Contributors Peter Cornick Associate Litigation & Trial Practice peter.cornick@alston.com Tania Rice Senior Associate Litigation & Trial Practice tania.rice@alston.com 5 Life Insurance determined by us …” did not impose a contractual duty to redetermine cost-of-insurance rates each month or periodically. The court also affirmed a ruling that the clause “based on our expectations as to future mortality experience” did not require the insurer to exclusively rely on expectations as to future mortality experience when setting cost-of-insurance rates. With these two findings, the court rejected both theories reliant upon an alleged failure to redetermine cost-of-insurance rates. However, the plaintiff’s claim was saved by its alternative— even contradictory—set of allegations that Protective Life redetermined its rates but ignored “expectations as to future mortality experience.” Accepting the insured’s allegations as true, the Eleventh Circuit concluded that the insured sufficiently pleaded a breach-of-contract claim under this theory and remanded the case for further proceedings. However, the court noted that past the pleading stage, “it remains to be seen what can be proven.” … While Another Speeds Up for Class Certification Newton v. Brighthouse Life Insurance Co., No. 1:20cv-02001 (N.D. Ga. May 9, 2024). Faced with the plaintiff’s motion for class certification in a case brought following a change in cost-of-insurance rates, Judge Amy Totenberg issued an order requiring the parties to submit supplemental briefing on a list of discrete topics. Judge Totenberg sought clarity on “[t]he timeliness of Plaintiff’s claims under the relevant statutes of limitations,” “record evidence supporting or refuting Plaintiff’s purported reliance on the relevant policy provisions,” and “record evidence supporting or refuting” several of the plaintiff’s claims regarding the insurer’s conduct and the relevant contractual language. This order will likely require an expedited development of the key facts and legal arguments at the class-certification stage and contrasts starkly with other class-certification orders in similar cases. n Life Insurance 4 Coverage No Coverage for COVID – California High Court Deals Blow to Policyholders Another Planet Entertainment LLC v. Vigilant Insurance Co., No. S277893 (Cal. May 23, 2024). In answer to a certified question from the Ninth Circuit, the California Supreme Court held that “the actual or potential presence of the COVID-19 virus on an insured’s premises generally does not constitute ‘direct physical loss or damage to property’ for purposes of coverage under a commercial property insurance policy.” Another Planet Entertainment, which produces and promotes concerts, sued Vigilant Insurance Company in California federal court seeking coverage for its business income losses stemming from closing its venues in compliance with government orders. Under California law, the “direct physical loss or damage to property” that is covered by typical property insurance policies requires a distinct, demonstrable, physical alteration to property. Another Planet argued that the presence of the virus rendered its properties unfit for use. Alternatively, it argued that the virus binds to surfaces and objects, physically altering them to fomites (inanimate objects that can transfer disease). The district court granted Vigilant’s motion to dismiss for failure to state a claim, and Another Planet appealed the decision. Given the conflicting decisions reached in the lower courts, the Ninth Circuit asked the California Supreme Court for guidance. Consistent with most courts nationwide, the California Supreme Court answered that question in the negative, finding that the government public health orders, which were legal rather than physical in nature, did not constitute a direct physical loss. The inability to use the property as intended was insufficient on its own to establish a physical loss. Additionally, the court found that COVID-19’s alteration of the property on a microscopic level was not the reason the property was unusable and did not result in injury to or impairment of the property. The court noted, however, that while Another Planet’s allegations were the most common type of allegations in support of pandemic-related property insurance coverage, it could not “determine that the COVID-19 virus can never cause direct physical loss or damage to property.” n Contributors Andrew Roberts Senior Associate Litigation & Trial Practice andrew.roberts@alston.com Arianna Clark Associate Litigation & Trial Practice arianna.clark@alston.com Laura Simmons Senior Associate Litigation & Trial Practice laura.simmons@alston.com
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