LEWISBURG – Companies owned by Gov. Jim Justice and his family have filed a lawsuit accusing a host of insurance companies of failing to pay for business losses associated with the COVID-19 pandemic.
Justice Family Group LLC and Bluestone Resources Inc. filed the complaint in Greenbrier Circuit Court. The listed defendants are Starr Surplus Lines Insurance Company, The Princeton Excess and Surplus Lines Insurance Company, Certain Underwriters at Lloyd’s London Subscribed to a certain policy, Houston Casualty Company, Aviva Insurance Company, Aspen Specialty Insurance Company, Ironshore Specialty Insurance Company, Maxim Indemnity Company, Hallmark Specialty Insurance Company and Mitsui Sumitomo Insurance Company of America.
According to the amended complaint filed August 26, the plaintiff companies purchased specialized “all-risk” insurance coverage to protect business interests that include the Greenbrier Resort, coal mining interests, steel operations and agricultural interests in West Virginia and other states. The insurance policies included specific coverage for business interruption losses resulting from communicable disease.
“These companies directly employ thousands of individuals in West Virginia and elsewhere and their success over the years has been reinvested into the local communities by supporting schools, universities, and other youth organizations,” the complaint notes. “The communicable disease coverage purchased by the Justice Companies does not require physical loss or damage; rather, it merely requires a government order restricting access to ‘property of the insured.’
“The express communicable disease coverage provided by the policies distinguishes the Justice Companies’ claims from almost every other COVID-19 insurance claim.”
The complaint says the plaintiff companies “incurred significant physical damage, suspension of operations, remediation costs and other costs to prevent the further spread of the deadly disease” in the spring of 2020. The plaintiffs submitted a claim for coverage, including under the “Interruption by Civil Authority response to Communicable Disease Coverage,” for losses resulting from the presence of COVID-19 at the Greenbrier and other Justice companies as well as for the preventive measures the plaintiffs took to protect and preserve its insured locations from imminent loss, damage, or destruction.
“The insurers were nowhere to be found,” the complaint alleges. “Instead of honoring the policies and providing coverage for the Justice Companies’ losses, the insurers performed only a cursory investigation before effectively denying coverage.
“The grounds for denial, which the insurers continue to espouse today, were (1) that despite state orders shutting down the resort’s casino, spa and other facilities, access to the resort and the other Justice Companies’ properties was not ‘prohibited in its entirety’ ― a requirement not imposed by the policies; (2) that language in the policies issued by Starr and Lloyds operated to cancel the communicable disease coverage Justice Companies bargained for and that was found in every other policy; and (3) that the presence of Coronavirus and COVID-19 does not cause property damage ― again, not a requirement of the policies. As a result, the Justice Companies were forced to bring this action to obtain the coverage promised by the policies.”
The plaintiffs say they only seek coverage they were entitled to under the policies drafted by the defendant companies “to insure against almost precisely the circumstances suffered by the Justice Companies at the resort and elsewhere.”
“That is, the policies insure against ‘actual loss sustained ... when as a result of a threat or existence of exposure to a Communicable Disease at an Insured Location, access to the property of the insured is prohibited by order or action of civil authority,’” the complaint states. “The policies also ‘insure[] against all risk of physical loss of or damage to property ... except as hereinafter excluded[.]’
“Neither virus, communicable disease, nor pandemics are excluded causes of loss under the policies. Indeed, infectious disease is a “peril insured against” under the policies by virtue of the purchase of express Communicable Disease coverage.”
The plaintiffs allege the defendants have effectively denied coverage for their losses despite reasonable expectations of broad coverage “specifically designed to protect a major resort property against losses due to an outbreak of communicable disease exactly like the COVID-19 pandemic.”
According to the complaint, the plaintiffs experienced direct physical loss of or damage to their property in at least four ways.
First, the presence of the virus diminished the function and use of the Greenbrier Resort. Second, government orders – including some issued by Justice himself – drastically limited use of plaintiffs’ property, causing them to lose normal use and function of their property. Third, social distancing and other such measures caused issues. Fourth, sanitizing and cleaning that needed to be done to combat the virus.
The plaintiffs say their losses to date because of the pandemic exceed $20 million.
The plaintiffs seek an order saying losses and expenses are covered by the express communicable disease coverage and other grants of coverage in the policies and that the defendants are responsible for fully and timely paying such losses. They also seek damages for breach of contract for insurers’ failure to pay respective covered losses and seek damages for bad faith and unfair trade practices in connection with the insurers’ wrongful failure to promptly and properly investigate, handle, and settle their claim.
They also seek punitive damages, pre- and post-judgment interests, court costs, attorney fees and other relief.
The plaintiffs are being represented by Ronald J. Hatfield, general counsel for the plaintiff companies as well as by Aaron Ryan, Peter M. Gillon and Brendan W. Hogan of Pillsbury Winthrop Shaw Pittman.
The case has been assigned to Circuit Judge Jennifer Dent.
Greenbrier Circuit Court case number 22-C-25