## Facts

- Berk-Cohen Associates, L.L.C. owned the Forest Isle Apartments, a 66-building, 700+ unit apartment complex in New Orleans.
- Landmark American Insurance Company issued two commercial property policies covering physical damage and lost rental value, and providing business-income coverage.
- Hurricane Katrina severely damaged Forest Isle; Landmark paid approximately $19.35 million for building damage.
- Repairs began after the hurricane and were completed around September 2007, with delays from a fire and a transformer explosion.
- Berk-Cohen sought additional business-income benefits for lost rental value attributable to covered (non-flood) damage during the restoration period.
- The parties disputed how to calculate “actual loss of business income” under a policy “Loss Determination” provision: Landmark used pre-Katrina occupancy and rents; Berk-Cohen incorporated increased post-Katrina occupancy and rental rates driven by a regional housing shortage.

## Issues

1. Whether the policy’s business-income and loss-determination provisions permitted Berk-Cohen to measure loss using increased post-Katrina demand (higher occupancy and rents) during the period of restoration.
2. Whether the Loss Determination clause barring consideration of improved conditions resulting from the “same cause” as the interruption foreclosed Berk-Cohen’s methodology as a matter of law.
3. Whether Fifth Circuit precedent interpreting similar business-interruption provisions required judgment for Landmark on the post-disaster demand issue.

## Decision

- The court denied Landmark’s motion for partial summary judgment on Berk-Cohen’s business-income claim.
- The court held the policy did not unambiguously bar Berk-Cohen from considering post-Katrina demand in calculating business-income loss on the summary-judgment record.
- The court concluded precedent cited by Landmark did not conclusively resolve the policy-interpretation and causation questions presented.
- The court found genuine disputes of material fact regarding causation, the effect of post-Katrina market conditions, and the amount of any unpaid covered business-income loss.

## Legal Principles

- Summary judgment is improper where reasonable competing interpretations of an insurance policy and material factual disputes exist as to causation and loss amount.
- A business-income “loss determination” provision excluding improved conditions attributable to the “same cause” as the interruption does not necessarily bar consideration of post-disaster market conditions when the improved conditions may be attributable to other factors.
- Prior appellate decisions addressing post-event increases in revenues under business-interruption coverage apply based on the specific policy wording and the causal link between the peril causing the interruption and the improved conditions.

## Conclusion

The court allowed Berk-Cohen to proceed with a business-income theory that incorporated post-Katrina occupancy and rent increases, concluding that the policy language and causation questions were not resolved as a matter of law and required fact development rather than summary judgment.


Berk-Cohen Assocs., L.L.C. v. Landmark Am. Ins. Co., No. 07-9205, 2009 WL 2777163 (E.D. La. Aug. 27, 2009)