Landmark COVID-19 business interruption lawsuit defeated in jury trial

Joanna Fantozzi

After Kansas City brewery/restaurant group K.C. Hopps became the first of many similar cases to successfully bring a lawsuit against its insurance company for pandemic-related claims to a jury trial, the restaurant group was defeated in court on Oct. 28. According to Kansas City federal court documents, the jury found that Cincinnati Insurance Co. Inc. does not have to cover the losses sustained by K.C. Hopps due to COVID-19-incurred losses.

“We thank the jury for their time and attention through the trial,” Cincinnati Insurance said in a statement on Friday, according to Claims Journal. “We are pleased that they unanimously agreed with us that our commercial property insurance policy does not provide coverage for these COVID-19 losses.”

In September, U.S. District Court Judge Stephen Bough upheld his ruling that K.C. Hopps sustained “direct physical loss or physical damage during the pandemic” on the basis of claims that COVID-19 was physically present on the premises.

“Whether the virus was present on plaintiff’s premises, whether it actually caused a physical loss or physical damage to plaintiff’s premises, and the extent of plaintiff’s damages due to that ‘loss’ are genuine issues of material fact which preclude summary judgment,” the previous ruling said.

Related:José Andrés’ ThinkFoodGroup and Central Michel Richard are the latest restaurants to sue their insurance company over COVID-19 coverage

This was a landmark case because although there have been dozens of similar cases filed by restaurants and other hospitality businesses, more than 80% of these cases have been dismissed by courts, according to the University of Pennsylvania Law School case tracker.

For most of these cases, businesses tried to argue that insurance companies had to pay out because the effects of restaurant closures during the pandemic constituted physical loss or damage. Successful cases, meanwhile, focused on evidence of COVID-19 on-premises. The plaintiff in the K.C. Hopps case argued that because SARS-COV-2 can linger on surfaces, that it constitutes direct physical loss or damage.

On Oct. 23, K.C. Hopps filed a motion seeking an order in regard to the court’s interpretation of the insurance policy and asked to revise the proposed jury instructions, according to Claims Journal, since previously, Judge Bough had ruled that the insurance company’s exclusion policies do not apply in this case.

Only one other COVID-related business insurance interruption lawsuit was brought to trial, but it was defeated before the bench: New Orleans judge Paulette R. Irons denied New Orleans restaurant Cajun Conti LLC a petition for declaratory relief in February.

Related:Restaurateurs Fabio Trabocchi and Robert Wiedmaier sue insurance company for denial of COVID-19 coverage

Representatives for the plaintiff did not respond in time to requests for comment.

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