State high court hears arguments in Colectivo Coffee Roasters et al. v. Society Insurance

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Two years after filing their initial suit, Wisconsin restaurant owners, including Colectivo Coffee Roasters, had their case heard before the Wisconsin Supreme Court on Tuesday. The business owners are suing Society Insurance for a lack of coverage during the March 2020 shutdown that required restaurants to perform takeout-only services.

The case was initially filed and heard in the Milwaukee County Circuit Court before Judge Laura Gramling Perez and has since been accepted by the Supreme Court on a bypass petition to review. The high court is expected to issue an opinion on arguments raised by Colectivo, et al. such as:

• When Colectivo limited its operations in response to COVID-19 and the social distancing orders, did it experience a “direct physical loss of or damage to” covered property? The Society policy stating Business Income and Extra Expense coverage would be issued when there is a “direct physical loss of or damage to” covered property.
• When Colectivo limited its operations in response to social distancing orders, was access to its property “prohibited” because of damage to other property? The Society policy allows for Civil Authority coverage when access to the property is prohibited by the government.

The other remaining issues surround Society’s policy definitions regarding alleged contamination that prohibits access to the property, alleged consequential losses due to shutdown orders and “Acts or Decisions” coverage  for alleged losses due to closure orders.

Laura Foggan, attorney for Society Insurance, contended that economic losses are not equivalent to property losses. Foggan alleged that the policy definition in question, “physical loss of or damage to,” does not cover loss of dining space due to the property still having the physical space, just not the use of it. The defense continued to explain that the government’s social distance orders reflect a change in zoning that affects business operations, not physical change or loss to the building or property inside the building.

Jay Urban of Urban and Taylor represented the plaintiffs, stating that the Society policy is a “homegrown” policy that was written with restaurants in mind because it lacked a virus exclusion clause, one that many other insurance companies allegedly added during the pandemic. Urban argued that the Supreme Court is the only court that can rule on and define the “of,” “to” and “prohibit” terms of Society’s policy. He compared the policy to that of a short-term disability policy where it’s meant to bridge the gap between when the shutdown restrictions went into place and when restaurants could operate with dining rooms open.

The plaintiffs named in the suit along with Colectivo are Tandem Restaurant LLC, Wrecking Crew Inc., Iron Grate BBQ Co. Inc., East Troy Brewery Co., Logan & Potter Inc., Buckley’s Kiskeam Inn, Other Ones MKE, BCT 5, Company Brewing, Bryhopper’s Bar & Grill, The River’s Bar, Etcetera by BLH, REMBS LLC, KRO Bar Inc., Rivermill Inc. and Pork’s Place of Kaukana.