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COVID-19 Legal Updates

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October 07, 2020 BY Karen Karabinos

On October 6, 2020, a Georgia Federal Court issued the state’s first ruling addressing insureds’ business interruption claims related to COVID-19.  Judge Thomas W. Thrash with the Northern District granted Allied Insurance Company’s motion to dismiss and denied plaintiffs’ motion to certify questions of law to the Georgia Supreme Court. The case is Henry’s Louisiana Grill, Inc. v. Allied Insurance Company of America, 1:20-cv-02939 (N.D. Ga. 10/6/20).

Plaintiffs, Henry’s Louisiana Grill and Henry’s Uptown, are a restaurant and private party space, who ceased operations following the Executive Order declaring a “Public Health State of Emergency” issued by Georgia Governor Brian Kemp. Plaintiffs filed a claim for its loss of revenue with Allied, who denied the claim citing the language of the Business Income provision and the Virus or Bacteria exclusion of the policy.  Plaintiffs consistently represented that ‘at no time has there been ‘any virus located at, on, or in Plaintiff’s premises’” and argued that the Virus or Bacteria did not apply because the businesses were closed in response to Governor Kemp’s orders, not COVID-19.

Judge Thrash’s opinion contains a thorough analysis of the policy provisions, and in particular, the central provision that the business income loss must be the result of a “direct physical loss of or damage to” covered property. As expected by Georgia insurance defense attorneys, the parties and Judge Thrash focused on the Georgia Court of Appeals case, AFLAC, Inc. v. Chubb & Son, Inc., 260 Ga. App. 306 (2003). NOTE: a detailed analysis of this case can be found on

Judge Thrash found plaintiffs’ “allegation of a physical change . . . curious.” Because plaintiffs acknowledge that COVID-19 has not been present at their businesses, Judge Thrash held they cannot argue that COVID-19 caused a physical change resulting in their losses. Judge Thrash noted that plaintiffs’ argument was that a minute before the governor issued the order, the dining rooms were in one state, but a minute later, after the order had been issued, the dining rooms “underwent a direct physical change that left the dining rooms in a different state.”  According to Judge Thrash, “[t]his interpretation of the contractual language exceeds any reasonable bounds of possible construction, pushing the words individually and collectively beyond what any plain meaning can support.”

Looking at the entire policy, Judge Thrash considered the “period of restoration” provision which was defined as the “time between the date of the loss and the earlier of:

  1. The date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality; or
  2. The date when the business is resumed at a new permanent location.”

Judge Thrash held that this “range of contemplated harms aligns with an understanding that ‘loss of’ means total destruction while ‘damage to’ means some amount of harm or injury.” As a result, the court found that the Business Income provision does not provide coverage for plaintiffs’ claim.

The Court also found there was no coverage under the policy’s Civil Authority provision, because there were no allegations in the complaint that a civil authority’s actions prohibited access to the insured premises or that damage to immediately surrounding properties were blocked by a civil authority. Judge Thrash specifically noted that the governor’s order itself “does not represent an action to prohibit access to the described premises,” but could be read as “advising” residents to stay home.

Finally, Judge Thrash rejected plaintiffs’ motion to certify the interpretation of the insurance provisions at issue stating “[g]iven this Court’s view of the unambiguous contract language, this Court will not exercise its discretion to certify the Plaintiffs’ proposed questions of law to the Georgia Supreme Court.”

According to our last count, seven other COVID-19 related cases remain pending in the Georgia Federal Courts. We will provide you an update when any additional rulings have been issued.

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Karen Karabinos
Partner, Drew Eckl & Farnham, LLP
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