The retail giant sued XL Insurance America Inc., Ace American Insurance Co. and three other insurers in the U.S. District Court for the Western District of Washington on March 5, seeking a ruling that they must treat the store's damages and business interruption claims as a single occurrence, rather than individual events that would force Nordstrom to pay separate $1 million deductibles.
The defendants are insisting that the destructive events constitute multiple occurrences in a "transparent effort" to keep most of the retailer's losses within its deductibles, the suit says.
Other defendants named in the complaint are AIG Specialty Insurance Co., Continental Casualty Co. and Ironshore Specialty Insurance Co.
The lawsuit arises out of the sustained period of civil unrest last summer that was sparked by the killing of George Floyd by Minneapolis police officers May 25, 2020.
While most of the ensuing protests across the country were peaceful, Nordstrom says, a "small percentage" of them turned violent and created an opportunity for some individuals to engage in looting, property destruction and arson.
The suit says Nordstrom became aware of the risk of damage to its stores and immediately took action to ensure the safety its workers, customers and property.
According to the complaint, the retailer boarded up its stores, reinforced doors and windows and hired security guards to protect its property before it temporarily closed all 350 of its brick-and-mortar stores May 31, 2020.
Nordstrom says all of its locations were affected by the civil unrest, causing the retailer to incur nearly $25 million in business interruption losses, property and merchandise theft and damage, repair costs, security costs, store closures, and cleanup expenses.
The retailer, represented by Gordon Tilden Thomas & Cordell LLP, sought coverage for its losses from the defendants under all-risk property insurance policies that cover direct physical loss or damage to insured property.
The policies each provide for a fixed percentage of a $25 million quota-share layer of coverage over a $1 million per-occurrence deductible, according to the suit.
So far, the insurers have collectively paid Nordstrom only $4.7 million, including an unallocated advance of $2 million, the suit says.
And while the insurers have not taken an official position yet as to the number of occurrences implicated by Nordstrom's claim, they have suggested that the claim involves multiple occurrences that necessitate multiple $1 million per-occurrence deductibles, according to the retailer.
The plaintiff is now asking the court to declare that its nationwide civil unrest claim arises out of a single occurrence subject to a single $1 million deductible under the policies.
It also alleges that the insurers should be held liable for breach of contract by failing to fully reimburse Nordstrom for its claim and refusing to acknowledge that its loss is the result of a single occurrence.