First COVID-19 Coverage Trial In The Country Results In Ruling of No Coverage

In the first trial addressing coverage for COVID-19 claims, a trial court in New Orleans denied an insured’s petition for declaratory relief. Cajun Conti, LLC v. Certain Underwriters at Lloyd’s, London, C.A. No. 2020-02558 (Orleans Parish Civ. Dist. Ct. Feb. 10, 2021). 

The insured was the first in the country to file suit seeking coverage for losses resulting from having to suspend its operations because of government orders due to the COVID-19 pandemic. The original petition was amended twice, with the last iteration alleging that coverage was available because the insurers chose to not include a virus exclusion in the policy even though one was available. The insured further alleged that: 1) “[t]he virus is physically impacting public and private property, and physical spaces in cities worldwide”; 2) “the deadly virus physically adheres to and stays on the surface of objects or materials”; 3) plaintiffs “must comply with the [o]rders, which impacts their business by severely limiting their operations” and 4) “COVID-19 was present in the insured premises as individuals who tested positive for COVID-19 were at the property,” all of which resulted in a loss of use of the property, which the insured alleged was sufficient to trigger coverage. On the first day of trial, the insured dismissed with prejudice claims relating to civil authority, meaning it intended to rely solely on the allegation that the insured property sustained “direct physical loss of or damage.”

The insurers presented expert testimony that any viral remnants of the virus that may adhere for limited duration were insufficient to cause infection to another person and that any such remnants dissipate quickly and did not permanently adhere to or otherwise damage insured property, as a result of which there could be no “direct physical loss of or damage to property.” The case was tried in December 2020, and the court issued an order containing no written reasons but simply denying the relief sought.

Phelps partners Allen Miller (lead trial counsel) and Ginger Dodd (lead coverage counsel) tried this case for the insurers. Please contact them for further information.