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Thanksgiving and a Cornucopia of Potential Insurance Claims

by | Nov 22, 2022 | COVID-19, Decisions, Insurance Law, News & Updates

   Thanksgiving is a time to spend with family and friends and celebrate all that we are thankful for. It is also a time for a cornucopia of potential insurance claims. Thanksgiving-related insurance claims can run the gamut from auto accidents, to slip-and-falls, fire losses, and even business losses.

   This year, it is estimated that 54.6 million people will travel more than 50 miles for their Thanksgiving celebrations, which greatly increases the risk of an auto accident or other travel-related insurance claim. In addition, the National Fire Protection Association (“NFPA”) has noted that Thanksgiving is the leading day of the year for home cooking fires in the United States.[1]  In fact, the NFPA has reported that home cooking fire reports increase over 200% on Thanksgiving Day versus the daily average for the rest of the year.[2]

   Increased risks of insurance claims are also not limited to homeowners and/or auto claims and the risks do not end on Thanksgiving Day. Millions of Americans will also venture out on Black Friday to take advantage of the many deals that can be found on the biggest shopping day of the year. This leads to increased exposure for businesses from parking lot accidents, slip-and-falls, miscellaneous property damage, and theft.  

   The increased number of losses over the Thanksgiving Weekend also results in an uptick in insurance claims under auto policies, homeowners policies, and business insurance policies. This means that insurers need to be ready to staff and handle a potentially large volume of new claims, both first-party and third-party, in the days and weeks surrounding the Thanksgiving Holiday.

   With these increased risks in mind, the Lether Law Group Family encourages everyone to use extra caution as you enjoy time with family and friends and/or as you venture out on Black Friday.

   If something unexpected should occur or if you need advice for post-Thanksgiving-related insurance claims, please keep in mind that the attorneys at Lether Law Group have over 33 years in combined experience in advising insurers and defending first and third-party claims. This includes providing coverage advice and defending large property losses, catastrophic accident injuries, and other spontaneous and unexpected claims. Please feel free to contact us at any time if you would like to discuss any Thanksgiving-related claims or any other matter.

 

[1] NFPA urges extra caution when preparing your feast this Thanksgiving, by far the leading day of the year for U.S. home cooking fires

[2] NFPA Keep everyone safe from fire hazards this Thanksgiving | NFPA

 

 

 

 

THE NINTH CIRCUIT COURT OF APPEALS AFFIRMS DISMISSAL OF COVID-19 BUSINESS INTERRUPTION CLAIMS

by | Oct 27, 2022 | COVID-19, Decisions, Insurance Law, News & Updates

                On October 17, 2022. The United States Court of Appeals for the Ninth Circuit issued additional Opinions regarding COVID-19 Business Interruption claims.

                In McCulloch, et al v. Valley Forge Ins. Co., et al¸ No. 21-35520, 2022 U.S. App. LEXIS 2860, 2022 WL 9830777 (9th Cir. Oct. 17, 2022), the Court affirmed a summary judgment ruling from the Western District of Washington dismissing claims by several dentists/dental clinics. The Plaintiffs argued that their claims were improperly dismissed because they asserted the claims resulted from “direct physical loss of or physical damage to” their insured premises. The Ninth Circuit disagreed.

                While the appeal was pending, the Washington State Supreme Court issued its ruling in Hill & Stout, PLLC v. Mutual of Enumclaw Ins. Co., 515 P.3d 525 (2022), in which the Supreme Court held that “loss of intended use of property” and “loss of business income” from COVID-19 orders did not qualify for insurance coverage as “direct physical loss of or damage to property.” As a result, the Ninth Circuit dismissed the breach of contract/direct physical loss claim.  The Court also dismissed Plaintiff’s claims that they were entitled to coverage under the policies’ civil authority coverage because there was no evidence that the Washington State Governor’s orders were in response to any actual physical property damages. Therefore, the Ninth Circuit concluded that the Hill & Stout Opinion also precludes coverage.

                In addition, the Ninth Circuit dismissed the appeal for extra-contractual claims. With respect to the extra-contractual claims, certain Plaintiffs argued that the insurer unreasonably denied their claim and failed to conduct a reasonable investigation of the claims. The Ninth Circuit rejected both arguments. Specifically, the Court noted that the unreasonable denial claim first required a showing of an incorrect denial of the claim. Because the claim was properly denied, the extra-contractual claim failed. The Court rejected the unreasonable investigation argument because “the insurer’s denial of coverage was based on a legal interpretation of the policy. [As a result,] [t]here was no need for factual investigation…”

                In Hot Yoga, Inc. v. Philadelphia Indem. Ins. Co.¸No. 21-35806, 2022 U.S. App. LEXIS 28674, 2022 WL 9732180 (9th Cir. 2022), the Ninth Circuit similarly affirmed dismissal of contractual claims based on the Washington State Supreme Court’s Opinion in Hill & Stout. In addition, the Court held that the policy’s virus exclusion, precluding coverage when a virus initiates the causal chain that led to the cause of any claimed loss, barred coverage. 

                The Ninth Circuit also rejected the insured’s arguments regarding its extra-contractual claims. The insured argued that the district court erred in dismissing extra-contractual claims premised on the insurer allegedly “misrepresenting the pertinent policy language and preemptively denying the claim without any investigation.” The Ninth Circuit held that the claims necessarily failed because the policy did not provide coverage. 

                As we previously opined, it is clear that the Washington State Supreme Court’s decision and reasoning in Hill & Stout is having a substantial impact on pending COVID-19 BI claims in Washington. We anticipate that there will be several other similar rulings in the near future.

                If you have any questions about the above Ninth Circuit cases and how the Hill and Stout case will continue to impact COVID-19 BI claims and cases, please give us a call.

 

 

 

Kevin J. Kay

Kevin J. Kay

Shareholder

Kevin is a graduate of Pacific Lutheran University and Seattle University School of Law. He is licensed to practice in the state and federal courts of Washington and admitted to practice before the Ninth Circuit Court of Appeals. In addition, Kevin has appeared pro hac vice in courts in Louisiana and California. Kevin has represented insurers and insureds in coverage for 16 years. These claims involve personal and commercial auto policies, commercial general liability, professional liability, and E&O insurance. Kevin has also advised and represented risk pools, insurers, and insured in matters ranging from automobile/bus accidents to catastrophic landslides. His practice also includes construction defect disputes, personal injury claims, commercial leases, and significant property damage disputes.

 

WASHINGTON COURT OF APPEALS WITHDRAWS OPINION ADDRESSING THE INSURANCE FAIR CONDUCT ACT IN THE CONTEXT OF UM/UIM INSURANCE

by | Sep 29, 2022 | Appellate Practice, Decisions, Events, Insurance Law, News & Updates

 As noted in a previous newsletter, Division Two of the Washington State Court of Appeals issued an opinion on April 19, 2022 in Beasley v. Geico General Insurance Company and Aaron Yaws, No. 54997-2-II, which addressed the meaning of the term “actual damages” under the Washington Insurance Fair Conduct Act (IFCA), RCW 48.30.015 and holding that the term “actual damages” includes noneconomic damages. Beasley v. Geico General Insurance Company and Aaron Yaws, No. 54997-2-II.  The unpublished part of the opinion also addressed the issue of tendering “undisputed” amounts in the context of UM/UIM claims, which had not been addressed in prior case law in Washington.

 Last week, The Court of Appeals withdrew the Beasley opinion in response to a Motion for Reconsideration filed by GEICO. The Order granted the Motion for Reconsideration in part, withdrew the earlier opinion, and advised that a revised opinion would be filed.  To date, the revised opinion has not yet been issued. As a result, there is no information regarding which portion of the prior opinion has been reconsidered. Nevertheless, and as a result of the withdrawal, the earlier Beasley opinion is no longer good law and should be disregarded by insureds and insurers alike. 

Lether Law Group currently represents multiple insurers in coverage litigation in state and federal courts in Washington involving claims under IFCA. If you have questions about the implications of Beasley or general questions in regard to pending insurance claims and compliance with Washington insurance law, please feel free to contact our office.

 

Ellen Mcgraw

Ellen Mcgraw

Associate Attorney

Meg is from Oklahoma City, Oklahoma. She received a bachelor’s degree in Environmental Sustainability from the University of Oklahoma, where she graduated with honors. She went on to receive her Juris Doctor from Lewis & Clark Law School, graduating cum laude. Before joining Lether Law Group, Meg served as a judicial extern for the Honorable Chief Judge Marco A. Hernández in the U.S. District Court for the District of Oregon.

WASHINGTON COURT OF APPEALS WITHDRAWS OPINION ADDRESSING THE INSURANCE FAIR CONDUCT ACT IN THE CONTEXT OF UM/UIM INSURANCE

by | Sep 15, 2022 | Appellate Practice, Decisions, Events, Insurance Law, News & Updates

 As noted in a previous newsletter, Division Two of the Washington State Court of Appeals issued an opinion on April 19, 2022 in Beasley v. Geico General Insurance Company and Aaron Yaws, No. 54997-2-II, which addressed the meaning of the term “actual damages” under the Washington Insurance Fair Conduct Act (IFCA), RCW 48.30.015 and holding that the term “actual damages” includes noneconomic damages. Beasley v. Geico General Insurance Company and Aaron Yaws, No. 54997-2-II.  The unpublished part of the opinion also addressed the issue of tendering “undisputed” amounts in the context of UM/UIM claims, which had not been addressed in prior case law in Washington.

 Last week, The Court of Appeals withdrew the Beasley opinion in response to a Motion for Reconsideration filed by GEICO. The Order granted the Motion for Reconsideration in part, withdrew the earlier opinion, and advised that a revised opinion would be filed.  To date, the revised opinion has not yet been issued. As a result, there is no information regarding which portion of the prior opinion has been reconsidered. Nevertheless, and as a result of the withdrawal, the earlier Beasley opinion is no longer good law and should be disregarded by insureds and insurers alike. 

Lether Law Group currently represents multiple insurers in coverage litigation in state and federal courts in Washington involving claims under IFCA. If you have questions about the implications of Beasley or general questions in regard to pending insurance claims and compliance with Washington insurance law, please feel free to contact our office.

 

Thomas Lether

Thomas Lether

Founder and Managing Shareholder.

Thomas Lether is a graduate of the University of Puget Sound and the University of Puget Sound Law School. He has been involved in insurance and commercial litigation since 1988. Mr. Lether’s primary clients include numerous National and International insurance companies, several smaller insurers and independent adjusting firms. He also represents a number of contractors, property owners, and business owners. His practice predominantly involves the representation of insurance companies and individuals in the investigation, adjustment and defense of complex coverage matters.

 

THE WASHINGTON STATE SUPREME COURT WEIGHS IN ON COVID-RELATED BUSINESS INTERRUPTION CLAIMS

by | Sep 1, 2022 | COVID-19, Decisions, Insurance Law, News & Updates

As insurance professionals and insurance lawyers are aware, Washington State is historically one of the most liberal jurisdictions in the country. This has often led to decisions and rulings that favor policy holders. However, on August 25, 2022, the Washington State Supreme Court issued a decision finding that COVID-19 related business income losses are not covered under standard commercial property insurance policies.  Hill & Stout, PLLC v. Mutual of Enumclaw Insurance Company, Cause No. 100211-4.

Hill & Stout is a Washington dentistry practice.  When the COVID-19 pandemic first arose in the State of Washington, Governor Jay Inslee declared a state of emergency and issued multiple proclamations relating to public health and safety, including a proclamation prohibiting all non-emergent dental procedures.  In light of the emergence of COVID-19 and the governmental and societal response thereto, Hill & Stout joined thousands of businesses in Washington and around the country in seeking Business Interruption coverage under its commercial property policy.

Mutual of Enumclaw (MOE) denied Hill & Stout’s claim effectively for two reasons.  First, the business income loss coverage is triggered only where there is “direct physical loss or damage” to the insured premises.  Second, the MOE policy contained an exclusion for any losses caused by a virus.  Hill & Stout sued in the King County Superior Court.

Since the inception of the global pandemic, thousands of lawsuits relating to business income loss coverage have been filed by businesses seeking to recover their losses.  The courts around the U.S. have been nearly universal in finding that there is no coverage for these claims.  In fact, as Lether Law Group has previously reported, the United States District Court for the Western District of Washington has previously ruled in favor of insurers on these claims.  Germack v. The Dentists Insurance Company, W.D. Wa. Cause No. 2:20-cv-00661-BJR.

However, until Hill & Stout, the highest court in the State of Washington had not fully and finally resolved the issue in this jurisdiction.  In Hill & Stout, the Supreme Court found that there is no coverage for COVID-related business losses because the virus and the governmental proclamations related thereto do not cause direct physical loss or damage to the insured premises.  The insured had focused their argument on the claim that they had a “loss” of the business.  The Supreme Court rejected that argument finding that the loss was not “physical”.

The Court went on to find that the efficient proximate cause of the business losses was not the governmental response to the virus, but the virus itself.  As a result, the Court held that the virus exclusion would operate to preclude coverage, even if there was a direct physical loss.

Lether Law Group represents multiple carriers in Washington and in jurisdictions around the United States in COVID-related business income loss claims.  This includes the Germack case referenced above. If you would like to speak with us regarding these or any other claims, please contact us at any time.

 

Kevin J. Kay

Kevin J. Kay

Shareholder

Kevin is a graduate of Pacific Lutheran University and Seattle University School of Law. He is licensed to practice in the state and federal courts of Washington and admitted to practice before the Ninth Circuit Court of Appeals. In addition, Kevin has appeared pro hac vice in courts in Louisiana and California. Kevin has represented insurers and insureds in coverage for 16 years. These claims involve personal and commercial auto policies, commercial general liability, professional liability, and E&O insurance. Kevin has also advised and represented risk pools, insurers, and insured in matters ranging from automobile/bus accidents to catastrophic landslides. His practice also includes construction defect disputes, personal injury claims, commercial leases, and significant property damage disputes.

 

COVID-19 Business Interruption Case Updates from Across the Country

by | Sep 11, 2020 | Decisions, Featured, Insurance Law

The rapid spread of COVID-19 throughout the United States and resulting governmental shut-down orders have sparked a large increase in business interruption claims and subsequent litigation. While “direct physical loss” and “necessary suspension” policy language have been addressed in most jurisdictions, the less commonly litigated terms of civil authority coverage and virus exclusions are the subject of debate in many courts across the country. The following is a summary of notable rulings on COVID-19 business interruption coverages:
  • In re: COVID-19 Business Interruption Protection Insurance Litigation, United Statees Judicial Panel on Multidistrict Litigation, MDL No. 2942, 2020 U.S. Dist. LEXIS 144446: The Panel denied the plaintiffs’ motion to transfer and consolidate 263 cases across 48 districts into a single industry-wide business interruption coverage case. The Panel found that consolidation was inappropriate because differences overwhelmed any common factual questions – there was no common defendant, different policy forms, and a diverse group of plaintiffs located throughout the United States. Moreover, the Panel found that consolidation would be inefficient for all parties and courts involved.
  • 10E, LLC v. Travelers Indem. Co., United States District Court for the Central District of California Case No. 2:20-cv-04418-SVW-AS, 2020 U.S. Dist. LEXIS 156827: The court granted Travelers’ Motion to Dismiss, interpreting “direct physical loss” to require “the permanent dispossession of something” as opposed to a temporary restriction of the use of property. The 10E court found that the plaintiff-restaurant was not entitled to business interruption loss or civil authority coverage arising from governmental orders restricting restaurants to take-out and delivery due to COVID-19.
  • Gavrilides Management Co. v. Michigan Insurance Co., Michigan Circuit Court Case No. 20-258-CB-C30: The court granted Michigan Insurance Company’s motion to dismiss after finding that a loss of income due to orders limiting a restaurant’s operations to take-out and delivery in response to COVID-19 did not satisfy the requirement of physical loss of or damage to property. The Gavrilides court stated that “physical alteration to or physical damage or tangible damage to the integrity of the building” was required for coverage.
  • Malaube, LLC v. Greenwich Ins. Co., United States District Court for the Southern District of Florida Case No. 20-22615-Civ, 2020 US Dist LEXIS: Magistrate Judge Edwin Torres recommended granting Greenwich Insurance Company’s Motion to Dismiss COVID-19 Business Interruption claims brought by a restaurant. Where government orders prohibited indoor dining but allowed delivery and take-out orders, Judge Torres found that no “direct physical loss or damage” occurred because the government orders never made the plaintiff’s restaurant uninhabitable or substantially unusable.
  • Rose’s 1, LLC v. Erie Ins. Exch., District of Columbia Superior Court Case No. 2020 CA 002424 B, 2020 D.C. Super. LEXIS 10: The court granted summary judgment after finding that government orders restricting business operations do not constitute “direct physical loss.” The court found that that the government’s orders did not cause any “direct” change to properties, that the orders did not have any “effect on the material or tangible structure of the insured properties,” and the orders did not constitute a “loss” because they did not have any “direct physical intrusion on to the insured property.”
  • Diesel Barbershop, LLC, v. State Farm Lloyds¸ United States District Court for the Western District of Texas Case No. 5:20-CV-461-DAE, 2020 U.S. Dist. LEXIS 147276: The court granted State Farm’s motion to dismiss, finding that business interruption coverage required tangible injury to property and upholding the policy’s virus exclusion. Specifically, the court found that the shut-down orders were a sequential result of the presence of COVID-19, and therefore, “the primary root cause” of Plaintiffs’ business closure.
  • Social Life Magazine, Inc. v. Sentinel Ins. Co. Ltd., United States District Court for the  Southern District of New York No. 20 Civ. 3311 (VEC): The court denied plaintiff’s motion for preliminary injunction because COVID-19 does not cause physical damage to property, rather, “it damages a person’s lungs.”
  • Optical Services USA, et al. v. Franklin Mutual Insurance Company, New Jersey Superior Court Case No. BER-L-3681-20: The court denied Franklin Mutual’ s motion to dismiss, finding that plaintiffs should have the opportunity to engage in issue-oriented discovery to fully establish the record regarding direct covered losses and to amend their complaint accordingly. The court also found that Franklin Mutual failed to provide any controlling legal authority supporting their interpretation of “direct physical loss,” admitting that the New Jersey legal authority addressing this issue was limited.
  • Martinez v. Allied Insurance Company of America, United States District Court for the Middle District of Florida, Case No. 2:20-cv-00491-FtM-66NPM: The court granted Allied’s motion to dismiss, upholding the policy’s virus exclusion. The court found that plaintiff failed to assert that his loss or damage was due to a “covered cause of loss.” Rather, the court found that because the plaintiff’s damages resulted from COVID-19, neither the governmental orders narrowing plaintiff’s dental services nor the disinfection of the dental office constituted a “covered cause of loss” pursuant to the policy’s virus exclusion.
  • Studio 417, Inc., et al. v. The Cincinnati Insurance Company, United States District Court for the Western District of Missouri Case No. 20-cv-03127-SRB, 2020 U.S. Dist. LEXIS 147600: The court denied Cincinnati’s motion to dismiss, finding that the plaintiff had adequately stated a claim for direct physical loss and claims under the policy’s civil authority, ingress and egress, and dependent property coverages. Specifically, the court found that plaintiff’s adequately alleged a causal relationship between COVID-19 and their losses – that COVID-19 “is a physical substance” that attached to and deprived Plaintiff’s of their property, making it “unsafe and unusable”.
  • Turek Enterprises, Inc. v. State Farm Mutual Automobile Insurance Company, et al., United States District Court for the Eastern District of Michigan Case No. 20-11655, 2020 U.S. Dist. LEXIS 161198: The court granted State Farm’s motion to dismiss, finding that “direct physical loss” required tangible damage and that coverage was otherwise precluded by the virus exclusion. Specifically, the governmental orders and plaintiff’s business interruption losses resulting therefrom “would not have occurred but for COVID-19.”

Lether Law Group currently represents several national insurers in COVID-19 business interruption litigation in state and federal courts in Washington, Oregon, California, and Pennsylvania. If you have questions about any state-specific requirements which have been enacted due to the COVID-19 pandemic or general questions in regard to pending insurance claims and compliance with any regulatory requirements, please feel free to contact our office.

The above article is an opinion based on various resources such as industry knowledge and is not to be construed as legal advice or to be used as such. If you require legal advice or would like to inquire further about the information contained in this article, please feel free to contact our office directly.