I wonder whether Loyd’s will call John Houghtaling himself as a trial witness to tell the judge WHY NOLA Mayor Cantrell’s emergency declaration, filed on the same day that Houghtaling filed this lawsuit — March 16, 2020 — (which was even before the claim was denied, btw), stated that COVID-19 “caus[es] property loss and damage in certain circumstances”.
“Because the coronavirus contaminates surfaces, it’s property damage,” Houghtaling said.
That argument appeared to get an immediate boost from New Orleans Mayor LaToya Cantrell, who filed an emergency declaration in the same civil court Monday directing restaurants to limit operations to take-out and delivery service. The declaration specifically says the COVID-19 virus “caus(es) property loss and damage in certain circumstances.”
At a news conference Monday afternoon, Cantrell said she and her administration specifically wanted to address the business interruption insurance issue.
“We have also been very aggressive as it relates to business interruption support and … insurance,” Cantrell said. “We understand pandemic infections are not included in their insurance coverage, which makes this a priority for my administration to push for these reasons at the state and federal level.”
_______________________________________________________________
On March 20, 2020, Executive Director and General Counsel Jonathan Wilkofsky wrote this to the members of the New York Public Adjusters Association:
“At the urging of our partner, Jon [sic] Houghtaling, on March 16th Mayor DeBlasio of New York City issued an Executive Order adopting our proposed language relating to the closure orders to “property damage” caused by the virus’ contamination of surfaces. This language will be extremely helpful for policies without a virus exclusion.” https://www.dropbox.com/s/gbmlu0wi4yq9nks/Wilkofsky%20Letter%20to%20NYPAA%20Members%2003.20.20.pdf
These governmental orders were worded in an attempt to trigger insurance, not because there was actually any direct physical damage to property. Attorneys even admitted to this. From my boom “Why Insurance Doesn’t Cover the COVID-19 Pandemic”:
One of the earliest cited civil authority orders came from New Orleans. While the “proclamation” paid lip service to the “propensity” of COVID-19 to spread from surface to person “causing property loss and damage in certain circumstances,” the document otherwise focused on health issues. A Virginia governor’s order placed “restrictions” on certain businesses and complete closure of recreational and entertainment businesses but only to “public access,” not to access by, for example, business owners or employees.
The City of Key West issued a local emergency directive incorporating language almost verbatim from the New Orleans order that made reference to COVID-19 “causing property loss and damage.” So, why do these orders include the “property damage” references? Legal gamesmanship. Well-intentioned perhaps, but an attempt to impact insurance coverage based on a generalized comprehension of what is and isn’t covered under most business income insurance forms. For example, in the case of the Key West directive, consider this excerpt from a local publication citing an attorney who essentially took credit for the property damage language:
“Both types of coverage – and people can have one, both or neither – but they both require physical damage to the property, which is why it was so important for the city to include specific language in its emergency declaration stating that the virus causes physical property damage. That can only help business owners with these types of coverage. Of course, it’s always a fight when dealing with insurance companies, but I’m glad Commissioner Clayton Lopez was at the meeting when I mentioned this needed language and brought it back to City Attorney Shawn Smith for inclusion in the city directive.”
Based on this narrative, the inclusion of a reference to property damage in the directive was for the purpose of triggering insurance coverage, not necessarily because of any real or perceived property damage. In fact, there was no citation of any actual property damage at all. If anything, such orders would be issued to PREVENT “property damage,” something that does nothing to actually trigger most business income coverage forms.
The reality is that these are public health orders that have little or nothing to do with real property damage, as would be the case in an order prohibiting access to an area following a disaster like a tornado or hurricane. Public health orders are not the subject of the civil authority coverage.
The Chinese drywall comparison makes no sense because the drywall was physically and permanently altered by carbon disulfide, carbonyl sulfide, and hydrogen sulfide. A SARS-CoV-2 virus resides on the surface and does not alter that surface physically in any way. Chinese drywall cannot be “repaired” by a Clorox wipe.
And probably the main reason that the comparison is nonsensical is that the defective drywall actually existed. The presence of carbon disulfide, carbonyl sulfide, and hydrogen sulfide was real. Claimants could not recover simply by alleging the drywall’s damaged condition…they had to have demonstrable proof.
“Whether the Orders prohibited access to the insured premises is also a genuine issue of material fact. The restaurant had to drastically change its operations to exclude sit-down patrons, which was previously the heart of its business, because the Orders restricted their presence in the building.”
First, I’d examine a dictionary for the meaning of “prohibit.” Limiting or restricting access is not the same as prohibiting access.
Second, I’d read what the policy language actually says. The policy in question is a current ISO form. The coverage extension for Orders of Civil Authority also requires that access be prohibited to the AREA (not just the declared premises) surrounding property that is actually damaged.
There are no questions of material facts that necessitate a trial. Coverage (rather, a lack thereof) can easily be determined by reading the insurance contract in the context of known facts and circumstances.
Without physical damage, this virus cannot spread. The virus must cause damage to the air we breathe to spread. If the air with virus particulates in the “damaged air”–gas is a physical state–are inhaled, it can kill. If the air carries and deposits the virus on other property, that property is damaged as well.
The virus in our air and our a solids is physical damage.
It is pretty simple. Insurers just do not want to hear it.
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I wonder whether Loyd’s will call John Houghtaling himself as a trial witness to tell the judge WHY NOLA Mayor Cantrell’s emergency declaration, filed on the same day that Houghtaling filed this lawsuit — March 16, 2020 — (which was even before the claim was denied, btw), stated that COVID-19 “caus[es] property loss and damage in certain circumstances”.
From https://www.kagstv.com/article/news/health/coronavirus/first-coronavirus-insurance-dispute/289-9597675b-c4de-486b-b796-dc764b52b79a:
“Because the coronavirus contaminates surfaces, it’s property damage,” Houghtaling said.
That argument appeared to get an immediate boost from New Orleans Mayor LaToya Cantrell, who filed an emergency declaration in the same civil court Monday directing restaurants to limit operations to take-out and delivery service. The declaration specifically says the COVID-19 virus “caus(es) property loss and damage in certain circumstances.”
At a news conference Monday afternoon, Cantrell said she and her administration specifically wanted to address the business interruption insurance issue.
“We have also been very aggressive as it relates to business interruption support and … insurance,” Cantrell said. “We understand pandemic infections are not included in their insurance coverage, which makes this a priority for my administration to push for these reasons at the state and federal level.”
_______________________________________________________________
On March 20, 2020, Executive Director and General Counsel Jonathan Wilkofsky wrote this to the members of the New York Public Adjusters Association:
“At the urging of our partner, Jon [sic] Houghtaling, on March 16th Mayor DeBlasio of New York City issued an Executive Order adopting our proposed language relating to the closure orders to “property damage” caused by the virus’ contamination of surfaces. This language will be extremely helpful for policies without a virus exclusion.” https://www.dropbox.com/s/gbmlu0wi4yq9nks/Wilkofsky%20Letter%20to%20NYPAA%20Members%2003.20.20.pdf
My tallies are a bit different from Prof. Baker’s but I believe insurers are now leading 11-8 in the category of cases dismissed when there is no virus exclusion. My rulings metrics as of yesterday are here: https://www.dropbox.com/s/n42t1czxz92qvlk/COVID-19%20BI%20Litigation%20Rulings%20Metrics%20%C2%A9%202020%20Mura%20%26%20Storm.pdf
Regardless, this will be an interesting trial to “watch”. Thank you for reporting this.
These governmental orders were worded in an attempt to trigger insurance, not because there was actually any direct physical damage to property. Attorneys even admitted to this. From my boom “Why Insurance Doesn’t Cover the COVID-19 Pandemic”:
One of the earliest cited civil authority orders came from New Orleans. While the “proclamation” paid lip service to the “propensity” of COVID-19 to spread from surface to person “causing property loss and damage in certain circumstances,” the document otherwise focused on health issues. A Virginia governor’s order placed “restrictions” on certain businesses and complete closure of recreational and entertainment businesses but only to “public access,” not to access by, for example, business owners or employees.
The City of Key West issued a local emergency directive incorporating language almost verbatim from the New Orleans order that made reference to COVID-19 “causing property loss and damage.” So, why do these orders include the “property damage” references? Legal gamesmanship. Well-intentioned perhaps, but an attempt to impact insurance coverage based on a generalized comprehension of what is and isn’t covered under most business income insurance forms. For example, in the case of the Key West directive, consider this excerpt from a local publication citing an attorney who essentially took credit for the property damage language:
“Both types of coverage – and people can have one, both or neither – but they both require physical damage to the property, which is why it was so important for the city to include specific language in its emergency declaration stating that the virus causes physical property damage. That can only help business owners with these types of coverage. Of course, it’s always a fight when dealing with insurance companies, but I’m glad Commissioner Clayton Lopez was at the meeting when I mentioned this needed language and brought it back to City Attorney Shawn Smith for inclusion in the city directive.”
Based on this narrative, the inclusion of a reference to property damage in the directive was for the purpose of triggering insurance coverage, not necessarily because of any real or perceived property damage. In fact, there was no citation of any actual property damage at all. If anything, such orders would be issued to PREVENT “property damage,” something that does nothing to actually trigger most business income coverage forms.
The reality is that these are public health orders that have little or nothing to do with real property damage, as would be the case in an order prohibiting access to an area following a disaster like a tornado or hurricane. Public health orders are not the subject of the civil authority coverage.
The Chinese drywall comparison makes no sense because the drywall was physically and permanently altered by carbon disulfide, carbonyl sulfide, and hydrogen sulfide. A SARS-CoV-2 virus resides on the surface and does not alter that surface physically in any way. Chinese drywall cannot be “repaired” by a Clorox wipe.
And probably the main reason that the comparison is nonsensical is that the defective drywall actually existed. The presence of carbon disulfide, carbonyl sulfide, and hydrogen sulfide was real. Claimants could not recover simply by alleging the drywall’s damaged condition…they had to have demonstrable proof.
“Whether the Orders prohibited access to the insured premises is also a genuine issue of material fact. The restaurant had to drastically change its operations to exclude sit-down patrons, which was previously the heart of its business, because the Orders restricted their presence in the building.”
First, I’d examine a dictionary for the meaning of “prohibit.” Limiting or restricting access is not the same as prohibiting access.
Second, I’d read what the policy language actually says. The policy in question is a current ISO form. The coverage extension for Orders of Civil Authority also requires that access be prohibited to the AREA (not just the declared premises) surrounding property that is actually damaged.
There are no questions of material facts that necessitate a trial. Coverage (rather, a lack thereof) can easily be determined by reading the insurance contract in the context of known facts and circumstances.
Without physical damage, this virus cannot spread. The virus must cause damage to the air we breathe to spread. If the air with virus particulates in the “damaged air”–gas is a physical state–are inhaled, it can kill. If the air carries and deposits the virus on other property, that property is damaged as well.
The virus in our air and our a solids is physical damage.
It is pretty simple. Insurers just do not want to hear it.