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Federal, state courts split over COVID BI decisions



The Atlanta Federal Court of Appeals issued another pro-insurer's decision in a case of covid-19 business interruptions last week, while a state court in New Mexico became the latest state court to dismiss similar litigation.

In the federal appeal . , the 11th U.S. Circuit Court of Appeals upheld a judgment of the U.S. District Court in Birmingham, Alabama, ruling that Liberty Mutual Insurance Co. and a subsidiary were not required to provide business break protection to Buford, Georgia-based Ascent Hospitality Management Co. ., according to the decision of Ascent Hospitality Management Co., LLC v. Employers Insurance Co. in Wausau, Liberty Mutual Insurance Co.

Ascent Hospitality manages and operates hotels and restaurants at 35 locations in five states, Alabama, Georgia, Indiana, Mississippi and Tennessee.

Both sides agree that New York law, and the decision referred to the December ruling of the 2nd U.S. Circuit Court of Appeals in New York in 1

0012 Holdings Inc. DBA Guy Hepner v. Sentinel Insurance Co., which held that a theater was not eligible for coverage.

"Ascent's alleged losses are not covered by the all-risk provision as a matter of New York law" and while Ascent for several counter-arguments, "no one is convincing," the verdict said.

The 11th Circuit had previously issued a pro-insurance ruling on the matter. [19659002] The ruling in the New Mexico case that dismissed the dispute. mot Cincinnati Insurance Co. filed in Bernalillo County Court, Albuquerque, New Mexico.

According to court documents in the case, which were first filed in the U.S. District Court in Albuquerque before being transferred to state court, the lawsuit was filed by more than a dozen eye surgery clinics in New Mexico against Cincinnati Insurance, according to Eye Associates of New Mexico Ltd., Eye Surgery Centers of NM, LLC and Pecos Valley Surgery Center, LLC v. The Cincinnati Insurance Co., an Ohi o Insurance Co., and Erica N. Johnson, a judgment in New Mexico.

In its brief ruling the judge said that "after hearing oral arguments and otherwise receiving full information on the premises, the court finds that the motion is not well received and should be denied."

Eye Associates attorney Kristin Davis, a partner with Thompson Hammerman Davis LLP in Washington , said: "We believe that the judge achieved the right result, that this case presents a clear example of a covered claim" and that the insurer "did not treat its client fairly in the way they handled this requirement."

Ms. Davis said the ruling is "part of a growing trend in which state courts" rule differently than federal courts on the issue.

The insurer's lawyers did not respond to a request for comment.

In December, for example, a judge in the state court in New Jersey in Atlantic City ruled in favor of a casino, AC Ocean Walk LLC, in litigation brought against the Allianz, Zurich Insurance Group and American International Group Inc. units, according to the judgment in OC Ocean Walk, LLC vs. American Guarantee and Liability Insurance co. et al.

In its 20-page decision, the court refused to dismiss the case against Zurich, one of the defendants in AIG, AIG Specialty Insurance Co. and Allianz.

It stated that it concluded "that the term" direct physical injury "in the carriers' policies in this case could support either the plaintiff's or the defendant's views on what constitutes a direct physical loss; in other words, it is ambiguous;

"The carriers could have defined the term physical injury but refused to do so."

The court agreed to dismiss the case against the AIG unit National Fire & Marine Insurance Co. on the basis of an approval of exclusion of biological or chemical substances in its coverage.


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