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Court refuses to entirely dismiss theaters’ COVID claim

Posted On: Mar. 7, 2023 6:40 PM CST


A federal district court in New York on Monday refused to entirely dismiss COVID-19-related business interruption coverage based on what it said is ambiguous policy language, in a lawsuit filed by a Broadway theater group against a Chubb Ltd. unit.

Jujamcyn Theaters LLLC, which owns and operates five Broadway theaters in New York, had an all-risk property insurance policy with Chubb unit Federal Insurance Co. that insured each of its five theaters against property damage, according to the ruling by the U.S. District Court in New York in Jujamcyn Theaters LLC v. Federal Insurance Co. and Pacific Indemnity Co.

It also had a “performance disruption” policy issued by Chubb unit Pacific Indemnity Co., which provided coverage for business income loss and extra expense, according to the ruling. 

Federal refused to pay for any losses under its policy. Pacific made a single payment of $250,000 to Jujamcyn based on its interpretation of “limit of liability” due under its policy, although the company maintained the closure of its five theaters each represented a loss, and that it is owed five times the $250,000.

The court ruled in Federal’s favor, holding that previous decisions in the district are “dispositive” of its claims.

With respect to the Pacific claims, the court said, “the relevant language in the Pacific Policy is ambiguous.”

The court said both the insurer’s and the insured’s interpretations of the policy language as to whether it covered just one sole entity, or five theaters respectively, were “reasonable.”

Jujamcyn attorney Jeffrey Schulman, New York-based managing partner with Pasich LLP in New York, said as the next step, “we’re going to continue forward with the litigation with Pacific and we’re going to evaluate our options with regard to Federal.”

He added, “The court has not been asked as of this moment to do anything else.” If the parties cannot resolve their differences amicably, “at some point we expect to go back to the court and ask for adjudication.”

Chubb’s attorneys did not respond to a request for comment.