Insurer wins COVID BI appeals court ruling against theater chain

A Tokio Marine HCC unit prevailed in a COVID-19 related business interruption lawsuit filed against it by a North Carolina movie theater chain Monday, when a federal appeals court affirmed a lower court ruling in its favor.

The ruling by the 7th U.S. Circuit Court of Appeals in Chicago in East Coast Entertainment of Durham, LLC v. Houston Casualty Co. and American Claims Management Inc., affirmed a lower court ruling by the U.S. District Court in Chicago.

A three-judge appeals court panel cited the court’s December 2021 ruling in Sandy Point Dental P.C. v. The Cincinnati Insurance Co. in its ruling in favor of the Tokio Marine unit Houston Casualty and its claims administrator, Carlsbad, California-based American Claims.

“In Sandy Point, we joined four other circuits in concluding that mere loss of use due to COVID-related closures does not constitute ‘direct physical loss’ when unaccompanied by any physical alteration to property,” it said.

“The policy provisions at issue in Sandy Point are materially indistinguishable from ECE’s policy…Try as it might, ECE similarly fails to allege a physical alteration of its policy,” the ruling said, in affirming the lower court.

Attorneys in the case had no comment or did not respond to a request for comment.