Hunton Insurance Recovery Blog (2024)

Sanctions are an extreme remedy; frequently sought, but seldom granted. Such was the case in Hunton Andrews Kurth LLP’s action on behalf of hotel and casino, Treasure Island, LLC (“Treasure Island”), against Affiliated FM Insurance Company (“AFM”) in federal court in Nevada, where AFM “hid” documents which refute the insurer’s defense on the central disputed issue in Treasure Island’s case—and many more actions seeking insurance coverage for losses arising from the COVID-19 pandemic. A copy of the sanctions order can be found here.

Court dockets, both in the state and federal court systems, have seen a massive influx of COVID-19 business interruption insurance cases since the pandemic began in March of 2020. More recently, cases have been moving more expeditiously through the federal courts, and the circuit courts are starting to issue decisions. Most recently, the Ninth Circuit has spoken and its decisions provide important guidance for policyholders with pending COVID-19 coverage cases in California federal courts.

On Tuesday, a New Hampshire trial court awarded summary judgment to the owner of scores of hotels after finding that the hotels sustained covered “physical loss of or damage to” insured property caused by the pandemic presence of COVID-19 and its viral agent, SARS-CoV-2.The merits ruling is yet another recent victory for policyholders who continue to make headway against an early wave of insurance company dismissals, most of which, unlike the ruling on Tuesday, never considered evidence in support of their decisions.

Earlier this year, lawyers for plaintiffs applied to the MDL Panel for consolidation of all COVID-19 business interruption cases in federal courts throughout the country. On August 12, the Panel rejected plaintiffs’ requests for a single consolidation but requested briefing on the possibility of mini-MDLS as respects five of the insurers that accounted for approximately one third of these cases: Lloyds (26 actions), Cincinnati (70 actions), Hartford (130 actions), Society Insurance (24 actions) and Travelers (45 actions). On Thursday, September 24, the Panel held a nearly three-hour hearing.

On August 18, 2020, the United States Court of Appeals for the Eleventh Circuit affirmed a District Court’s 2018 ruling that Sparta Insurance Company need not cover a south Florida restaurant’s lost income and extra expenses resulting from nearby road construction. But, in doing so, the appeals court appears to deviate from even its own understanding of “direct physical loss” under controlling Florida law.

We previously reported on the July 30 argument before the MDL Panel regarding plaintiffs’ motion to consolidate more than 275 COVID-19 Business Interruption cases.

On July 30, the Judicial Panel on Multidistrict Litigation held a Zoom hearing on a motion filed by plaintiffs’ lawyers to consolidate hundreds of business interruption claims filed across the country. The Panel permitted a number of plaintiffs’ counsel and two insurers’ counsel to each argue for 3 uninterrupted minutes and then respond to questions.