The Hartford Wins Dismissal of COVID-19 Insurance Lawsuit

The Hartford Covid Case Dismissed

A lawsuit against The Hartford Financial Services Group Inc. regarding COVID-19 was thrown out recently in South Carolina. A federal judge agreed to dismiss a lawsuit against Hartford, claiming the insurer could not be held liable. The policy in question, according to the judge, was issued by one of Hartford’s subsidiaries – not Hartford.

Black Magic LLC operates the Black Magic Cafes in Charleston. The restaurants claimed that Hartford should have covered the losses stemming from the state’s COVID-19 shutdown. Last year, Gov. Henry McMaster ordered indoor dining to close during the worst days of the virus. The restaurants, along with many others, were denied business interruption coverage claims.

Hartford sought an early end to the lawsuit through a motion to dismiss. In its filing, Hartford claimed that Black Magic lacked standing, lacked personal jurisdiction, and had failed to state a claim. Also, the company said it was not even a party to the contract in dispute. That’s because its subsidiary, Twin City Fire Insurance Company, issued the policy rather than Hartford.

U.S. District Judge Howe Hendricks agreed. The judge concluded that Black Magic’s complaint improperly tried to lump all defendants together. Naming Hartford as a defendant was an attempt to sue a company with which the restaurants had no contract. The judge found that plaintiffs could not trace any of their claims to Hartford’s conduct.

The state of South Carolina also lacked jurisdiction over The Hartford. The company is not incorporated in the state, nor does it have a principal place of business there. Moreover, the subsidiary relationship between Hartford and Twin City was not enough to bring it into the lawsuit. More particularly, the subsidiary relationship does not allow South Carolina courts to exert personal jurisdiction over Hartford.

The lack of jurisdiction is an interesting note in the case. But even if it existed, there was no contractual relationship between the plaintiffs and Hartford. Their dispute over the insurance policy is with Twin City, not Hartford. The Hartford was released from the lawsuit, while the claim against Twin City can continue.

Black Magic claimed it purchased an insurance policy from Twin City, effective from July 2019 to July 2020. According to the lawsuit, the policy included limited coverage for virus-related losses. Black Magic accused The Hartford of breach of contract for refusing to provide business interruption income. The restaurants wanted to trigger a class action lawsuit for other policyholders that were denied business interruption coverage. Hartford has been sued well over 200 times throughout the country in COVID-19 related cases.

The South Carolina case involving The Hartford is an interesting commentary on how motions to dismiss can proceed. Here, the plaintiffs made the mistake of improperly identifying their defendants. Attempting to throw Hartford in with other insurers did not get past The Hartford’s lawyers. They pointed out, to the agreement of the judge, that they simply aren’t a legitimate defendant in the matter.

In addition, the company made arguments over jurisdiction and related matters. That’s a wise legal move. Even though the lack of a contract was the most powerful argument, The Hartford didn’t stop there. Skilled attorneys know you never go with just one legal argument. You make the most arguments you can, in case the judge doesn’t agree with your strongest one.

The insurance defense attorneys of Rosenbaum & Taylor represent insurers in New York that are facing litigation. With COVID-19 lawsuits still moving forward, your organization could be a target for plaintiffs’ attorneys. You need experienced legal representation to defend your interests in court. Let our attorneys help. Call Rosenbaum & Taylor today.

 

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