IT’S TIME TO STOP TRYING TO FORCE INSURERS TO PAY FOR COVID SHUT DOWN LOSSES

Read the full article at https://www.linkedin.com/feed/update/urn:li:ugcPost:6925421498660790273?updateEntityUrn=urn%3Ali%3Afs_updateV2%3A%28urn%3Ali%3AugcPost%3A6925421498660790273%2CFEED_DETAIL%2CEMPTY%2CDEFAULT%2Cfalse%29 and at https://zalma.com/blog plus more than 4200 posts.

No Physical Damage No Coverage

Posted on April 28, 2022 by Barry Zalma

EVEN THE NINTH CIRCUIT AGREES

In Rialto Pockets, Inc.; Brookhurst Venture, LLC; City Of Industry Hospitality Venture, Inc.; and 22 more plaintiffs, et al. v. Beazley Underwriting Limited, and Certain Underwriters At Lloyds London, Including Beazley Furlonge Ltd, No. 21-55196, United States Court of Appeals, Ninth Circuit (April 20, 2022) the 24 Plaintiffs appealed the district court’s dismissal of their operative complaint in an insurance coverage dispute.

Plaintiffs are 24 affiliated companies who operate 23 so-called “gentlemen’s” clubs and a retail store, and they claim coverage under a single policy issued by Defendant Beazley Underwriting Ltd. (“Beazley”) to non-party affiliate The Spearmint Rhino Companies Worldwide, Inc.

According to the complaint, Beazley breached this coverage obligation by failing to pay Plaintiffs for the Time Element losses that directly resulted from the Covid-19 Governmental Orders or were caused by the Covid-19 Governmental Orders.

ANALYSIS

Plaintiffs’ claim of coverage is foreclosed by the California Court of Appeal’s decision, Inns by the Sea v. California Mut. Ins. Co., 286 Cal.Rptr.3d 576 (Ct. App. 2021) and the Ninth Circuit’s decision Ryman v. Sears, Roebuck & Co., 505 F.3d 993, 995 (9th Cir. 2007).

The complaint expressly alleges that the losses “directly result[ed] from the Covid-19 Governmental Orders." Because Plaintiffs’ asserted losses do not fall within the scope of the insurance policy, the district court correctly granted Defendant’s motion to dismiss.

ZALMA OPINION

When even the notoriously liberal Ninth Circuit refuses to ignore the clear and unambiguous language of a policy of insurance that requires there be direct physical damage to property to recover under a time element coverage (business interruption) cover because of orders of the state shutting the business, it is time for lawyers and litigants to stop trying. They might want to consider that their losses are due to a taking of their property by the state in violation of the Fifth and Fourteenth Amendments to the U.S. Constitution.

No alt text provided for this image

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, is available at http://www.zalma.com and [email protected].

Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe.

Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.