Coffee not covered, high court dismisses Colectivo’s COVID-19 lawsuit

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Because a Milwaukee-based coffee company and various Wisconsin bars and restaurants could still offer curbside and similar services during pandemic-related shutdowns, they are not entitled to collect lost business income under their insurance policies, according to the Wisconsin Supreme Court.

The state Supreme Court on Wednesday ruled in favor of Society Insurance Company’s request for the dismissal of a lawsuit filed by Colectivo Coffee Roasters and various bars and restaurants over their insurance coverage for pandemic-related losses. Justice Rebecca Dallet delivered the court’s unanimous opinion, finding the plaintiffs had failed to establish a claim for alleged “covered losses.”

According to the opinion, because Colectivo and the other plaintiffs had access to their properties and could still operate takeout services throughout the pandemic, they did not suffer the sort of physical loss of a dining space that would trigger coverage under Society’s business-income, extra-expense or civil-authority provisions. The court also concluded that the plaintiffs had not “suspended operations due to contamination,” only altered them in response to public-health orders.

“As the overwhelming majority of the other courts that have addressed the same issue have concluded, the presence of COVID-19 does not constitute a physical loss of or damage to property because it does not ‘alter the appearance, shape, color, structure, or other material dimension of the property,’” Dallet said.

Besides Colectivo, the other plaintiffs in the suit included Tandem Restaurant, Iron Grate BBQ, East Troy Brewery,  Company Brewing, Bryhopper’s Bar & Grill, The River’s Bar, KRO Bar Inc., and Pork’s Place of Kaukana.

The court also noted that when some of these businesses were prevented from serving alcohol during the pandemic, the prohibition came from a state law or local ordinance rather than an order from the Department of Health Services.

In dismissing this suit, Wisconsin joined Iowa, Massachusetts and various other states that have handed down similar decisions.

“We are gratified that Wisconsin’s highest court correctly applied the terms of the Society policies in this ruling,” said Society’s attorney Laura Foggan in an email. “While these times remain undeniably challenging for many of Society’s policyholders, and businesses impacted by the pandemic, this does not alter the terms of Society’s insurance contracts or create insurance coverage for losses that fall outside those contracts’ terms.  It is the insurance contracts that control.  Today’s well-reasoned ruling should serve as another step toward bringing this litigation to an end.”

The Wisconsin Supreme Court’s dismissal reversed a previous decision from the Milwaukee County Circuit Court’s Judge Laura Gramling Perez.