Florida Appellate Court Sides with Mound Cotton’s Clients in COVID-19 Dispute Over Business Interruption Provision
FL (03/19/25) — On Wednesday, Mound Cotton’s clients won an appeal in a COVID-19 coverage action involving a claim for Business Interruption (“BI”) coverage, which extends only to losses resulting from loss or damage “covered herein.” The appeal, pursued by Fontainebleau Florida Hotel LLC and related entities, involved an argument that the BI provision was not sufficiently specific about whether the income losses had to result from direct physical loss or damage. The insureds took the position that their COVID claim should be covered even in the absence of direct physical loss or damage, given their view that the BI provision should be construed in their favor. But the appellate court unanimously disagreed, and sided instead with Mound Cotton’s arguments: “When read as a whole, the policy’s plain language shows that the loss, damage or destruction ‘covered herein’ refers to the Perils Insured Against provision, which explicitly requires ‘direct physical loss’ or property damage.” Slip Op. at 5-6. Accordingly, the appellate court affirmed, thereby upholding the lower court’s dismissal of the insureds’ declaratory judgment action on the pleadings alone.
The case is Fontainebleau Fla. Hotel LLC v. Westchester Surplus Lines Ins. Co., No. 3D23-1264 (Fla. Ct. App. 3d DCA Mar. 19, 2025), and the slip opinion is available here.
Partners Wayne R. Glaubinger and Jared K. Markowitz represented a majority of the primary layer, including: GuideOne National Insurance Company; Starr Surplus Lines Insurance Company; AXIS Surplus Insurance Company; Western World Insurance Company; Princeton Excess and Surplus Lines Insurance Company; Certain Underwriters at Lloyd’s, London Subscribing to Policy Nos. (UMR) B080119363U19 and B0356JG135V19A000; and Certain Underwriters at Lloyd’s, London Subscribing to Policy Nos. W275E6190101 and W2754E190101.