Businesses throughout Western Tennessee are being hit hard by the COVID-19 pandemic. Many businesses were forced to close or limit operations. While some business, such as restaurants, are being permitted to reopen – with restrictions – most businesses have lost profits and have had to lay off staff all while still having to pay mortgages and other overhead expenses. Even as businesses reopen, they are likely to suffer large losses due to the fears and concerns of customers who might be exposed to the novel coronavirus.
Business interruption insurance generally covers lost income, overhead, marketing, relocation costs, and other expenses if the business must cease operations due to a fire, hurricane, or other disasters. It is an open question in Tennessee and across the country whether COV-19 is a covered loss.
Many restaurants, retail stores, hotels, and other businesses are hoping that their business interruption insurance will pay for their losses. Numerous individual lawsuits are being filed throughout the country. Insurance carriers are denying most of these claims on the grounds that:
- The businesses must show that it suffered physical damage in order to obtain business operation damages
- The policies exclude any damage due to viral infections or pandemics
The lawyers for the business and organization clients are challenging these defense positions by arguing that:
- Physical damage isn’t required. One argument asserts that if the virus doesn’t constitute physical damage, then there would be no need to have a virus exclusion
- The inability to use business property is effectively “physical damage” especially when the inability to use the property is due to a government order
- The insurance policy either lacks exclusions for viral infections or the exclusions are ambiguous
So far, there are no definitive answers to these issues.
Reasons for consolidation
Now, several groups of plaintiffs, according to Claims Journal, are asking that federal business interruption lawsuits, across multiple jurisdictions, be consolidated to address the validity and challenges to the defenses of the insurance companies. The consolidation requests ask that one federal judge be authorized to handle numerous business interruption cases – to resolve common legal issues.
Claims Journal noted that in just 24 hours, the following four restaurants had filed business interruption lawsuits:
- The Guajillo Mexican restaurant in Rosslyn, Virginia
- Al Johnson’s Swedish Restaurant in Sister Bay, Wisconsin
- The Joseph Tambellini Restaurant and Sieb’s Pub in the Pittsburgh, Pennsylvania area
- The IT! Italy Ristorante Cafe & Bar in Fort Lauderdale, Florida
The aim of consolidating lawsuits is to provide clarity to the issue of business interruption insurance due to COVID-19. A Multidistrict Litigation Panel will hear and decide the two consolidation motions.
At Bailey & Greer, PLLC, our experienced Memphis trial lawyers are fighting for businesses that have suffered business interruption losses and have a business interruption insurance policy. We work with financial professionals to validate your economic losses. We are ready to pursue the issues of coverage and damage in court. For help with any business operation loss to your for-profit or non-profit business, call us at 901-475-7434 or fill out our contact form to schedule a consultation. We represent clients in Memphis, Jackson, and throughout Western Tennessee.