BatesCarey secured its 12th precedent-setting victory on COVID-19 business interruption claims with a dismissal in the Southern District of Mississippi. Adam H. Fleischer, Matthew P. Fortin and Lindsey D. Dean obtained a ruling that State Auto Property and Casualty Ins. Co. owed no coverage for loss of income caused by COVID-19 state-wide shutdowns.

Since the start of the pandemic, the firm has secured a dozen important dismissals of COVID-19 claims for clients and has successfully argued issues of first impression in the U.S. Courts of Appeals for the Fifth, Sixth and Eighth Circuits that involved suits in Mississippi, Ohio, Texas, North Carolina and elsewhere.

In Big Tomato LLC v. State Auto Prop. & Cas. Ins. Co., --- F. Supp. 3d ---, 2022 WL 17257664 (S.D. Miss. Nov. 22, 2022), the United States District Court for the Southern District of Mississippi dismissed a class action lawsuit with prejudice, holding that “direct physical loss” requires immediate tangible deprivation of property. The court additionally held the insured’s claim under the food-borne illness provision did not apply as suspended operations must be caused by a condition of the premises rather than a state-wide government order.

Big Tomato operated a restaurant in Hattiesburg, Mississippi, which suffered a loss of income following a COVID-19-related government-ordered shutdown. Big Tomato sued State Auto Property under their commercial property insurance policy which covered income lost due to a necessary suspension of operations caused by direct physical loss or damage to the property, as well as extra expenses incurred during restoration of services. BatesCarey moved to dismiss the suit in July 2020 and, before the oral argument set for May 2021, the plaintiff amended the complaint to add a claim for coverage under the food-borne illness provision, prolonging the case.

BatesCarey moved to stay the case pending the outcome of another, similar case the firm had recently argued, Terry Black’s Barbecue, LLC v. State Automobile Mutual Insurance Co., in the Fifth Circuit Court of Appeal, which was granted. Following the Fifth Circuit’s decision in Terry Black’s, the court agreed with BatesCarey that “direct physical loss” requires a tangible change to the physical condition of property and that the food-borne illness provision is only applicable if the suspended operations were caused by a condition of the premises.