1-206-467-5444 info@letherlaw.com

Thanksgiving and a Cornucopia of Potential Insurance Claims

   Thanksgiving is a time to spend with family and friends and celebrate all that we are thankful for. It is also a time for a cornucopia of potential insurance claims. Thanksgiving-related insurance claims can run the gamut from auto accidents, to slip-and-falls, fire losses, and even business losses.

   This year, it is estimated that 54.6 million people will travel more than 50 miles for their Thanksgiving celebrations, which greatly increases the risk of an auto accident or other travel-related insurance claim. In addition, the National Fire Protection Association (“NFPA”) has noted that Thanksgiving is the leading day of the year for home cooking fires in the United States.[1]  In fact, the NFPA has reported that home cooking fire reports increase over 200% on Thanksgiving Day versus the daily average for the rest of the year.[2]

   Increased risks of insurance claims are also not limited to homeowners and/or auto claims and the risks do not end on Thanksgiving Day. Millions of Americans will also venture out on Black Friday to take advantage of the many deals that can be found on the biggest shopping day of the year. This leads to increased exposure for businesses from parking lot accidents, slip-and-falls, miscellaneous property damage, and theft.  

   The increased number of losses over the Thanksgiving Weekend also results in an uptick in insurance claims under auto policies, homeowners policies, and business insurance policies. This means that insurers need to be ready to staff and handle a potentially large volume of new claims, both first-party and third-party, in the days and weeks surrounding the Thanksgiving Holiday.

   With these increased risks in mind, the Lether Law Group Family encourages everyone to use extra caution as you enjoy time with family and friends and/or as you venture out on Black Friday.

   If something unexpected should occur or if you need advice for post-Thanksgiving-related insurance claims, please keep in mind that the attorneys at Lether Law Group have over 33 years in combined experience in advising insurers and defending first and third-party claims. This includes providing coverage advice and defending large property losses, catastrophic accident injuries, and other spontaneous and unexpected claims. Please feel free to contact us at any time if you would like to discuss any Thanksgiving-related claims or any other matter.

 

[1] NFPA urges extra caution when preparing your feast this Thanksgiving, by far the leading day of the year for U.S. home cooking fires

[2] NFPA Keep everyone safe from fire hazards this Thanksgiving | NFPA

 

 

 

 

THE NINTH CIRCUIT COURT OF APPEALS AFFIRMS DISMISSAL OF COVID-19 BUSINESS INTERRUPTION CLAIMS

                On October 17, 2022. The United States Court of Appeals for the Ninth Circuit issued additional Opinions regarding COVID-19 Business Interruption claims.

                In McCulloch, et al v. Valley Forge Ins. Co., et al¸ No. 21-35520, 2022 U.S. App. LEXIS 2860, 2022 WL 9830777 (9th Cir. Oct. 17, 2022), the Court affirmed a summary judgment ruling from the Western District of Washington dismissing claims by several dentists/dental clinics. The Plaintiffs argued that their claims were improperly dismissed because they asserted the claims resulted from “direct physical loss of or physical damage to” their insured premises. The Ninth Circuit disagreed.

                While the appeal was pending, the Washington State Supreme Court issued its ruling in Hill & Stout, PLLC v. Mutual of Enumclaw Ins. Co., 515 P.3d 525 (2022), in which the Supreme Court held that “loss of intended use of property” and “loss of business income” from COVID-19 orders did not qualify for insurance coverage as “direct physical loss of or damage to property.” As a result, the Ninth Circuit dismissed the breach of contract/direct physical loss claim.  The Court also dismissed Plaintiff’s claims that they were entitled to coverage under the policies’ civil authority coverage because there was no evidence that the Washington State Governor’s orders were in response to any actual physical property damages. Therefore, the Ninth Circuit concluded that the Hill & Stout Opinion also precludes coverage.

                In addition, the Ninth Circuit dismissed the appeal for extra-contractual claims. With respect to the extra-contractual claims, certain Plaintiffs argued that the insurer unreasonably denied their claim and failed to conduct a reasonable investigation of the claims. The Ninth Circuit rejected both arguments. Specifically, the Court noted that the unreasonable denial claim first required a showing of an incorrect denial of the claim. Because the claim was properly denied, the extra-contractual claim failed. The Court rejected the unreasonable investigation argument because “the insurer’s denial of coverage was based on a legal interpretation of the policy. [As a result,] [t]here was no need for factual investigation…”

                In Hot Yoga, Inc. v. Philadelphia Indem. Ins. Co.¸No. 21-35806, 2022 U.S. App. LEXIS 28674, 2022 WL 9732180 (9th Cir. 2022), the Ninth Circuit similarly affirmed dismissal of contractual claims based on the Washington State Supreme Court’s Opinion in Hill & Stout. In addition, the Court held that the policy’s virus exclusion, precluding coverage when a virus initiates the causal chain that led to the cause of any claimed loss, barred coverage. 

                The Ninth Circuit also rejected the insured’s arguments regarding its extra-contractual claims. The insured argued that the district court erred in dismissing extra-contractual claims premised on the insurer allegedly “misrepresenting the pertinent policy language and preemptively denying the claim without any investigation.” The Ninth Circuit held that the claims necessarily failed because the policy did not provide coverage. 

                As we previously opined, it is clear that the Washington State Supreme Court’s decision and reasoning in Hill & Stout is having a substantial impact on pending COVID-19 BI claims in Washington. We anticipate that there will be several other similar rulings in the near future.

                If you have any questions about the above Ninth Circuit cases and how the Hill and Stout case will continue to impact COVID-19 BI claims and cases, please give us a call.

 

 

 

Kevin J. Kay

Kevin J. Kay

Shareholder

Kevin is a graduate of Pacific Lutheran University and Seattle University School of Law. He is licensed to practice in the state and federal courts of Washington and admitted to practice before the Ninth Circuit Court of Appeals. In addition, Kevin has appeared pro hac vice in courts in Louisiana and California. Kevin has represented insurers and insureds in coverage for 16 years. These claims involve personal and commercial auto policies, commercial general liability, professional liability, and E&O insurance. Kevin has also advised and represented risk pools, insurers, and insured in matters ranging from automobile/bus accidents to catastrophic landslides. His practice also includes construction defect disputes, personal injury claims, commercial leases, and significant property damage disputes.

 

THE WASHINGTON STATE SUPREME COURT WEIGHS IN ON COVID-RELATED BUSINESS INTERRUPTION CLAIMS

As insurance professionals and insurance lawyers are aware, Washington State is historically one of the most liberal jurisdictions in the country. This has often led to decisions and rulings that favor policy holders. However, on August 25, 2022, the Washington State Supreme Court issued a decision finding that COVID-19 related business income losses are not covered under standard commercial property insurance policies.  Hill & Stout, PLLC v. Mutual of Enumclaw Insurance Company, Cause No. 100211-4.

Hill & Stout is a Washington dentistry practice.  When the COVID-19 pandemic first arose in the State of Washington, Governor Jay Inslee declared a state of emergency and issued multiple proclamations relating to public health and safety, including a proclamation prohibiting all non-emergent dental procedures.  In light of the emergence of COVID-19 and the governmental and societal response thereto, Hill & Stout joined thousands of businesses in Washington and around the country in seeking Business Interruption coverage under its commercial property policy.

Mutual of Enumclaw (MOE) denied Hill & Stout’s claim effectively for two reasons.  First, the business income loss coverage is triggered only where there is “direct physical loss or damage” to the insured premises.  Second, the MOE policy contained an exclusion for any losses caused by a virus.  Hill & Stout sued in the King County Superior Court.

Since the inception of the global pandemic, thousands of lawsuits relating to business income loss coverage have been filed by businesses seeking to recover their losses.  The courts around the U.S. have been nearly universal in finding that there is no coverage for these claims.  In fact, as Lether Law Group has previously reported, the United States District Court for the Western District of Washington has previously ruled in favor of insurers on these claims.  Germack v. The Dentists Insurance Company, W.D. Wa. Cause No. 2:20-cv-00661-BJR.

However, until Hill & Stout, the highest court in the State of Washington had not fully and finally resolved the issue in this jurisdiction.  In Hill & Stout, the Supreme Court found that there is no coverage for COVID-related business losses because the virus and the governmental proclamations related thereto do not cause direct physical loss or damage to the insured premises.  The insured had focused their argument on the claim that they had a “loss” of the business.  The Supreme Court rejected that argument finding that the loss was not “physical”.

The Court went on to find that the efficient proximate cause of the business losses was not the governmental response to the virus, but the virus itself.  As a result, the Court held that the virus exclusion would operate to preclude coverage, even if there was a direct physical loss.

Lether Law Group represents multiple carriers in Washington and in jurisdictions around the United States in COVID-related business income loss claims.  This includes the Germack case referenced above. If you would like to speak with us regarding these or any other claims, please contact us at any time.

 

Kevin J. Kay

Kevin J. Kay

Shareholder

Kevin is a graduate of Pacific Lutheran University and Seattle University School of Law. He is licensed to practice in the state and federal courts of Washington and admitted to practice before the Ninth Circuit Court of Appeals. In addition, Kevin has appeared pro hac vice in courts in Louisiana and California. Kevin has represented insurers and insureds in coverage for 16 years. These claims involve personal and commercial auto policies, commercial general liability, professional liability, and E&O insurance. Kevin has also advised and represented risk pools, insurers, and insured in matters ranging from automobile/bus accidents to catastrophic landslides. His practice also includes construction defect disputes, personal injury claims, commercial leases, and significant property damage disputes.

 

April Showers Bring May Flowers — AND BABY GEESE!

For the 6th year in a row, once spring rolls around, a familiar Mother Goose returns to the back deck of Lether Law Group, where she lays her eggs. This year, Mother Goose laid six eggs in one of our gardening boxes on the back porch.

For weeks, the Lether Law Group team witnessed how tenderly Mother Goose cared for her 6 eggs. Sometimes, the Lether Law Group team would also witness Father Goose swimming from a short distance, making sure that no hunter or gatherer posed a threat to his growing family.

On May 15, 2022, Mother Goose and Father Goose officially became the happy parents of 6 little goslings. The little hatchlings, pictured below, are brightly colored yellow with a hint of green.

The next time you paddleboard, kayak, or take your boat around South Lake Union, keep a look out for these little ones. Happy Spring!