A court in the state of Colorado on Wednesday refused to dismiss a Covid-19 business interruption-related lawsuit filed by a retired operator against a CNA Financial Corp. entity.
It was the second decision this week by a state court that ruled in favor of a policyholder in a case of covid-19 business interruption.
Denver-based Spectrum Retirement Communities LLC, which operates 43 senior housing and memorial communities in the United States, sued Continental Casualty Co., a CNA entity, in February 2021. The coverage provided by Continental included business breaks for all risks and coverage of additional expenses on $ 50 million, according to Spectrum Retirement Communities LLC et al. v. Continental Casualty Co.
The district court, the city and the county of Denver, found that “since the complaint likely alleges that covid-19 was physically present on and in each of Spectrum’s covered properties, making them unusable, inaccessible and unnecessarily dangerous to use, Spectrum has likely promised a direct physical loss.
“Subsequent health orders prevented the normal use of Spectrum’s covered properties and limited the possibility for people to enter and leave the properties in the same way as before the properties were contaminated,” the judgment states.
The court said that “according to Colorado case law,” direct physical loss or damage “does not require evidence of” significant damage “or” physical alteration “of property.”
It cited Colorado’s Supreme Court ruling from 1968 Western Fire Insurance Co. v. First Presbyterian Churchwho considered that direct physical loss occurred when petrol that had accumulated around and under a church building seeped into the structure of the building and made its further use unsafe. “
“It is not conclusive that the majority of courts across the country have found that covid-19 does not constitute ‘direct physical loss.’ when it rejected the CNA’s request to dismiss the case.
Plaintiff Attorney Michael S. Burg, shareholder of Burg Simpson Eldredge Hersh Jardine PC in Englewood, Colorado, said: “We are in a unique situation because of the (Colorado) Supreme Court ruling that has a different definition than most jurisdictions do about it. physical damage to property. “
CNA did not respond to a request for comment.
An appeals court in California on Wednesday changed a lower court and reinstated a lawsuit filed for covid19-related business interruptions filed by a hotel and restaurant against an Allianz SE unit.