The Louisiana Supreme Court has agreed to review an appeals court decision that found the COVID virus caused direct bodily loss that was covered by insurance.
The Louisiana Supreme Court announced Tuesday that it will accept an appeal brought 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 harm. The Vermont Supreme Court issued a similar ruling in September, but appellate courts in 18 other states have ruled that the virus either cannot cause physical loss or harm, or did not do so in the circumstances at issue, according to a from the University of Pennsylvania guided law enforcement tracker .
In the Cajun Conti case, a New Orleans Parish jury found that the restaurant’s insurance policy did not provide coverage for business interruption costs caused by the COVID virus. The 4th Circuit Court of Appeals reversed in a 3-2 decision, finding that the physical presence of the virus affected use of the property.
Cajun Conti attorney John W. Houghtaling II told the Claims Journal after the verdict that he won the appeal because he was able to present evidence at trial that the Insurance Service Office was aware that viral contamination was covered under coverage “Anything can trigger risk” commercial real estate policies.
The two dissenters said they upheld the jury’s verdict. Lloyds of London appealed the decision of the Fourth Federal Court.
The High Court’s decision to hear the appeal is good news for insurers.
“Similar cases of COVID-19 business interruption claims heard in top state courts across the country have resulted in favorable rulings for commercial property insurers. We hope the Louisiana Supreme Court will follow suit,” said Mark Friedlander, communications director for the Insurance Information Institute.
The decision in the Cajun Conti case allows the Louisiana Supreme Court to resolve a conflict between the way federal courts and state courts have interpreted Louisiana law. In March, the Fifth Circuit Court of Appeals ruled in Q Clothier New Orleans v. Twin City Fire Insurance Co. that the virus cannot cause direct physical loss or damage because it has not caused a “tangible change” in property. The 5th Circuit has affirmed its decision in the case at least three times since the Louisiana Court of Appeals ruled, according to a paper by University of Pennsylvania law professor Tom Baker.
The high courts in Delaware, Iowa, Massachusetts, Oklahoma, South Carolina and Washington have similarly ruled against policyholders seeking coverage for loss of income due to the COVID-19 pandemic.
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