ACON Investments v. Various Insurers
MCWG represents a market of insurers that provided first-party property coverage to the insured, which made a claim for business interruption coverage arising out of damage to and closure of certain insured locations – grocery stores – in Texas in connection with Hurricane Harvey. The Insured demanded payment of claimed business interruption; the Insurers demonstrated that because the Insured sent those customers to other store locations that remained open, and those stores demonstrated an increase in revenues following the storm, the “make-up” at those alternate stores must reduce any business interruption at the closed stores to $0. The insurers demanded appraisal of the quantum – if any – of the Insured’s losses.
The Insured rejected the Insurers’ appraisal demand, denied that any “make up” was appropriate, and sued the Insurers in the Superior Court of the District of Columbia. The Insurers moved to compel appraisal, arguing that the quantum of the loss, as well as any potential “make up,” was within the purview of the appraisers. The Court agreed, granting the Insurers’ motion for a stay, so that the parties could proceed with the appraisal, and also ruled that the policy language clearly indicates that business interruption losses at one store may be mitigated or reduced by sales at another store. This matter is significant because there is a dearth of caselaw involving what constitutes “make-up,” and this decision provides greater clarity to both insurers and insureds as to what constitutes appropriate “make-up” under a first-party property policy.
The decision can be read here.