Being a sports junkie, I all too often phrase events in sports terms, and continue to do so in my analysis of the current climate of lawsuits brought for damages and loss purportedly caused by Covid-19.
We are only in the 3rd inning of lawsuits, but it seems that the heart of the insureds’ lineups are coming to bat (especially so in certain jurisdictions).
As recently published in the February 11, 2021 issue of Claims Journal, to date, insurers have won 147 motions for dismissal or summary judgment in state and federal courts, according to a litigation tracker maintained by the U. of Penn’s Carey Law School.
Policyholders had won only 34 cases in the early rounds-less than one out of five.
But in Ohio, the home office of the Sill Company, the nation’s leading public adjusters and loss consultants to insureds, the story is quite different. On our “home field” in Ohio, insurers have won only two of 11 motions to dismiss or for summary judgment, as of Feb. 9. The most interesting and perhaps consequential is the ruling of Judge Polster in the Northern District of Ohio, Eastern Division in Henderson Road Restaurant Systems, Inc. dba Hyde Park Grille, et.al. v. Zurich American Insurance Company.
In Henderson, Hyde Park Steakhouses closed all but four of their restaurants in Ohio in response to government orders restricting the operations of restaurants to abate the spread of Covid-19. Those four restaurants continued to provide only carry-out services until March 17, 2020, and then they also closed.
Without reviewing all of the rulings in favor of insurance companies, it can generally be stated that the rulings have revolved around the insureds failure to show “direct physical loss or damage to their property” as they had not been able to establish that Covid-19 was present in their space.
Hyde Park’s legal counsel took a different tact. They essentially stipulated that none of the restaurants were closed because of the presence of Covid-19. Instead, Hyde Park focused on the specific wording in the policy which provided for coverage if there was “direct physical loss of or damage to property” [emphasis added].
The court, in a reasonably lengthy discussion of insurance law in general and under Ohio law, accepted Hyde Park’s argument in granting summary judgment that the insured did suffer “loss of property” even if they couldn’t or didn’t attempt to prove “damage to property”, distinguishing between the two phrases.
So, what have we learned, at least in the Northern District of Ohio? Insureds, which suffered business losses as a result of closings due to governmental orders, should immediately have their commercial property policies reviewed by claims experts, such as the Sill Company, to determine if their policy language is as favorable as it was to the insured in the Hyde Park case.