Kenmore Army Navy Store added to list of businesses seeking business interruption coverage for Covid-19 losses

 

The Kenmore Army Navy Store (which is located in Downtown Crossing, several MBTA stops away from Kenmore), has sued Travelers Casualty Insurance Company of America in the United States District Court for the District of Massachusetts.  Like so many other businesses, the Army Navy store seeks business interruption coverage for losses from the coronavirus pandemic.  

The store alleges that the policy Travelers issued has the usual coverage for "direct physical loss."  It alleges that the direct physical loss from the pandemic is "the property being damaged, access to the property being denied, customers being prevented from physically occupying the property, the property being physically uninhabitable by customers, the function of the property being nearly eliminated or destroyed, and/or a suspension of business operations occurring at the property." 

The store also alleges that the policy has no applicable exclusions -- meaning, presumably, that the policy does not contain a virus exclusion.  If that's correct, that's one legal hurdle the store does not have to jump over.

The store alleges breach of contract and, in what seems to me to be a bit of a stretch, breach of the covenant of good faith and fair dealing and of Mass. Gen. Laws ch, 93A.    

Judicial Panel on Multidistrict Litigation rejects bid to centralize all federal lawsuits seeking coverage for business interruption losses caused by Covid-19 pandemic

 

 Law360 provides in-depth coverage of the decision here.   

Cheers bar joins the fray -- files lawsuit for business interruption coverage for Covid-19 losses

Some (actually not so) important background: when the TV show Cheers was popular, a bar opened in Boston which was named Cheers to attract tourists who were fans of the show.  Natives knew that the "legitimate" Cheers bar was the Bull & Finch Pub, on Beacon Hill -- because the exterior of the TV show's bar was shot there.  Back in the day, it was a pretty good bar, although nobody knew my name when I went there.  Eventually the fake Cheers bar also took over the Bull & Finch and renamed it Cheers. 

Yesterday Hampshire House Corporation, the owner of both Cheers bars as well as a couple of other restaurants, filed a lawsuit in the United States District Court for the District of Massachusetts against Fireman's Fund Insurance Company, Associated Indemnity Corporation, and Allianz Global Risks United States Insurance Company, alleging that the insurers have wrongfully denied coverage for business interruption claims caused by -- not the Covid-19 pandemic, but the emergency orders limiting the operation of restaurants during the pandemic.  Presumably that is because the policies have a virus exclusion that would apply to pandemic losses. 

According to the complaint, the emergency orders "were not a foregone conclusion or obvious consequence of the Covid-19 pandemic, as evidenced by the great variance between states and localities as to the types and extent of restrictions placed on business and public activities." 

The complaint alleges that the emergency orders caused Hampshire House to lose the ability to provide restaurant, alcohol, and retail sales, prevented its customers from physically occupying the premises, and caused the properties to be physically uninhabitable.  According to the complaint, those losses constituted "physical loss of and damage to the insured properties for regular business operations."  Since the policies cover physical loss and damage, the business losses from the emergency orders are covered losses. 

Hampshire House takes issue with the insurers' across-the-board denial of all Covid-19 business interruption claims, alleging that the insurers have a duty to investigate the different circumstances that apply to each claim.