COVID-19 Closure Orders Not 'Physical Loss,' DC Judge Rules

[Nevilledog]

https://www.law360.com/articles/1299183

Law360 (August 6, 2020, 5:31 PM EDT) -- A District of Columbia judge on Thursday shot down a bid by a group of restaurants in the area to get coverage for business interruptions during the COVID-19 pandemic, ruling that government shutdown orders don't constitute a "direct physical loss" that triggers the policy.

Superior Court Judge Kelly A. Higashi sided with Erie Insurance Exchange in a suit led by Rose's 1 LLC, which owns and operates several restaurants in the city, letting the insurer off the hook for the losses the restaurants suffered when they had to close their doors.

Like numerous businesses around the country, Rose's 1's properties shut down operations in response to government mandates — in this case, orders issued by Washington, D.C., Mayor Muriel Bowser in March prohibiting table seating and standing customers at bars and restaurants and mandating closure of nonessential businesses.

The restaurants went to Erie for coverage under their "Ultrapack Plus Commercial Property Coverage" insurance policies and were denied, prompting the suit, after which both Rose's 1 and Erie pushed for summary judgment.

In Thursday's ruling, Judge Higashi shot down each of the restaurants' arguments, saying the restaurateur failed to show how Mayor Bowser's shutdown orders in themselves constituted a "direct physical loss."

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