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O’Malley, Harowski and Cvitanovic Obtain Summary Judgment in Case Involving Lost Business Income Arising from the Pandemic

October 17, 2022

Michael O’Malley (Partner-Chicago), Michael Harowski (Partner-New Orleans) and Dominik Cvitanovic (Associate-New Orleans) obtained summary judgment in favor of Certain Underwriters at Lloyd’s, London (Underwriters) in connection with an insurance coverage dispute in Louisiana state court for lost business income arising from the COVID-19 pandemic. The judge rejected the reasoning of a recent appellate decision that found in favor of coverage and instead found coverage had not been triggered because the insured was unable to demonstrate that it sustained direct loss of or damage to property. Louisiana is only one of three states in the nation with appellate law finding losses arising from COVID-19 could trigger business income coverage under a commercial property policy. During the summary judgment briefing, a Louisiana appellate panel issued a decision in a case that involved an identical claim against Underwriters for COVID-19, finding the same policy language involving “loss of or damage to property” was ambiguous and construed the ambiguity in favor of coverage. After a lengthy oral argument, the court ruled from the bench, rejected the reasoning of the other appellate court, and found that such COVID-19 losses did not constitute “loss of or damage to property.” 

The decision is significant because it lays the foundation for a circuit split within Louisiana, and because attorneys, policyholders, insurers and judges nationwide have been following each of these cases closely as the total business income losses arising from COVID-19 is estimated to be in the trillions of dollars globally.

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