Troisi, Bank, Welch, Mulholland and Vizzi Secure Dismissal of COVID-19 Business Interruption Suit

Michael Troisi, Brian Bank, Michael Welch, Laura Mulholland, and Michelle Vizzi secured dismissal of a COVID-19 business interruption putative class action on behalf of Badger Mutual Insurance Company. Three insured Las Vegas restaurants sued Badger in federal court (District of Nevada) on behalf of themselves and a putative class of other policyholders seeking coverage for over $5 million in economic losses incurred from the government-mandated closures of their restaurants during the COVID-19 pandemic.

Badger moved to dismiss the complaint, arguing that the restaurants had not alleged direct physical loss of or damage to their properties, and that the policies’ virus exclusion barred coverage for their claims. Plaintiffs countered that the policy provisions were vague, their loss of use of the restaurants satisfied the “loss of or damage to” requirement under the policies, and that their losses were proximately caused by the government closure orders and not the virus itself.

United States District Judge Jennifer Dorsey adopted our arguments and granted Badger’s motion to dismiss the complaint in its entirety, with prejudice. The Court found that the restaurants had failed to plausibly allege direct physical loss of or damage to their properties, and that even if they had, the policies’ virus exclusions unambiguously applied. The Court also found unpersuasive Plaintiffs’ argument that the virus was not the efficient proximate cause of their injuries, explaining that but for COVID-19, the government closure orders would not exist and the restaurants would not have lost business.

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