A federal district court in Texas on Wednesday refused to dismiss a COVID-19 business interruption coverage case filed by the film chain Cinemark, in which the company claimed that the virus had damaged property was covered by its policy.
Plano, Texas-based Cinemark Holdings Inc., the third-largest U.S. cinema circuit, filed a lawsuit against an FM Global entity after the insurer did not respond to its corporate income loss coverage claim due to its theatrical shutdown. , according to the judgment of the U.S. District Court in Sherman, Texas, in Cinemark Holdings Inc. v Factory Mutual Insurance Co.
The policy included "infectious disease response" and "interruption of infectious disease" Coverage, they said.
The ruling said that more than 1
Factory Mutual claimed that Cinemark had not claimed physical loss. or damage, and that its policy exclusion of contaminants blocks claims. It cited the court's dismissal last month of another COVID-19 business interruption, Selery Fulfillment Inc. v. Colony Insurance Co., filed by a Carrollton, Texas-based company providing e-commerce services. trade. companies against an Argo Group unit.
The two cases are different, the judges say. The case Selery claimed COVID-19 and the resulting government orders caused an immediate physical loss or damage to its property, the decision said.
"The court granted the motion to dismiss because mandatory authority proposes that & # 39; physical loss requires a physical change to the property … Selery never claimed that COVID-19 entered the property, only that the pandemic prevented Selery from fully take advantage of it, "it said.
Cinemark "claims another damage and is governed by different contract terms", the decision states. "Unlike Selery, Cinemark claims that COVID-19 was actually present and actually damaged the property by changing the air content," it said.
Its policy "is much broader than that of Selery and explicitly covers loss and injury caused by & # 39; infectious disease & # 39 ;," which both parties agree covers COVID-19, was mentioned. in the decision and refused to dismiss the case.
Cinemark Attorney Michael S. Levine, a partner with Hunton Andrews Kurth LLP in Washington, said, "It is refreshing and encouraging that the court looked at the specific allegations and acknowledged the significant differences in that lawsuit. that we submitted and that these differences are significant, and that they matter. "the details and" got the right result ", he said.
FM Global said in a statement that it" values the long-term relationships we have with our policyholders and we are proud to be a leader in the tort service industry. It is unfortunate when legal issues arise because we strongly believe that our insurances are clear for the coverage provided. ”
More insurance and risk management news about the coronavirus crisis here .