Producers of a Broadway play based on the life of pop star Tina Turner, which was shut down because of COVID-19, may pursue its business-interruption claim despite a communicable disease exclusion in the policy, a New York appellate court ruled.
Tina Turner Musical LLC won a relatively rare policyholder victory with its lawsuit because event cancellation policies don’t contain the usual “direct physical damage or loss” language that has stymied business owners covered by commercial property policies. The policy written by Chubb Insurance Co. of Europe excluded communicable diseases only if the loss was caused by the actions of “a national or international body.”
“As plaintiff’s losses stemmed from executive orders issued by the New York State governor and New York City mayor banning performances and gatherings in theaters, the exclusion did not apply,” the New York Appellate Division’s First Department said in an opinion released Tuesday.
Tina: The Tina Turner Musical opened at the Lunt-Fontanne Theatre in New York City on Oct. 12, 2019 but shut down on March 12, 2020 after Gov. Andrew Cuomo ordered live performances to cease because of the pandemic.
The producers of the play had purchased an events-cancellation policy from Chubb with a limit of $16.5 million for costs and expenses and $6,124,548 for gross revenue. The production company filed a claim but Chubb denied it, saying “there would be no cover under the policy for the actions taken by the US Government in closing the theatre,” according to the civil complaint.
Tina Turner Musical filed a lawsuit seeking a declaratory judgment by the New York County Supreme Court, which is the trial court with jurisdiction over Manhattan.
The Supreme Court ruled that Chubb’s lawsuit should proceed because the communicable disease exclusion in Chubb’s policy would apply only if the production was shut down because or orders by a national or international body.
On appeal, Chubb argued that the communicable disease applies if an outbreak becomes serious enough for any national or international body to take action. The insurer said the World Health Organization had declared the coronavirus outbreak a public health emergency and the federal government had restricted travel from some regions to guard against transmission of the virus. The policy language does not require the loss to be caused by the orders of an national or international body for the exclusion to apply, Chubb argued.
The Appellate Division said the language in Chubb’s policy did not clearly state that the exclusion should be applied as broadly as the insurer said it should.
“Rather, giving the exclusion a strict and narrow construction, and resolving any ambiguities against defendant, we find that it precluded from coverage losses resulting from quarantine or travel advisory orders issued by a national or international body or agency in response to a communicable disease,” the opinion said.
As for the Tina Turner Musical, the show must go on. The production started a 30-city US tour in September. The play opened at the Opera House in Detroit, Michigan on Tuesday, with actresses Naomi Rodgers and Zurin Villanueva playing the title role.
Top photo courtesy of Tina:The Tina Turner Musical.
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