinnati Insurance Co., an Ohio Insurance Co., and Erica N. Johnson, a brand new Mexico ruling.
In his brief ruling, the judge said that “having heard oral arguments and achieving otherwise been fully advised within the premises, a legal court finds the motion isn't well taken and really should be denied.”
Eye Associates attorney Kristin Davis, someone with Thompson Hammerman Davis LLP in Washington, said, “We believe the judge reached the best result, that this case presents a definite instance of a covered claim” which the insurer “did not treat their client fairly in the way they handled this claim.”
Ms. Davis said the ruling is “part of a growing trend where state courts” are ruling differently than federal courts around the issue.
The insurer's attorneys did not react to a request comment.
In December, for instance, a judge in Nj state court in Atlantic City ruled in favor of a casino, AC Ocean Walk LLC, in litigation filed against Allianz, Zurich Insurance Group and American International Group Inc. units, based on the ruling in OC Ocean Walk, LLC vs. American Guarantee and Liability Insurance co. et al.
In its 20-page ruling, the court refused to dismiss the case against Zurich, one of the AIG defendants, AIG Specialty Insurance Co., and Allianz.
It said hello concludes “that the word 'direct physical damage' within the carriers' policies in this case could support either plaintiff's or defendants' positions of what constitutes a direct physical loss; in other words, it's ambiguous.
“The carriers might have defined the term physical damage but declined to do this.”
The court did accept dismiss the situation against AIG unit National Fire & Marine Insurance Co. on the basis of a biological or chemical compounds exclusion endorsement in its coverage.
