Hawaiian Gift Shop’s COVID-19 Coverage Action Dismissed with Prejudice

SAN FRANCISCO — A California federal judge has dismissed with prejudice a Hawaiian gift shop chain’s COVID-19 business interruption action, ruling that it failed to adequately allege “direct physical loss or damage” to property as required by the policy.

In a Feb. 1 order, Judge William H. Orrick of the U.S. District Court for the Northern District of California that Water Sports Kauai Inc. d/b/a Sand People failed to cure the defects in its original complaint by pleading facts showing that COVID-19 was present at its insured properties.

Rather, in its amended complaint, Water Sports “pleaded only additional facts showing …