RHODE ISLAND COURT ALLOWS ADULT NIGHTCLUB’S COVID BI SUIT TO PROCEED

A state court judge in Rhode Island has ruled that a local adult nightclub’s Covid-related business interruption lawsuit against Nationwide’s Scottsdale Insurance unit may go forward. After the Desire nightclub closed in early 2020 following pandemic-related lockdown orders by the state and the city of Providence, establishment owner Atwells Realty sought coverage under both the civil authority and direct physical damage clauses of its all-risk policy. The court found that the language of the policy’s civil authority coverage is “ambiguous and reasonably susceptible to more than one meaning, including Atwells’ meaning that the civil authority prohibited its patrons from accessing the premises.” The court also ruled that the policy’s virus exclusion was not applicable because “Scottsdale has not met its burden of proving...that the virus exclusion applies to preclude civil authority coverage.” The court rejected Atwell’s property damage claim because the company did not allege that operations were suspended to make repairs.