Law Firm Seeks Business Interruption Coverage Due to Hurricane Sandy (NJ)

The Atlantic City law firm of Cooper, Levenson, April, Niedelman & Wagenheim is suing its insurance company for denying its business interruption claim after being forced to close due to Hurricane Sandy. Harleysville Insurance Company paid Cooper Levenson $25,000 for loss of electrical service following Sandy. The firm contends, however, that being forced to remain closed for business during the storm resulted in approximately $900,000 in additional damage for which it has not yet been compensated.

Following Governor Christie’s order for the mandatory evacuation of Atlantic County, in effect from October 28, 2012 through October 30, 2012, the firm made a timely claim against its policy, which was allegedly written to provide coverage for professional liability, business interruptions and extra expenses.  According to Harleysville, the claim was accompanied by tax returns listing an annual gross income of $28.6 million, from which the $900,000 damages claim was calculated. Harleysville denied coverage on two occasions, except for the $25,000 mentioned above.

The suit, originally filed in state court in Atlantic County, was removed to federal court in Camden. Cooper Levenson seeks a declaratory judgment that Harleysville owes the firm coverage. Additionally, Cooper Levenson alleges that Harleysville engaged in unfair claims settlement practices, deceptive conduct, misrepresentations and false information by issuing the policy and then improperly denying coverage. Finally, Cooper Levenson seeks compensatory and punitive damages, pursuant to the Consumer Fraud Act.

The firm contends that Harleysville denied coverage based on the wording of the policy; however, it disputes the insurer’s interpretation of its policy language. Coverage is often contingent on physical damage to property.  However, in this case, the firm’s claim focuses on Governor Christie’s Order of mandatory evacuation of Atlantic County areas and civil authority coverage.  Harleysville maintains no coverage is owed and that the firm will not be able to sustain the bad faith claim.

Special thanks to Samantha Epstein for her contribution.

For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com.