Capri Holdings Ltd. on Thursday asserted in New Jersey state court that it had adequately shown its stores sustained physical damage and loss as a result of the pandemic and consequent government restrictions. It accused Zurich American Insurance Co. and five other insurers of falsely describing as hollow the evidence that it put forward to show its loss.
Touting the broad coverage provided by its all-risk policies, the fashion group contended that the coronavirus caused its properties to become unsafe, spoiling the very air and surfaces upon which a virus particle might settle.
The group said that physical loss includes a loss of access to property. A failure to define physical loss or damage should be construed in Capri's favor, the company argued.
"The insurers could have included a structural alteration requirement had they wanted it — but they did not," Capri said in the briefs, adding that it "suffered damage to its properties by the presence of the virus in its stores that made the stores uninhabitable, and the air and surfaces within them potentially lethal to customers and employees."
The other named insurers are XL Insurance America Inc., Mitsui Sumitomo Insurance Co. of America, Liberty Mutual Fire Insurance Co., Allianz Global Corporate and Specialty SE, and AIG Specialty Insurance Co.
Capri is seeking coverage to help compensate for more than $1.2 billion in losses resulting from the pandemic, according to court documents. That more than 600 of its employees contracted COVID-19, the respiratory ailment caused by the coronavirus, was direct proof of the virus's presence in its stores, Capri said in a March complaint.
It is seeking $500 million in coverage spread out over two policy periods, according to court documents — $250 million for each period, dating back to March 2019.
In its bid last month to dismiss the case, Zurich said Capri's "rambling complaint" purported reasons of loss that have been routinely rejected by courts as warranting any coverage under all-risk policies. It described Capri's assertion of the coronavirus in its stores as "rank speculation."
"Even though the virus can be removed from inanimate objects with ordinary household cleaning products, or by increasing the temperature, [Capri] alleges in conclusory fashion that coronavirus and COVID-19 is present in its stores and on its properties," Zurich said. "Although the vast majority of courts nationwide have held to the contrary, [Capri] insists that the purported presence of the virus in its stores causes direct physical loss of or damage to property."
Zurich has faced more pandemic coverage suits than almost every other major insurance group, according to data compiled by the University of Pennsylvania Carey Law School. Its 165 suits match that of the Cincinnati Financial Corp. — a number topped only by Hartford Financial Services Group Inc.'s 244 suits.
Last month, the owner of LA Fitness combined two pandemic loss suits into one $950 million action against insurers including Zurich in Washington state court.
And in April, a Florida restaurant chain asked the Eleventh Circuit to revive its virus loss suit, saying its Zurich Edge policy doesn't require policyholders to go through a "period of restoration" to show property repairs. Lindenwood Female College of Saint Charles, Missouri, also asked the court to keep alive a proposed class action for virus coverage.
Counsel for Capri declined to comment on its Thursday briefs.
Counsel for Zurich did not immediately respond to requests for comment Friday.
Capri is represented by Richard H. Epstein and Victor J Herlinsky of Sills Cummis & Gross PC and by Joseph D. Jean, Scott D. Greenspan, Benjamin D. Tievsky and Janine M. Stanisz of Pillsbury Winthrop Shaw Pittman LLP.
Zurich is represented by Charles A. Booth, Michael L. Anania and John A. Mattoon of Ford Marrin Esposito Witmeyer & Gleser LLP.
The other insurers are represented by Shawn L. Kelly of Dentons, Alexander W. Cogbill of Zelle LLP, Timothy A. Carroll of Clyde & Co. LLP, Rachel R. Hager of Finazzo Cossolini O'Leary Meola & Hager LLC and by Brian E. O'Donnell of Riker Danzig Scherer Hyland & Perretti LLP.
The case is Capri Holding Ltd. v. Zurich American Insurance Co. et al., case number BER-L-2322-21, in the New Jersey Superior Court.
--Additional reporting by Hailey Konnath and Daphne Zhang. Editing by Neil Cohen.
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