U.S. District Judge Marco A. Hernandez wrote in rulings issued Saturday and Tuesday that while he sympathized with the businesses, which included a Michelin-starred Thai restaurant in San Francisco and a Seattle "street food" eatery, the policies issued by a Liberty Mutual unit and Oregon Mutual Insurance Co. do not provide coverage for the claimed losses.
Clarke B. Holland of Pacific Law Partners LLP, which represents Oregon Mutual, told Law360 in an emailed statement that the company is pleased with the rulings. He said the company "believes these decisions are consistent with its insurance policies and existing case law."
Judge Hernandez found that the policies' failure to define the phrase "direct physical loss or damage" did not require the insurers to cover the losses. The phrase, the judge ruled, was unambiguous and not broad enough to provide coverage.
An ordinance or law exclusion in the policies also bars coverage "even if the property has not been damaged," the judge noted.
To date, 357 lawsuits over coverage denials for COVID-19-related business losses have been dismissed by federal judges nationwide, according to the University of Pennsylvania's COVID Coverage Litigation Tracker.
Oregon Mutual insured Nue LLC, which operates the Nue Seattle street food restaurant; Nari Suda LLC, the owner of the Kin Khao Thai eatery in San Francisco; and the Spokane, Washington-based Hills Restaurant owner, Hillbro LLC. Each of the eateries filed claims with Oregon Mutual for losses that resulted from government shutdown orders enacted to slow the spread of COVID-19.
The orders, which were initially rolled out in March 2020, allowed restaurants to initially serve customers only via takeout or through delivery services. When restaurants were allowed to reopen, they were required to limit capacity and follow heightened cleaning protocols, the businesses noted.
Meanwhile, Tigard, Oregon-based property manager North Pacific Management Inc., obtained policies from Liberty Mutual Fire Insurance Co. on behalf of nine other Oregon-based hospitality and commercial businesses. North Pacific said the businesses suffered losses after they were required to suspend operations after the shutdown orders were implemented.
The policyholders all initiated proposed class actions after their respective insurers denied their claims for pandemic-related losses. They complained that their losses were caused by the shutdown orders and that they were entitled to coverage under the policies' civil authority, business interruption and extra expense provisions.
Nue and Hillbro sought to represent nationwide and statewide classes for policyholders in Washington. Nari Suda brought claims for a proposed nationwide class and a subclass for California policyholders. North Pacific only sought to represent a class of Oregon policyholders.
Nari Suda also accused Oregon Mutual of bad faith and violation of California's Unfair Competition Law.
The insurers asked Judge Hernandez to dismiss the suits, arguing that they properly denied the policyholders' claims. The government shutdown orders, the companies said, were not enacted in response to damage at the policyholders' properties.
Judge Hernandez agreed with the insurers, concluding that each policyholder had to show that their properties were harmed or destroyed by government shutdown orders in order to obtain coverage.
Counsel for the policyholders and the Liberty Mutual unit did not respond to requests for comment on Wednesday.
Nue is represented by Amy Williams-Derry, Gretchen Freeman Cappio, Ian S. Birk, Irene Margaret Hecht, Lynn L. Sarko, Maureen M. Falecki and Nathan Nanfelt of Keller Rohrback LLP.
Nari Suda is represented by Steve D. Larson and Elizabeth K. Bailey of Stoll Berne PC, Robert J. Nelson, Fabrice N. Vincent and Jacob H. Polin of Lieff Cabraser Heimann & Bernstein LLP, and Alexandra L. Foote of the Law Office of Alexandra L. Foote PC.
North Pacific is represented by Kyle A. Sturm and Nicholas A. Thede of Foreman Sturm & Thede LLP, and Nicholas A. Kahl of Nick Kahl LLC.
Hillbro LLC is represented by Amy Williams-Derry of Keller Rohrback LLP.
Oregon Mutual is represented by Clarke B. Holland of Pacific Law Partners LLP, Jay W. Beattie of Lindsay Hart LLP, and R. Lind Stapley and Rachel A. Ruben of Soha Lang PS.
Liberty Mutual is represented by John A. Bennett and Stuart Duncan Jones of Bullivant Houser Bailey PC, and by James Kitces and Taylore Karpa of Robins Kaplan LLP.
The cases are Nue LLC v. Oregon Mutual Insurance Co., case number 3:20-cv-01449, Nari Suda LLC v. Oregon Mutual Insurance Co., case number 3:20-cv-01476, North Pacific Management Inc. et al. v. Liberty Mutual Fire Insurance Co., case number 3:21-cv-00404, and Hillbro LLC v. Oregon Mutual Insurance Co., case number 21-cv-00382, all in the U.S. District Court for the District of Oregon.
--Editing by Vincent Sherry.
Correction: A previous version of this story misstated the name of Robins Kaplan. The error has been corrected.
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