In a two-page decision and order issued Monday, New York County Supreme Court Justice Andrew Borrok determined that a "communicable disease" exclusion in Chubb European Group's event cancellation insurance policy to Tina Turner Musical (TTM) did not apply to losses incurred as a result of state and local shutdown orders designed to slow the spread of COVID-19.
Courts across the country have overwhelmingly sided with insurers on COVID-related claims for business income interruption coverage, owing to the fact that such coverage is only triggered by property loss or damage. There is no such requirement for event cancellation insurance.
Chubb's lawyers at Clyde & Co, on the other hand, argued that TTM's case should be dismissed because the policy explicitly excluded losses from cancellation due to "any communicable disease... which leads to" a quarantine, restriction of movement, travel advisory, or warning by a "national or international body or agency."
COVID-19 is contagious, prompting numerous national and international warnings and quarantines, according to Chubb.
TTM's attorneys at Pillsbury Winthrop Shaw Pittman argued that the exclusion was inapplicable because the "national or international warnings" had not resulted in TTM's losses. The judge concurred.
"TTM's losses are the result of former New York State Governor Andrew Cuomo's March 12, 2020, Executive Order 202.1, which states that 'any theater seating 500 or more attendees for a live performance... shall not hold any further performances after 5 p.m. on March 12, 2020," Borrok wrote.
Requests for comment from Chubb's attorneys were not immediately returned. TTM's lawyers, according to a spokesman, are unable to comment on the ongoing litigation.
"Tina: The Tina Turner Musical" premiered on Broadway in November 2019 at the Lunt-Fontanne Theatre. It resumed its run there in October of last year.
According to the lawsuit, TTM sought coverage from Chubb under its $23 million policy within days of the March shutdown orders, but Chubb denied the claim without conducting a substantive investigation.
In addition, the complaint claimed that Chubb "placed its own interests above those of its policyholder" in violation of its duty of good faith and fair dealing, and sought unspecified consequential damages.
Borrok denied Chubb's motion to dismiss that count in a single sentence, stating that the claim was "sufficiently pled" and did not necessitate detailed allegations of bad faith.