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Archive for the ‘Coronavirus – Insurance Coverage and Extra-Contractual Liability’ Category

California Assembly Bill 1552 – Near Miss or Cautionary Tale for Insurers?

Posted on: November 11th, 2020

By: Ryan Greenspan

As fear of the novel coronavirus and COVID-19 continues to grip the world, an array of government rules, restrictions, and guidelines have been imposed. Some businesses have been operating at a limited capacity and some have closed outright. In March of this year, California’s governor issued one of the strictest orders in the country, defining what is an “essential” and a “non-essential” business and then ordering all so-called “non-essential” businesses to shut down indefinitely. The governor has since permitted certain businesses to re-open to varying degrees.

Many businesses are now seeking to recoup their losses by making claims under insurance policies that provide for business interruption coverage.

Courts around the country have already weighed in on the applicability of business interruption insurance, but this past summer, California Assembly members James C. Ramos and Monique Limon introduced Assembly Bill 1552 (“AB 1552”). Typically, business interruption insurance is available when the insured can prove direct, physical loss or damage to covered property. AB 1552 was different from other, similar bills introduced in such states as Massachusetts and New York because it would have created a rebuttable presumption that the novel coronavirus was present at a business’s property and resulted indirect, physical damage to or loss of property. Bills introduced in other states would have simply mandated coverage, which would make those bills subject to constitutional challenges from insurers. AB 1552’s rebuttable presumption was an attempt to withstand a constitutional challenge.

On June 26, 2020, AB 1552 passed in the California State Assembly by a 77-0 margin. However, it was unable to garner further support and was pulled from consideration before receiving a vote in the State Senate. With the California Legislature currently in recess until January 2021, there is no chance that such a bill, in any form, will be passed in 2020. 

While insurers operating in California may have dodged a proverbial landmine, the governor’s forced closures continue, and many believe that when the California state legislature reconvenes in 2021, a form of AB 1552 revised to attract Senate support may be introduced. Its significant support in the State Assembly is likely to keep the possibility alive for 2021.

If you have any questions about AB 1552 or business interruption insurance practices in California, please contact Ryan Greenspan at [email protected].

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients.  Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments.  For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

No Entry Without a Mask: Coverage for Discrimination?

Posted on: October 26th, 2020

By: Mallory Ball

More businesses are requiring masks or face coverings to protect their patrons and employees from COVID-19. Unfortunately, with the face-covering requirements, businesses are vulnerable to liability claims from patrons alleging they have been discriminated against by requiring them to wear a face covering. The allegations of discrimination may also include humiliation or mental injury as a result. In order to trigger coverage under the standard commercial general liability policy, the discrimination must fall within Coverage A (bodily injury) or Coverage B (personal and advertising injury). Even if the claims trigger coverage under Coverage A or B, there could be an exclusion under the policy that precludes coverage for the alleged discrimination.  

Depending on the jurisdiction and the policy, there might not be coverage for the discrimination claims. The general definition of bodily injury under the standard commercial general liability policy is “bodily injury, sickness or disease, including death resulting from any of these.” In some jurisdictions, mental injury is considered bodily injury. Thus, claims of discrimination with humiliation or mental injury in those jurisdictions might qualify as bodily injury. For the jurisdictions that do not consider mental injury as bodily injury, claims for mental injury resulting from discrimination probably would not trigger coverage under Coverage A of the standard commercial general liability policy. But, if the policy’s definition is broadened to include mental anguish, mental injury and/or humiliation, then there could potentially be coverage for the discrimination claims. Likewise, because discrimination is not one of the offenses in the general definition of personal and advertising injury, the discrimination claims would not fall under Coverage B. However, if the definition is broadened to include discrimination as one of the offenses, then there could potentially be coverage under the policy. Even if the claims do trigger coverage under Coverage A or B, some commercial general liability policies include a virus exclusion that might preclude coverage for discrimination claims arising from a face-covering requirement due to the coronavirus. Depending on the jurisdiction, other exclusions could apply as well such as for claims arising from the actual or alleged release or dispersal of pollutants.

With the increase in COVID-19 cases and winter around the corner, the face covering requirements are likely to remain in place for months. Although claims of alleged discrimination for not being allowed to enter a business without a face covering may increase as well, they are unlikely to be covered depending on the terms of the policy and the jurisdiction at issue.

If you have questions or would like more information, please contact Mallory Ball at [email protected].

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

FMG Attorneys Assist Prevailing Insurer in a COVID-19 Business Loss Claim

Posted on: October 8th, 2020

FMG attorneys Phil Savrin and Shawn Bingham secured a favorable outcome for Allied Insurance Company of America who was sued for rejecting a claim for lost business income after the insured shuttered its restaurant during the COVID-19 pandemic. The insured, a Cajun restaurant in the Atlanta area, decided to close its dining room after the governor issued an Executive Order that declared a state of emergency in March 2020. With losses continuing to mount, the restaurant sought coverage under its insurance policy that applied where business operations are suspended due to a “direct physical loss of or damage to” the property. When Allied determined that the coverage terms were not met, the restaurant filed a lawsuit seeking damages exceeding $900,000.

FMG’s lawyers moved to dismiss the lawsuit in which they asked the judge to confirm that Allied had applied the policy provisions correctly. The main argument was that the policy language requires a physical change in the property that prevented the business from operating for coverage to apply, such as a storm that destroys the roof. In this case, in contrast, the restaurant decided to close down its operations completely due to a concern for spreading the infection. Even if the decision to close was influenced by a government order, Allied argued, there was no physical change in the property preventing the continued operation of the business.

Allied filed its motion in July 2020 before any courts had issued decisions on coverage for business losses related to COVID-19. Since then, a number of courts have found for insurers based on either the absence of a “direct physical loss” to the premises as the cause of the closures or an exclusion for losses caused by a virus. No court has found coverage for business losses under the language in Allied’s policy although some judges have allowed the claims to proceed for factual development.

Allied was handed a victory, however, on October 6, 2020 when the chief judge of the Northern District of Georgia granted the motion and dismissed the restaurant’s lawsuit. He reasoned that despite the ongoing pandemic, there was no suggestion that there was a physical change in the restaurant’s property let alone one that “directly” caused the closure: “Every physical element of the dining rooms—the floors, the ceilings, the plumbing, the HVAC, the tables, the chairs—underwent no physical change.” As such, he found the insured’s claim that it physically lost the ability to operate “exceeds any reasonable bounds of possible construction, pushing the words individually and collectively beyond what any plain meaning can support.” He further ruled that the decision to close the restaurant was not a direct cause of the government order as the decision was made “by intervening persons as a result of intervening conditions.”

The case is captioned Henry’s Louisiana Grill, Inc. v. Allied Insurance Company of America, United States District Court for the Northern District of Georgia, Civil Action Number 1:20-cv-2939-TWT. If an appeal is taken it would be to the United States Court of Appeals for the Eleventh Circuit.

If you have questions or would like more information, please contact Phil Savrin at [email protected] or Shawn Bingham at [email protected].

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

Statute of Limitations Tolled in California Amid Pandemic

Posted on: August 3rd, 2020

By: Matthew Jones

In response to the COVID-19 pandemic, California’s Governor Gavin Newsom issued a “state of emergency” for the entire State. In response, the California Judicial Council adopted several Emergency Rules to implement during the pandemic. In particular, Rule 9 states that all statute of limitations for civil causes of action are tolled from April 6, 2020 until 90 days after the state of emergency related to COVID-19 is lifted by the Governor. Therefore, if a party’s claim would have expired pursuant to the applicable statute of limitations during this timeframe, such claims are still very much alive. In regard to those claims, there is currently no deadline to file them since the “state of emergency” has yet to be lifted by the Governor. Once lifted, claimants will have six months to file their respective claims.

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients.  Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments.  For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

Hurricanes, Pandemics, and Shortages, Oh My: Considerations for Hurricane Season in the Time of Coronavirus

Posted on: June 18th, 2020

By: Anastasia Osbrink

According to forecasters with the Climate Prediction Center at the National Oceanic and Atmospheric Administration (“NOAA”), a division of the National Weather Service, the 2020 hurricane season has a 60% chance of being an “above-normal season.” (See https://www.noaa.gov/media-release/busy-atlantic-hurricane-season-predicted-for-2020.)

This forecast is based on several factors. According to the NOAA, there are “warmer-than-average sea surface temperatures in the tropical Atlantic Ocean and Caribbean Sea,” including record high temperatures in the Gulf of Mexico. That “coupled with reduced vertical wind shear, weaker tropical Atlantic trade winds, and an enhanced west African monsoon all increase the likelihood for an above-normal Atlantic hurricane season.” Hurricanes are formed when “a weather disturbance, such as a thunderstorm, that pulls in warm surface air from all directions” combines with “water at the ocean’s surface that is at least 80° Fahrenheit.” (https://oceanexplorer.noaa.gov/facts/hurricanes.html.) Warm sea water gives hurricanes their strength. Therefore, the warmer the seawater, the more fuel they get, and the stronger these storms can become. Additionally, hurricanes lose strength if high-altitude winds shear apart the top of the storm. Hence, reduced vertical wind shear and weaker tropical Atlantic trade winds will also enable stronger storms to form. (https://oceanexplorer.noaa.gov/facts/hurricanes.html.) Regarding the fourth of these conditions, a stronger west African monsoon season “allows wind patterns coming off Africa to more easily spin up storms.” (https://www.noaa.gov/stories/whirlwind-of-atlantic-hurricane-season-what-gives.) Additionally, as the NOAA explains, “El Nino Southern Oscillation (ENSO) conditions are expected to either remain neutral or to trend toward La Nina, meaning there will not be an El Nino present to suppress hurricane activity.” (https://www.noaa.gov/media-release/busy-atlantic-hurricane-season-predicted-for-2020.) The NOAA notes that when “similar conditions” have been present in the past, they have produced more active seasons than when these conditions are not present. In fact, this is the first time since records of hurricanes have been kept where there were three named storms before the official start of hurricane season on June 1st.

There is, though, another factor that will have an impact during this season’s hurricanes and storms – Coronavirus and COVID-19 – for several reasons.

First, during these initial months of response to Coronavirus and COVID-19, staples like toilet paper, water, disinfectants, and first-aid items often have been out of stock at stores and online. With storms heading their way, certain population centers will have to respond to the inevitable rush for food, bottled water, and other crucial supplies.

Second, many people living along the Southeastern Seaboard and the Gulf Coast rely on various businesses that provide hurricane preparation and storage services, such as window boarding, sandbagging, and securing of personal property. With many businesses struggling to remain open or maintain their workforce due to the pandemic, such services may be more difficult to find.

Third, if people have to head to evacuation centers, which are enclosed spaces crowded with people, the virus and COVID-19 may be more likely to spread.

Finally, as cities and states respond, they will need to put more time, effort, and resources into planning and setting up these centers to ensure social distancing can be practiced. One solution is more centers with more volunteers. Additional personal protective equipment (“PPE”) will be needed such as extra masks, gloves, hand sanitizer, and washing stations.

Some of the resources available to respond to these risks are provided in the following links:

https://www.ready.gov/hurricanes

https://www.cdc.gov/coronavirus/2019-ncov/index.html

https://www.fema.gov/news-release/2020/06/01/prepare-2020-hurricane-season-now

https://www.weather.gov/wrn/hurricane-preparedness

If you have any questions or would like more information, please contact Anastasia Osbrink at [email protected].

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you. We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**