By Carolyn H. Rosenberg, J. Andrew Moss, Emily E. Garrison and Herbert F. Kozlov
CHICAGO — Insured owners of a number of restaurants filed a proposed class action suit on March 31 in Illinois federal court against its business interruption insurer, claiming that punitive damages are warranted as a result of the insurer’s denial of the insured’s claim for lost business income incurred as a result of state shutdowns caused by the novel coronavirus pandemic (Billy Goat Tavern I Inc., et al. v. Society Insurance Co., et al., No. 20-2068, N.D. Ill.).
TAMPA, Fla. — One day after a sports bar insured sued its commercial property insurer seeking coverage for its losses arising from the “COVID-19 governmental suspension of business operations,” a federal judge in Florida on April 3 issued a sua sponte order directing the insured to show cause as to why its complaint should not be dismissed for lack of diversity jurisdiction under 28 U.S. Code Section 1332(a)(1), 28 U.S.C. § 1332(a)(1) (Prime Time Sports Grill, Inc. v. Certain Underwriters at Lloyd’s London, No. 20-00771, M.D. Fla.).
ST. LOUIS — A federal judge in Missouri on April 6 held that there was no possibility of coverage for any property damages potentially covered under a commercial general liability insurance policy because the underlying alleged "loss of use” damages against a credit union insured were not caused by an “occurrence,” further finding that there was no possibility of coverage for any “personal injury” damages because all alleged damages stemmed from the insured’s provision of credit union financial services that are unambiguously excluded from coverage (Anheuser Busch Employee Credit Union v. Travelers Property Casualty Company of America, et al., No. 18-1208, E.D. Mo., 2020 U.S. Dist. LEXIS 59933).
ST. PAUL, Minn. — An insured recently asked the Eighth Circuit U.S. Court of Appeals to reverse a lower federal court’s ruling that an excess directors and officers liability insurance policy’s prior acts exclusion bars coverage for the underlying settlement of securities and derivative lawsuits, alleging that the insured failed to disclose material, related-party relationships, arguing that the lower court made a “significant” error (Tile Shop Holdings, Inc. v. Allied World National Assurance Company, No. 19-2404, 8th Cir.).
SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals on April 1 affirmed a lower federal court’s ruling that coverage for an underlying contempt proceeding against an insured is barred by a general liability insurance policy’s intellectual property and unfair competition exclusions, rejecting the appellants’ argument that the exclusions violate public policy pursuant to California law (Great American E&S Insurance Company v. Theos Medical Systems, Inc., No. 19-15351, 9th Cir., 2020 U.S. App. LEXIS 10345).
BOSTON — A Massachusetts appellate panel on April 2 held that an insurer’s unfair insurance settlement practices involving an underlying negligence lawsuit arising from a bar fight was “willful or knowing,” partially reversing a lower court and remanding for it to determine whether the amount of the judgment on all claims arising out of the present lawsuit and the underlying occurrence should be doubled or tripled pursuant to state law (Robert Chiulli vs. Liberty Mutual Insurance, Inc., No. No. 18-P-1288, Mass. App., 2020 Mass. App. LEXIS 32).
NASHVILLE, Tenn. — A federal judge in Tennessee on March 31 held that a professional liability insurer has failed to demonstrate that policy exclusions apply to bar coverage for arbitration awards for breach of contract claims, attorney fees or arbitration costs entered against a franchisor insured, denying the insurer’s motion for summary judgment (For Senior Help, LLC v. Westchester Fire Insurance Company, No. 19-cv-00126, M.D. Tenn., 2020 U.S. Dist. LEXIS 56057).
HOUSTON — A Texas appeals panel on March 31 held that an insured’s losses associated with the U.S. Securities and Exchange Commission’s notices and enforcement action are subject to a directors and officers liability insurer’s “Interrelated Claims” condition and, therefore, do not fall under the scope of coverage, affirming a lower court’s ruling in favor of the insurer (Uni-Pixel, Inc., et al. v. XL Specialty Insurance Company, No. 14-18-00828, Texas App., 14th Dist., 2020 Tex. App. LEXIS 2646).
INDIANAPOLIS — An Indiana appeals court panel on March 31 affirmed a lower court’s ruling that a ransomware attack against an insured did not trigger computer fraud coverage under its commercial insurance policy, finding that although the hijacker's conduct was illegal, there was no deception in the hijacker's bitcoin ransom demands (G&G Oil Co. of Indiana v. Continental Western Insurance Company, No. 19A-PL-1498, Ind. App., 2020 Ind. App. LEXIS 126).
RIVERSIDE, Calif. — An insurer on March 14 filed suit in a federal court in California seeking a declaration that its policy’s “invasion of privacy” exclusion bars directors, officers and organization liability insurance coverage for an underlying putative class action alleging that the insured violated the Telephone Consumer Protection Act (TCPA) and state law (Atlantic Specialty Insurance Company v. HOSOPO Corporation, No. 20-00545, C.D. Calif.).
CINCINNATI — The Sixth Circuit U.S. Court of Appeals on March 30 reversed a federal court’s ruling in favor of insurers in their declaratory judgment lawsuit disputing coverage for an underlying malicious prosecution suit brought against their mutual insured by a man exonerated for a murder charge, finding that his injuries were caused by malicious prosecution and were continuous during the relevant coverage period (St. Paul Guardian Insurance Company, et al. v. City of Newport, Ky., et al., No. 19-5948, 6th Cir.).
CHICAGO — A group of restaurant and movie theater owners and operators claim in a March 27 complaint filed in Illinois federal court that their insurer breached its contracts and acted in bad faith in denying the insureds’ claims for business interruption losses sustained as a result of the state-ordered shutdown of nonessential businesses in Illinois in the wake of the coronavirus pandemic (Big Onion Tavern Group LLC et al., v. Society Insurance Inc., No. 20-2005, N.D. Ill.).
ATLANTA — The 11th Circuit U.S. Court of Appeals on March 30 affirmed a lower court’s ruling that a commercial general liability insurance policy’s “amusement devices” exclusion bars coverage for an underlying negligence lawsuit brought against the insured, finding that the lower court properly found that the exclusion is unambiguous (Princeton Excess and Surplus Lines Insurance Company v. Hub City Enterprises, Inc., et al., No. 19-14193, 11th Cir., 2020 U.S. App. LEXIS 9744).
DURANT, Okla. — Choctaw Nation of Oklahoma is one of two Native American Indian tribes to sue its insurers on March 24 in an Oklahoma court, arguing that they are responsible for its losses and expenses related to the COVID-19 infection and coronavirus pandemic that has allegedly damaged its property and prevented it from being used for its intended purpose (Choctaw Nation Department of Commerce v. Lexington Insurance Co., et al., No. 20-35, Okla. Dist., Bryan Co.).
By Scott M. Seaman and Judith A. Selby
NAPA, Calif. — Owners, operators and managers of two Napa Valley, Calif., restaurants on March 25 sued their insurers in a California superior court, seeking a declaration that their insurance policy provides coverage for any current and future civil authority closures of Napa County restaurants because of physical loss or damage from the coronavirus and provides business income coverage in the event that coronavirus has caused a loss or damage at their restaurants (French Laundry Partners, LP, et al. v. Hartford Fire Insurance Company, et al., Calif. Super., Napa Co.).
CINCINNATI — No coverage is owed for a son’s exposure to secondhand smoke as a result of his father’s smoking because the father intended to smoke in front of the son, the Sixth Circuit U.S. Court of Appeals said March 27, noting that there was there was no occurrence as required for coverage to exist under the policies at issue (Liberty Mutual Insurance Co., et al. v. Estate of Hugo Bobzien Jr., et al., No. 19-5457, 6th Cir., 2020 U.S. App. LEXIS 9654).
ADA, Okla. — The Chickasaw Nation Department of Commerce on March 24 sued its insurers in Oklahoma court, seeking a declaration that its insurance policies cover its losses and expenses that are related to the coronavirus pandemic and COVID-19 infection (Chickasaw Nation Department of Commerce v. Lexington Insurance Co., et al., No. 20-35, Okla. Dist., Pontotoc Co.).
HOUSTON — A Texas appeals panel on March 26 affirmed a lower court’s ruling that an insurer owes no coverage for an underlying $87,598 default judgment entered against its hospital insured in an employment discrimination lawsuit because the hospital failed to timely report the claim (Junious R. Valentine v. Federal Insurance Company, No. 14-18-00438, Texas App., 14th Dist., 2020 Tex. App. LEXIS 2537).