Business Interruption Coverage Class Action: Update on Rinnigade Art Works v. Hartford Financial Group

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Back in June, Massachusetts saw the filing of the first suit seeking class action status challenging an insurance company's denial of coverage for COVID-19 related business losses, Rinnigade Art Works v. Hartford Financial Group.

On August 3, 2020, Plaintiff Rinnigade Art Works ("Rinnigade") filed an amended complaint, adding an additional Plaintiff - Cambridge Cuisine LLC, a limited liability company which operates Puritan & Company, a restaurant in Cambridge, as well as a wedding venue in Groton. Apart from adding a plaintiff, the amended complaint was substantially similar to the original complaint filed back in June.

A few months into the case, we now have responses from the Defendants.

The Defendants filed an answer to the amended complaint in which they deny Plaintiffs' claims and raise numerous affirmative defenses common to the denial of coverage for business interruption loss. Namely, Defendants assert that Plaintiffs' claimed losses are excluded or limited under various policy provisions (a pollution exclusion, sub-limits to the Civil Authority, Business Income from Dependent Property, Extra Expense, and Extended Business Income provisions). Additionally, Defendants contend the Plaintiffs' properties suffered no physical losses which cause their closure. Moreover, even assuming there had been physical losses, Plaintiffs are seeking coverage for beyond the time period needed to recover from any of these claimed losses to the properties.

Two defendants, The Hartford Financial Services Group, Inc. and Hartford Fire Insurance Company (the "Hartford Defendants"), have also jointly filed a motion to dismiss. In their motion, the Hartford Defendants argue Plaintiffs claims against them should be dismissed because they are not parties to the insurance policies at issue and, therefore, have no contractual relationship with Plaintiffs. Without a contractual relationship, the Hartford Defendants argue: (1) Plaintiffs have no standing to sue; (2) the District Court has no personal jurisdiction over the Hartford Defendants (they are Connecticut-based corporations); and, (3) Plaintiff cannot state a claim as there is no contract. In essence, without the existence of an insurance policy between Plaintiffs and the Hartford Defendants, Plaintiffs have suffered no harm resulting from the Hartford Defendants actions. Therefore, they contend, Plaintiffs have no case against the Hartford Defendants.

The remaining defendant, Twin City Fire Insurance Company, has also filed a motion to dismiss, but one limited to dismissing Plaintiffs' multi-state class action claims. In its motion to dismiss, Twin City argues that, as both Plaintiffs are Massachusetts companies bringing claims under Massachusetts law, the District Court for Massachusetts lacks personal jurisdiction over Twin City for claims on behalf of potential non-Massachusetts plaintiffs. Twin City is an Indiana corporation with a principal place of business in Connecticut, therefore is only subject to general jurisdiction in Indiana and Connecticut. Massachusetts courts would only have jurisdiction over Twin City for claims arising out Twin City's contacts with Massachusetts. As out-of-state plaintiffs would, by definition, not have contacts with Massachusetts, Massachusetts courts would not have jurisdiction over those claims. Twin City admits the District Court has jurisdiction for the remaining claims in Plaintiffs' complaint, and is just seeking to dismiss the multi-state class action claims.

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