BLS Blog

In Verveine Corp., et al., v. Strathmore Insurance Company, et al., the Massachusetts Supreme Judicial Court (SJC) held that claims for business losses made by three restaurants arising from COVID-19 dining restrictions were not covered by “all-risk” property insurance policies because the losses were not “direct physical loss or damage” under those policies.

In spring 2020, Governor Baker issued an emergency order prohibiting in-person dining at restaurants and bars in the Commonwealth. Two of the plaintiffs responded by offering takeout and delivery services, while the third plaintiff suspended operations. Though limited in-person dining resumed in June 2020, the plaintiffs continued to lose revenue due to the restrictions. The restaurants filed insurance claims for the lost income. Strathmore Insurance Company denied the claims. The restaurants then brought a declaratory judgment action against Strathmore and asserted claims for breach of contract and violation of G. L. c. 93A and G. L. c. 176D. Superior Court Judge Sanders dismissed the claims, ruling that the restaurants did not suffer “direct physical loss or damage,” as required by the policies.

In The Travelers Indemnity Company v. Lean & Local LLC, Travelers sought a declaration that it did not owe its insureds indemnity or a defense. Judge Green granted Travelers summary judgment. The claims asserted against the insureds in a trademark case, Judge Green ruled, did not trigger coverage under the policies’ “advertising injury” provision.

The trademark case, filed in the United States District Court for the District of Massachusetts, involved claims by Atomic Café against LeanBox and Cold Brew, the insureds under the policies. Atomic Café alleged that the defendants’ use of Atomic Café’s mark on the defendants’ website constituted trademark infringement.

Judge Sanders granted partial summary judgment in favor of Raw Seafoods, Inc. (RSI), a seafood processor, in a coverage dispute with its insurer, Hanover Insurance Group (Hanover). Judge Sanders held that Hanover was bound by a federal court’s finding that the damage to an RSI seafood shipment was caused by RSI’s negligence, rather than from a disqualifying intentional act.

Key Takeaway: In Roche Brothers Supermarkets v. Continental Casualty Company, Judge Kaplan ruled that monies expended by an insured to prevent property damage were not recoverable under a commercial property insurance policy. The policy insured against the risk of loss of, or damage to, property—not the cost of eliminating the risk of loss of, or damage to, property.