An appellate court has ruled for the first time that an insured restaurant can seek COVID-19 shutdown damages.
The Oceana Grill on Bourbon St. in New Orleans had originally lost their request to seek damages from its insurer, but that decision has now been reversed on appeal.
“The physical presence of COVID-19 substantially diminished the usable space of the property, as tables needed to be pushed farther apart, and resulted in economic losses due to the slowdown of the appellants’ business,” Chief Judge Terri Love wrote in the ruling.
Cajun Conti, the company that owns Oceana Grill, sued Lloyd’s of London for damages on the day they were shut down — March 20, 2020. They argued that COVID-19 had caused property damage by forcing it to close — and eventually reduce the amount of seating in the establishment to comply with social distancing rules.
“Oceana Grill’s parent company was one of the first, if not the first, to file a COVID insurance coverage lawsuit, though many more followed. The general consensus was that the pandemic wouldn’t qualify for business interruption assistance, as it was created to cover closures due to property damage from natural disasters. This court, however, found that the wording is open to interpretation and that physical damage did not have to be ‘obvious and observable,’” Nola reports.
One of the policyholder attorneys involved said the “dam has broken” with the ruling, paving the way for other businesses to do the same, according to a report from Reuters.
Lloyd’s attorney Virginia (Ginger) Dodd of Phelps Dunbar told Reuters that she believes the ruling was inconsistent with “ten federal circuit courts of appeal and every other state appellate court.”
“We will pursue all options to address what we believe to be an outlier decision,” Dodd added.
Reuters noted that “while Wednesday’s appellate decision is the first to find coverage for COVID-19 income losses under an all-risk property insurance policy, a state appellate court in New York on Monday affirmed a Bronx judge’s ruling that allowed the New York Botanical Garden to sue its Pollution Liability Insurer, Allied World Assurance, for denying its COVID-related loss of business income claim and for breach of the implied covenant of good faith and fair dealing.”
“This lawsuit was all about coverage,” Daniel Davillier, an attorney representing Oceana Grill’s owner, told Nola. “If you don’t have coverage you can’t claim any damages. There are a lot of people out there who suffered losses during the pandemic who’ve been waiting to see how this turns out.”