Iowa Releases Second State Supreme Court Ruling Finding No Coverage for COVID-Related Loss of Income
The Iowa Supreme Court ruled in two separate decisions Friday that COVID-19 caused no physical loss or damage that would allow a private golf club or a restaurant and bar to recoup lost revenue during COVID-19 shutdown orders.
Iowa was the second high state court in the nation to close the door on COVID-related business interruption claims. His unanimous decision follows a Thursday ruling by the Massachusetts Supreme Court upholding the dismissal of claims filed by three restaurants.
Robert Hartwig, professor of economics at the University of South Carolina and former director of the Insurance Information Institute, said “the writing was on the wall several months ago.” In addition to the high courts of Massachusetts and Iowa, 10 federal circuit courts and intermediate courts of appeals in California, Illinois, Indiana, Michigan, New York and Ohio have ruled that the SARS-CoV-2 virus does not cause direct physical harm or loss of property, according to a litigation tracker maintained by the Carey Law School at the University of Pennsylvania.
“It is high time for the Plaintiff Bar to throw in the towel,” Hartwig said in an email. “Courts across the country have decided thousands of cases from businesses large and small in many different industries. The message the courts send is rarely so consistent or so clear. COVID did not result in physical loss or damage to covered property. Period. End of the story.”
The Wakonda Club is a private member-owned golf and county club built in 1922 with panoramic views of the Des Moines skyline. The club closed completely from March 17-28, 2020 and limited sales of its Tiki Bar and snack bar to take-out unit orders on May 22 due to state pandemic precautions.
The golf club filed a claim for loss of revenue against its policy with Selective Insurance Co. of America, which was denied. Wakonda Club sued. Polk County District Court Judge Celene Gogerty granted summary judgment in favor of the insurer.
The Supreme Court agreed with Selective that the coronavirus pandemic did not cause any direct physical loss or damage covered by the club’s commercial property policy. The court never considered whether a virus exclusion in the policy applied.
“Mere loss of use of property, without more, does not meet the requirement for direct physical loss of property,” the notice states.
Jesse’s Embers, which operates a bar and restaurant in Des Moines, filed a lawsuit after Farm Bureau Financial Services denied its claim for lost business income during the March-May 2020 shutdown. Polk County District Court Jeanie K. Vaudt entered summary judgment for the insurer, finding that there was no physical loss or damage and that if there had been, it would have anyway been excluded under the wording of the policy.
The Supreme Court specifically rejected Jesse’s Embers’ argument that she should be covered under the civil authority provision of her police.
“Our conclusion is reinforced by the many courts that have dismissed claims by civil authorities in the absence of damage to adjacent properties,” the opinion states.
The plaintiffs’ losing streak extended to the federal court system.
The 8th Circuit Court of Appeals on Friday upheld a trial court’s summary judgment against a business interruption claim filed against Intrepid Insurance Co. by two restaurants and a dental practice in St. Louis, Missouri.
The appeals panel ruled that under Missouri law, there was no physical loss or damage to the Monday restaurants or the pediatric dental practice operated by Drs. Andrew Dill, Amy Varble and Michael Wong even though they were forced to temporarily restrict their operations.
The 8th Circuit issued two similar rulings. He dismissed a COVID-19 business interruption claim filed by an oral surgery practice in Iowa and a travel insurance claim filed by a Missouri resident.
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