Washington Federal District Court Grants Stay of COVID-19 Coverage Action

    To await a decision from the Washington Supreme Court, the federal district court stayed the COVID-19 coverage action pending before it. Reckless Enter. v. First Mercury Ins. Co., 2022 U.S. Dist. LEXIS 120832 (W.D. Wash. July 8, 2022). 

    Plaintiff owned and operated a restaurant that lost income during the height of the COVID-19 pandemic after the governor issued shut-down orders. Plaintiff tendered a claim for loss of income during the pandemic under its policy with First Mercury. The claim was denied because COVID-19-related losses did not constitute direct physical loss or damage.

    The federal district court had previously issued its decision in Nguyen v. Travelers Cas. Ins. Co. of Am., 2021 WL 2184878 (W.D. Wash. May 28, 2021), where it denied coverage for a COVID-19 loss of income matter because such losses did not constitute “direct physical loss of or damage to property.” Nevertheless, Plaintiff moved to stay this current case until the Washington Supreme Court ruled in Hill & Stout PLLC v. Mutual of Emumclaw Ins. Co. which, involved identical policy language. First Mercury opposed the motion claiming it was “based on the remote possibility that the Washington Supreme Court colud issue a decision diametrically opposed to the prior decision of this Court, the Ninth Circuit, every other state and federal appellate court, hundreds of state and federal courts across the country and the basic tenets of contract interpretation.”

    The court granted the motion for stay. It would not be in the interest of judicial economy for this court to predict how the Washington Supreme Court would rule when very soon the court would issue its ruling. First Mercury would not be prejudiced by a stay. The Washington Supreme Court had already held oral argument in Hill & Stout and presumably would issue a ruling shortly.