A federal district court in New York on Monday refused to completely dismiss a Covid-19-related business interruption claim, 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, held general property insurance with Chubb unit Federal Insurance Co. which insured each of its five theaters against property damage, according to the judgment of the US District Court in New York in Jujamcyn Theaters LLC v. Federal Insurance Co. and Pacific Indemnity Co.
It also had a “performance interruption” policy issued by Chubb unit Pacific Indemnity Co., which provided coverage for business income losses and additional expenses, according to the ruling.
Federal refused to pay for any losses under its policy. Pacific made a one-time payment of $250,000 to Jujamcyn based on its interpretation of the “limit of liability”; under its policy, although the company maintained that the closing of its five theaters each represented a loss and that it is owed five times $250,000.
The court ruled in Federal’s favor, holding that prior district decisions are “dispositive” of its claims.
As to the Pacific claims, the court said, “the relevant language of the Pacific Policy is ambiguous.”
The court said that both the insurer’s and the insured’s interpretations of the policy language as to whether it covered only a single unit, and five theaters, respectively, were “reasonable.”
Jujamcyn’s attorney Jeffrey Schulman, New York-based managing partner with Pasich LLP in New York, said as the next step, “we will continue with the litigation with Pacific and we will evaluate our options with respect to Federal.”
He added, “The court has not been asked to do anything else at this time.” If the parties cannot resolve their differences amicably, “at some point we expect to go back to court and ask for judgment.”
Chubb’s attorneys did not respond to a request for comment.