Judge: Insurance policy does not cover Aspen restaurant losses due to pandemic


Last month, a federal judge dismissed a lawsuit by an Aspen restaurant seeking insurance coverage for business interruptions in 2020 caused by public health orders and closures.

This means the owner of L’Hostaria Ristorante in Aspen will not be covered for financial losses resulting from the COVID-19 pandemic, after a federal judge ruled Sept. 21 in favor of defendant Cincinnati’s motion. Insurance Co. to dismiss the lawsuit. .

In his written decision, U.S. District Judge William J. Martinez noted that virus contamination at the restaurant did not constitute physical damage to restaurant property under the terms of its insurance coverage. A majority of courts in the United States have sided with defendant insurance companies that were sued for denying companies coverage for financial losses caused by pandemic-related health orders, according to Martinez’s ruling.

“Numerous courts across the country — including those in the Tenth Circuit — have held that potential contamination with the COVID-19 virus did not constitute physical harm as contemplated by the wording of the insurance policy,” a declared the decision.

The judge said he was not persuaded to go in any other direction: “The Court can discern no reason to depart from such a conclusion, and finds the same as COVID-19 contamination. 19 is not physical damage as covered by the policy.”

Under its corporate name Sagome Inc., L’Hostaria sued Cincinnati Insurance in December in Pitkin County District Court; Cincinnati Insurance was able to transfer the lawsuit to the US District Court in Denver in January.

Through Denver company Levin Sitcoff PC, the Italian restaurant’s lawsuit cited county and state health orders hampering the restaurant’s operations in the spring of 2020. Potential guests in Aspen were also spooked by the Pitkin County affidavit program for overnight visitors, according to the lawsuit.

Those orders should have triggered cover from the restaurant’s civil authorities, they argued.

“The Hostaria ceased business operations on March 16, 2020, pursuant to applicable executive and public health orders,” the lawsuit states. “Although The Hostaria reopened on April 27, 2020, it has resumed with only limited curbside pickup and dining, in accordance with applicable executive and public health orders. … The Hostaria has suffered and continues to suffer business interruption losses of approximately $40,000 per month due to the suspension of its operations caused by a direct loss of property on its premises due to the presence of COVID-19.

Like other insurance companies in similar positions, Cincinnati Insurance denied L’Hostaria’s claim for loss coverage because the restaurant’s general insurance policy excluded viruses as a payable claim, which meant that his coverage by the civil authorities did not apply either.

Levin Sitcoff argued that the potential for exposure to COVID-19 at The Hostaria qualified as physical property damage. In a similar lawsuit filed on behalf of Monarch Casino & Resort Inc., a Nevada company that owns and operates casinos in Reno and Black Hawk, Colorado, Levin Sitcoff asked a federal court judge to allow the Supreme Court of Colorado to answer the question: “Does the presence of COVID-19 at an insured place constitute physical loss or damage for the purposes of a property insurance policy?” »

The intent to get that question answered, Levin Sitcoff’s attorneys explained to U.S. District Judge Regina M. Rodriguez, was to establish state law. Still, Rodriguez ruled in favor of defendant Affiliate FM Insurance Co. on partial summary judgment, rendering the issue moot, the judge noted in a Sept. 17 ruling.

Levin Sitcoff did not respond to a request for comment on the rulings.

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