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A California Court of Appeal in Los Angeles ruled in favor of a Covid-19 policy in December for a well-loved restaurant in Sherman Oaks, that filed a business interruption claim with insurer Century-National.
Many states have been siding with insurers on Covid-19 coverage disputes, marking this ruling as a “significant shift” from previous thinking, according to a report from USA Herald. In past rulings, courts indicated that siding in favor of the policyholder would threaten the stability of the insurance industry.
The three-judge panel of the California Court of Appeal in Los Angeles ruled in favor of La Cava, which is operated by Shusha Inc., by overturning a trial court’s decision.
The appellate court sent the case back to the trial court and ordered it to vacate a previous ruling that agreed with the insurer’s argument that the law did not support a legal claim for the case presented by the restaurant.
The new ruling states that La Cava did show sufficient allegations of direct physical loss or damage to its premises due to the Covid-19 virus.
La Cava had sufficiently argued its claims for bad faith and unfair competition law violations when it accused Century-National of denying the restaurant’s claim for business interruption coverage without providing them any meaningful investigation into the claim, according to the ruling.
La Cava Attorney Lee Boyd told USA Herald after the ruling that she looks forward to having a trial where she will present evidence that the restaurant’s business operations were impacted by the Covid-19 virus and that interruption coverage is available under the insurance policy.
According to Law 360’s Covid-19 case tracker, state high courts, including in South Carolina, Massachusetts, Iowa, and Wisconsin, have sided with insurers. At the same time, federal district courts have tossed out about 51 percent of the 1,431 lawsuits from policyholders against their insurers seeking pandemic loss-related coverage.
Another 20 percent of the pandemic insurance suits filed in federal courts have been voluntarily dismissed, the tracker shows, with about 26 percent yet to be fully decided.
