Will a canceled tribute dinner honoring George and Amal Clooney turn into a key fight on the novel coronavirus insurance front?
On Friday, the Chubb Group demanded an end to a lawsuit filed by the Simon Wiesenthal Center over insurance coverage. The Holocaust organization, which is readying a documentary on Netflix and whose plans for a celebration of the Clooneys was interrupted by the pandemic, filed its claims in California federal court in late April. The Simon Wiesenthal Center seeks a declaration that Los Angeles Mayor Eric Garcetti's emergency "Safer at Home" order constituted sufficient action by a civil authority and triggered coverage meant to insure physical damage to a premises.
The Simon Wiesenthal Center is one of many businesses that are now seeking to recover losses by turning to an insurer. Many of those businesses may eventually wind up in Northern Illinois or elsewhere as a movement is now afoot for a consolidated Multidistrict Litigation (MDL).
Chubb, though, is moving to dismiss the Wiesenthal case with some provocative arguments. A prominent insurer in the entertainment industry, Chubb has tapped Daniel Petrocelli, a litigator who has been on the studio side for many significant legal battles.
On the basis of the complaint alone, it appeared as though the battle was headed toward an exploration of the nature of damage from the virus. The Simon Wiesenthal Center asserts, "The word 'physical' has been defined by California courts as 'having material existence' or 'perceptible through the sense and subject to the laws of nature.' The coronavirus, like a bacterium, clearly has a material existence and is something that exists in nature that physically damages tangible property by rendering it unusable as it adheres to surfaces creating a dangerous property condition."
The motion to dismiss, however, takes the case in a slightly different direction than the meaning of "material existence."
As Chubb reads the policy, the Civil Authority coverage is triggered when access to premises is prohibited as a direct result of physical damage to a property within a mile of the policyholder's own property. The insurer argues for dismissal on the basis that the plaintiff has failed to identify any damaged nearby property, facts establishing that access was prohibited as opposed to merely regulated, and a sufficient causal relationship.
"[I]t is not enough that a civil authority issued an order prohibiting access (which was not done here)," states Chubb's court brief (read here). "The order must also be the direct result of direct physical loss or damage to another property within one mile of the policyholder’s property. Plaintiffs allege no facts to satisfy this additional policy requirement. Indeed, the Garcetti Order was not issued directly because of any property damage but to 'limit the spread of COVID-19.'”
Chubb then adds, "Courts have routinely found no coverage for claims involving civil authority orders — from post-9/11 airport closures to hurricane evacuations to civil unrest curfews — where policyholders failed to establish a causal link between the civil order and damage to adjacent property."