Restaurant appealing summer decision
A Florida restaurant’s unsuccessful business interruption (BI) insurance claim that’s been referenced in COVID-related claims lawsuits is now being appealed to the U.S. Supreme Court. And although the restaurant’s case has nothing to do with the coronavirus, it has everything to do with how – and by whom – the key phrase “direct physical loss or damage” is defined and interpreted.
We told you in an August newsletter story about Mama Jo’s Restaurant in Miami and its lawsuit against Sparta Insurance Company for damages from dust and debris from a nearly two-year long road project that reduced the restaurant’s traffic and income and required extra cleaning costs. The restaurant filed a claim under its “all risk” commercial property insurance policy. A second claim filed under a Business Income Coverage form likewise was denied, because it, too, required a direct physical loss or damage to property.
Federal Judge David Proctor, in a ruling last summer by the U.S. Eleventh Circuit Court, wrote that “an ‘all-risk’ policy is not an ‘all loss’ policy, and thus does not extend coverage for every conceivable loss,” per a previous ruling by the Florida Supreme Court. He also noted that under Florida law “an item or structure that merely needs to be cleaned has not suffered a ‘loss’ which is both ‘direct’ and ‘physical.’” He upheld a ruling by the U.S. District Court in Southern Florida against the restaurant.
Mama Jo’s has now appealed that ruling to the U.S. Supreme Court, challenging the Circuit Court’s view that the restaurant’s expert witnesses were lacking. The court found the experts hadn’t done certain inspection, testing, and evaluation necessary to support the restaurant’s ultimate claim. Under the federal Daubert standard for expert witnesses, the court wrote that although the restaurant’s experts “were minimally qualified to render their opinions, their methodologies on the issue of causation were unreliable or nonexistent, and their testimony was speculative.” Another point of Mama Jo’s new appeal argues that just because the policy excludes interior dust, doesn’t mean it excludes exterior dust damage.
Insurance defense counsel have been using the Mama Jo’s decision in COVID-related business interruption cases, so we will be following this case and report back its outcome.
LMA Newsletter of 2-8-21
