A state judge in Rhode Island has refused to dismiss a COVID-19 business interruption lawsuit filed by an adult nightclub against Scottsdale Insurance Co. based on the governor's and mayor's executive order requiring closure due to the pandemic.
Atwell's Realty Corp., the licensed operator of the Desire nightclub, had filed a lawsuit against Scottsdale seeking coverage under its "all risk" policy based on Gina M. Raimondo's government and Providence Mayor Jorge O. Elorza's executive decision to close business, according to Friday's ruling from the Rhode Island Superior Court in Providence Atwells Realty Corp. against Scottsdale Insurance Co.
The nightclub sought coverage based on executive orders under the civil authority's coverage in its all-risk policy, as well as its claim that the pandemic had caused direct physical property damage to the nightclub.
By ruling in favor of the nightclub on its executive order, the decision claimed that Scottsdale claimed that Atwell's failure to claim that there was damage to any property within one mile of the premises, and that the civil authority prohibiting Atwell's access to the premises required both for civil authority coverage.
The insurer's argument that it failed to state a civil authority's claim for cover "is erroneous in two respects", the judgment said.
First, contrary to Scottsdale's assertion, the nightclub claimed that there was property damage within a mile of the premises. It also claimed COVID-1
In addition, "Atwells claims that executive orders forced non-essential corporations to close and its operations fall into the category of these non-essential businesses," the decision said.
"Furthermore, when interpreting the coverage of the civil authority in accordance with its purpose – to compensate an insured for loss of income deriving from its protector – the language is ambiguous and reasonably receptive to more than one sentence, including Atwell's claim that the civil The authority banned its patrons from accessing the premises, "the decision said.
The exclusion of viruses from the policy does not apply here, it said." Because the language of virus exclusion limits the losses that Scottsdale agreed to pay and which Atwell claimed were caused by executive order, Scottsdale has not fulfilled its burden of proving, by law, that the exclusion of the virus applies to the exclusion of the Civil Service's coverage under the facts alleged by Atwells, ”it said, refusing to dismiss the case.
However, the court ruled against Atwell in its professional damages . ”Because Atwells did not claim that its operations were suspended in order for Atwells to the property, such as a restoration effort to free the premises from COVID-19, did not invoke sufficient facts for prima facie that the coverage for the loss of business income exists according to the policy, "the decision states.
Lawyers did not respond to requests for comment.
Last month, a federal district court ruled that physical harm is not necessarily visible. in the eye, when he refuses to dismiss a COVID-19 business interruption lawsuit filed by Alabama restaurants.
More insurance and risk management news about the coronavirus crisis here .