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Law360 (April 21, 2020, 2:01 PM EDT ) Travelers Casualty Insurance Co. of America is taking Geragos & Geragos APC to California federal court, saying it has no duty to cover the law firm for business losses during the COVID-19 pandemic because the virus has not caused "physical loss or damage" to the firm's offices.
The complaint, filed Monday, comes a week after Geragos & Geragos launched a series of complaints in Los Angeles Superior Court accusing Travelers of wrongfully denying coverage to it and several other California businesses.
In Monday's complaint, Travelers says the policy Geragos & Geragos holds simply does not cover the outbreak, and has exclusions specifically for business losses resulting from a virus.
"Travelers understands that the COVID-19 pandemic has affected the public and the vast majority of businesses throughout the country (and world) in unprecedented ways," the insurer said in the complaint. "But these challenging and unfortunate circumstances do not create insurance coverage for losses that fall outside the terms of a policyholder's insurance contract."
According to the complaint, the insurance policy only covers physical loss or damage to the property that results from a covered cause under the policy. But the presence of the coronavirus does not cause physical damage, Travelers told the court.
And while the policy includes an endorsement for civil authority orders, that clause also depends on there being "direct physical loss of or damage to" property nearby, Travelers said, adding that the firm's loss of access to the courts is the result of government action, not physical loss.
Travelers further alleged the policy includes an exclusion for loss "due to virus or bacteria," which would bar coverage even if the business shutdown could be considered "physical loss."
"Travelers Insurance, after cashing our premium checks for years, decided yesterday that instead of paying our business interruption claim that they would hire a large law firm to sue us in federal court instead," Mark Geragos of Geragos & Geragos told Law360 on Tuesday. "Apparently, their way of adapting to a pandemic is filing lawsuits against their own insured. We welcome the opportunity to fight on behalf of small business against rank corporate greed and their legal enablers."
A spokesperson for Travelers declined to comment Tuesday.
Travelers is represented by Theodore J. Boutrous Jr., Richard J. Doren and Deborah L. Stein of Gibson Dunn & Crutcher LLP and Stephen E. Goldman and Wystan M. Ackerman of Robinson & Cole LLP.
Counsel information for Geragos & Geragos was not available.
The case is Travelers Casualty Insurance Co. of America v. Geragos & Geragos APC, case number 2:20-cv-03619, in the U.S. District Court for the Central District of California.
--Additional reporting by Hailey Konnath. Editing by Marygrace Murphy.
For a reprint of this article, please contact reprints@law360.com.
