An appeals court in the state of Louisiana overturned a lower court on Wednesday in a divided opinion and ruled that a restaurant in New Orleans is entitled to covid-19-related coverage of business interruptions due to ambiguous policy language.
In February 2021, after a bench trial, which was the first trial in the case, a judge in the state of Louisiana ruled in favor of Lloyd’s of London underwriters in a case filed by the owner and operator of Oceana Grill in New Orleans. French Quarter, in Cajun Conti LLC et. al. v. Some underwriters at Lloyds, London et al.
It’s the other state’s appellate court ruling for as many days to judge for policyholders, following dozens of federal appeals court rulings in favor of insurance companies, including several of New Orleans̵7; based 5th U.S. Circuit Court of Appeals.
On Tuesday, an appeals court in New York upheld a lower court ruling and ruled that New York’s botanical garden is entitled to covid-19-related coverage of business interruptions from an Allied World Assurance Co. Holdings Ltd. unit.
The majority decision in the 5-2 decision said that the policy “covers loss of business income due to necessary” suspension “of the business caused by” direct physical loss of property damage. ”
“‘Suspension’ is defined in the policy as ‘slowdown or cessation of your business activities’. Therefore, according to the terms of the contract, a complete cessation of business and uninhabitable property is not a condition for payment for business losses incurred due to downtime caused by” direct physical loss or damage to the property “, it is stated in the judgment.
“Shutdown includes the slowdown in business that occurred here, as well as a complete cessation of business that occurs when a property is completely uninhabitable,” the ruling said.
“The policy examined in this case is an ‘all-risk’ policy,” where all risks are covered unless they are clearly and specifically excluded, “says the majority opinion.
“The words in the policy anticipate a situation where business losses can be covered by less than the complete destruction of the property or less than the complete loss of the property’s benefit,” it said.
The existence of this ambiguity and the existence of two equally reasonable interpretations of what constitutes a “direct physical loss or damage to” the insured property requires the court to liberally interpret the provision in favor of the appellants and against the appellant, who drafted the vague the provision ”, it is stated in the opinion, by changing the district court’s decision and ruling in favor of the restaurant.
Lawyers in the case did not respond to a request for comment.
Marshall Gilinsky, an insurance recovery lawyer and shareholder at Anderson Kill PC in New York, who is not involved in the case, said in a statement that “while federal courts of appeal have ruled that the virus does not constitute physical loss or harm, laws from many state courts suggest otherwise, and state courts have been more receptive to corporate covid-19 claims. ”