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Law360 (March 31, 2021, 8:53 PM EDT) -- A California federal judge on Tuesday tossed a San Diego jewelry store's lawsuit seeking coverage from Travelers Casualty Insurance Co. of America for its financial losses stemming from the pandemic, saying the store hasn't alleged it's entitled to such coverage, but will allow it to rework the suit.
U.S. District Judge Anthony J. Battaglia granted Travelers' motion to dismiss, finding that Mayssami Diamond Inc. hasn't shown it's entitled to "civil authority" coverage under its policy because it doesn't allege that it was actually prohibited from accessing the store due to the government's lockdown orders.
Mayssami's policy with Travelers also contains a broad exclusion of coverage for any loss or damage caused by a virus or other microorganism that is capable of causing illness or disease, the judge said.
"As contemplated by the clear and unambiguous language of the policy, a virus, such as the coronavirus, is an excluded cause of loss," Judge Battaglia said. "Plaintiff's argument that its business losses were caused by the closure orders, and not the coronavirus itself, does not compel a contrary conclusion."
Even though Judge Battaglia said he doubts Mayssami will be able to cure the deficiencies in the suit, he gave the jewelry store until April 20 to file an amended complaint, saying the law related to business interruption coverage stemming from the pandemic is still developing.
But the judge did dismiss Mayssami's bid for damages under its unfair competition claim without leave to amend.
Counsel for Travelers declined to comment Wednesday, and counsel for Mayssami did not immediately respond to a request for comment.
Judges around the country for the most part have tossed coronavirus-related insurance coverage cases, with some cases reaching the appellate realm.
Earlier this month, a Michigan federal judge said a winery can't squeeze the Cincinnati Insurance Co. for virus coverage because the coronavirus didn't cause any physical loss or damage.
A Kentucky outdoor sports gear store also lost its bid for coverage after a federal judge said the policy's virus exclusion clearly states the insurer won't pay for any losses or damages caused by a virus.
In February, a Florida federal judge tossed a Miami restaurant's suit, saying the "weight of federal court rulings is against" the restaurant's argument that its inability to operate because of the effects of the coronavirus and government responses constitute physical losses under its insurance policy.
A New York state judge ruled that a Great American Insurance unit doesn't have to cover a movie theater's losses, finding that the direct physical loss or damage language at issue in the policy requires a tangible physical alteration to the policyholder's property, which did not occur.
But two Philadelphia federal judges issued differing opinions on a pair of coverage lawsuits, with one judge ruling that a policy's "virus exclusion" bars coverage and the other deferring the issue to state courts.
Last month, Los Angeles restaurant Plan Check asked the Ninth Circuit to reverse a district court's decision to toss its proposed class action seeking coverage from AmGuard Insurance Co. for losses stemming from COVID-19 shutdown orders.
And a group of minor league baseball teams sought to revive their suit against their three Nationwide insurers, after an Arizona federal judge granted a bid by National Casualty Co., Scottsdale Indemnity Co. and Scottsdale Insurance Co. to dismiss the case.
Mayssami is represented by Francis A. Bottini Jr., Albert Y. Chang and Yury A. Kolesnikov of Bottini & Bottini Inc.
Travelers is represented by Randy M. McElvain and Edmond Sung of Weston & McElvain LLP and Gregory P. Varga and J. Tyler Butts of Robinson & Cole LLP.
The suit is Mayssami Diamond Inc. v. Travelers Casualty Insurance Co. of America, case number 3:20-cv-01230, in the U.S. District Court for the Southern District of California.
--Additional reporting by Jeff Sistrunk, Matthew Santoni, Daphne Zhang and Mike Curley. Editing by Ellen Johnson.
For a reprint of this article, please contact reprints@law360.com.
