Travelers wins business interruption lawsuit against burger joint
The district judge ruled that the threshold requirement for the lost business income in Real Hospitality’s “all risk” property policy with Travelers necessitates either tangible damage or the “permanent dispossession” of the property.
Starrett pointed out that Real Hospitality has not alleged that it has permanently lost its restaurant, or that the burger joint suffered physical damage. Instead, the company’s lawsuit stated that only local and state COVID-19 shutdown orders have prevented it from offering dine-in services, thus leading to business losses.
“Reading the policy as a whole, the court finds that plaintiff’s complaint fails to state a claim because it does not allege that any insured property was damaged or that plaintiff was permanently dispossessed of any insured property,” the judge said in his judgment. “Consequently, plaintiff’s contention that ‘loss of property’ reasonably includes loss of usability is not sustainable.”
The judge also agreed with Travelers that even if Real Hospitality met the requirements for coverage, the policy’s virus exclusion would still apply.
Real Hospitality had filed its lawsuit against Travelers on May 08 in Mississippi federal court. Travelers moved to dismiss the case the following month.
Law360 reported that state and federal judges have granted insurance companies’ motions to dismiss in at least 33 similar suits brought by policyholders, while an estimated 15 cases have proceeded to discovery.
Read more: Travelers wins business interruption lawsuit case
Travelers won another previous lawsuit involving children’s clothing retailer Mudpie. The retailer alleged that it and many other retailers across California were forced to close down due to the state’s shutdown orders, yet Travelers and other insurance companies have been categorically denying business interruption coverage. That lawsuit was also dismissed over similar reasons.