State Farm Fire and Casualty Co. said on Monday that the amended complaint from Muriel's Jackson Square failed to correct its original deficiencies by failing to establish how government closure orders caused direct physical loss to its property. The policy's virus exclusion also unambiguously bars all pandemic-related losses, the carrier said.
"The [government] orders are intended to keep people away from each other, not away from dangerous conditions caused by damaged property," State Farm said.
In April, U.S. District Judge Nannette Jolivette Brown refused to toss Muriel's suit against State Farm, finding that although the eatery hadn't shown that its loss should be covered by the policy, it was permitted to fix the deficiencies in its complaint. The judge said Muriel's has not sufficiently alleged direct physical loss to the covered property and said the policy's virus exclusion precludes the restaurant's claim for coverage.
On Monday, State Farm said that although Muriel claimed it was the government closure orders instead of the virus that caused damage on its property, in its amended complaint, the restaurant once again failed to identify an "accidental direct physical loss to" property caused by government orders.
"As the COVID-19 case law holds, 'loss of use' unaccompanied by 'accidental direct physical loss to' property is not covered under the policy," State Farm said, asking the court to follow Louisiana federal courts' existing rulings and decisions from federal court around the country that held the pandemic does not cause property loss.
Even though the restaurant said the virus exclusion is not applicable because the coronavirus did not damage its property, the court has held before that "the text of the virus exclusion contains nothing about a contamination requirement," the carrier said.
The virus exclusion applies "to all losses where a virus is part of the causal chain," State Farm maintained. "[T]he excluded event — COVID-19 — remains part of the causal chain that resulted in Muriel's losses and coverage is barred by the virus exclusion."
Additionally, the insurer said the court should not grant the restaurant's request to estop it from applying the virus exclusion. Muriel's never demonstrated how State Farm misrepresented the exclusion to regulators to get it approved, so its allegation that State Farm engaged in fraud fails, it said.
Muriel's initially lodged its suit in Louisiana state court in June 2020, and it was removed to federal court in August. According to the complaint, the State Farm policy covered Muriel's insured property from June 2019 through June 2020. In March and April of last year, both Louisiana's governor and New Orleans' mayor issued orders and proclamations restricting public gatherings and limiting restaurant operations. During that time, Muriel's said it suffered a "massive and detrimental hit to its business income."
Representatives for the parties could not be immediately reached for comment.
Muriel's is represented by Charles Zimmer, Daniel E. Davillier and Jonathan D. Lewis of Davillier Law Group LLC; Roderick Alvendia of Alvendia Kelly & Demarest; and James M. Williams of Chehardy Sherman Williams Murray Recile Stakleum & Hayes LLP.
State Farm is represented by David A. Strauss and Robin D. Cassedy of Strauss Massey Dinneen LLC, and Douglas W. Dunham and Bert L. Wolff of Dechert LLP.
The case is Muriel's New Orleans LLC v. State Farm Fire and Casualty Co., case number 2:20-cv-02295, in the U.S. District Court for the Eastern District of Louisiana.
--Editing by Rich Mills.
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