After issuing the insureds' summary judgment motion that COVID-19 invasion of the insureds' property constituted "direct physical loss or damage to property," the New Hampshire Superior Court granted the insurers' motion for an interlocutory appeal. Schleicher & Stebbins Hotels, LLC, et al. v. Starr Surplus Lines Ins Co, et al., No. 217-2020-CV-000309, Order (N.H. Super. Ct. Jan. 6, 2022). The original decision granting summary judgment was discussed in a post here.
The insureds owned and operated twenty-three hotels in New Hampshire, Massachusetts and New Jersey. The insureds purchased $600 million of coverage from the various insurers.
When the COVID-19 related government orders restricted the operation of the hotels, they sought coverage from the insurers. The policies insured against "risks of direct physical loss of or damage to property." The insurers contended that the hotels failed to provide sufficient details concerning physical damage to their properties.
The insureds filed suit and moved for summary judgment to establish that the terms "loss or damage" and "directly physical loss of or damage to property" encompassed the impact of COVID-19 on their properties. The insureds' motion was granted. The insurers now moved for an interlocutory appeal,
The trial court found it was appropriate to present an interlocutory appeal for the Supreme Court's consideration. The court noted that courts in other jurisdictions had decided in favor of insurers on the issue of whether policy holders had experienced "direct physical loss of or damage to property" due to the presence of COVID-19. Therefore, the motion was granted.
The court also granted the insureds' motion to amend their complaint to add two causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing. The insureds' allegations were reasonably susceptible of a construction that would permit recovery on the claim for breach of the implied covenant of good faith and fair dealing, and thus the amendment was not futile.
