In Mark?s Engine v. The Travelers, Case No. 20-cv-04423 (USDC, CD CA. Oct. 2, 2020), a California judge dismissed a Los Angeles eatery’s suit seeking coverage from The Travelers Indemnity Co. of Connecticut for business losses stemming from the COVID-19 pandemic, finding that the virus hasn’t caused physical loss ? and even if it had, the restaurant’s policy has a virus exclusion that bars coverage.
U.S. District Judge Andr Birotte Jr. rejected arguments from plaintiff Mark’s Engine Co. No. 28 Restaurant that the virus had physically damaged its property, saying that because its employees still had access to the site, the company suffered no permanent loss or loss of use. In the order, Judge Birotte adopted the reasoning of U.S. District Judge Steven V. Wilson, who presided over another COVID-19 coverage suit, with an identical policy, saying Mark’s Engine only plausibly alleged that state mandates interfered with the use or value of the property, but didn’t cause physical loss or damage.
Whatever physical alteration COVID-19 might cause to property in general and however the public response impacted its business, the judge wrote, Mark’s Engine didn’t allege that it altered its property in particular. “The only individuals who could potentially claim ‘direct physical loss of’ access to the premises would be patrons who were no longer allowed to dine in,” Judge Birotte said. “And even then, the policy is between plaintiff and defendant, not restaurant goers and defendant.”
Judge Birotte further found that even if Mark’s Engine had plausibly alleged that COVID-19 had caused direct physical loss or damage to its property, the policy has an exclusion stating that it does not cover “loss or damage caused by or resulting from any virus.” Given the complaint’s emphasis that COVID-19 caused all its loss or damage, including that [LA Mayor Eric] Garcetti’s orders are due to the virus, and that the restaurant’s employees refused to work for fear of infection, the exclusion clearly applies and precludes all coverage, the judge wrote, dismissing the suit with prejudice.