Supreme Court to hear appeal of policyholder’s rare victory in COVID claim


The Louisiana Supreme Court has agreed to review an appeals court decision that found the COVID virus caused direct physical loss covered by insurance.

The Louisiana High Court announced on Tuesday that it will hear an appeal filed by a Lloyd’s of London syndicate against Cajun Conti, owner of the Oceana Grille in New Orleans. The court ordered the insurer to file a brief by December 19 and the restaurant owner until January 6 to file its response.

The Louisiana 4th Circuit Court of Appeals in June became the first state appeals court to rule that SARS-CoV-2 caused covered direct physical loss. Vermont’s Supreme Court issued a similar ruling in September, but appeals courts in 18 other states have either decided the virus cannot cause physical loss or harm, or it hasn’t. in the circumstances at issue, according to a litigation tracker maintained by the University of Pennsylvania. .

In the Cajun Conti case, a New Orleans parish jury found there was no coverage for business interruption costs caused by the COVID virus under the insurance policy. restaurant insurance. The 4th Circuit Court of Appeals reversed a 3-to-2 decision, finding that the physical presence of the virus diminished the use of the property.

Cajun Conti’s attorney, John W. Houghtaling II, told the Claims Journal after the ruling that he won the appeal because he was able to present “irrefutable” evidence at trial that the Insurance Service Office knew that viral contamination could trigger cover under “all risks” business property policies.

Both dissenters said they would have upheld the jury’s verdict. Lloyds of London appealed the 4th Circuit’s decision.

The High Court’s decision to hear the appeal is good news for insurers.

“Similar COVID-19 business interruption claim cases that have been heard in state supreme courts across the country have resulted in favorable rulings for commercial property insurers. We hope the Louisiana High Court will follow that lead,” said Mark Friedlander, director of communications for the Insurance Information Institute.

By ruling on the Cajun Conti case, the Louisiana Supreme Court could resolve a conflict between how federal courts and state courts have interpreted Louisiana law. In March, the United States Court of Appeals for the 5th Circuit ruled in Q Clothier New Orleans v. Twin City Fire Insurance Co. that the virus cannot cause direct physical loss or damage because it did not cause “tangible change” to property. The 5th Circuit has upheld its decision in the case at least three times since the Louisiana Court of Appeals ruled, according to an essay by University of Pennsylvania law professor Tom Baker.

High courts in Delaware, Iowa, Massachusetts, Oklahoma, South Carolina and Washington have also ruled against policyholders seeking to cover lost income due to the COVID-19 pandemic.

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