The judges tossed the suits Monday, saying that Hampton Inn Midwest City in the Western District of Oklahoma and concert venue owner Till Metro Entertainment in the Northern District, failed to show either the pandemic or its related government closure orders caused property damage.
The federal judges sided with the insurers that the businesses could not establish a "direct physical loss," a prerequisite for coverage under their property policies. The judges said under Oklahoma law, the coverage precondition requires actual physical damage or alteration of property that needs repairs.
"There are no allegations that the property required repair, rebuilding or replacement and plaintiff did not resume business at a new permanent location," U.S. District Judge David L. Russell said, referring to the Hampton Inn owner Govinda LLC's complaint against Columbia Mutual Insurance Co.
He also agreed with the insurer that the hotel was never required to shut down, and it did not lose access due to the closure orders, so it was not entitled to civil authority coverage. The policy's virus exclusion ambiguously applies to all pandemic-related losses, Judge Russell said.
Hampton's business slowdown "was not the result of any demand or legal requirement that the hotel shutter its doors. Rather, as a result of the pandemic, travel slowed and the market for hotel rooms was reduced," the judge said, adding that the policy's "loss of market" exclusion precludes its financial losses.
U.S. District Judge Gregory Kent Frizzell adopted a similar position to throw out Till Metro's suit against Covington Specialty Insurance Co. Till Metro owns the music venue The Vanguard in Tulsa, Oklahoma. The Vanguard did not incur property damage and the "pathogenic materials" exclusion bar coverage, Judge Frizzell said Monday.
"There are no allegations that any infected person was present in the property, or that any person became infected at the property. And, even if COVID-19 were present, it would not constitute a 'direct physical loss' because its presence could be eliminated by cleaning," Judge Frizzell said.
COVID-19 travels by "discharge" and spreads when an infected person breathes out droplets, the judge said. "The plain language of the policy's pathogenic materials exclusion excludes losses and damage caused by COVID-19," he added.
The judge also said the music bar could not demonstrate that the policy's pollution exclusion does not bar COVID-19-related losses.
Counsel for the parties could not be immediately reached for comment.
Govinda LLC is represented by J. Revell Parrish, Jordan R. Dennis, Michael Burrage and Reggie N. Whitten of Whitten Burrage.
Columbia is represented by Grace E. Dawkins, J. Logan Johnson, Jami R. Antonisse and Robert Bradley Miller of Miller Johnson Jones Antonisse & White PLLC.
Till Metro is represented by Daniel E. Smolen and Robert Murray Blakemore of Smolen & Roytman and Mark Allen Smith of Caruso Law Firm PC.
Covington Specialty is represented by James L. Gibbs II of Goolsby Proctor Heffner & Gibbs and Wayne D. Taylor of Mozley Finlayson & Loggins LLP.
The cases are Govinda LLC v. Columbia Insurance Group, case number 5:20-cv-00542, in the U.S. District Court for the Western District of Oklahoma, and Till Metro Entertainment v. Covington Specialty Insurance Co., case number 4:20-cv-00255, in the U.S. District Court for the Northern District of Oklahoma.
--Editing by Orlando Lorenzo.
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