Broadway’s Jujamcyn Theaters have brought a lawsuit against a pair of insurance companies, alleging that they unlawfully denied millions of dollars in policy coverage as the company shut down due to government restrictions on live events due to the coronavirus. The lawsuit, filed in the Southern District of New York, claims that Federal Insurance Company and Pacific Indemnity Company owe “tens of millions” of payouts due to the sudden halt on business, which will stretch at least into early 2021.
“Federal and Pacific knew, and publicly acknowledged, that they could be obligated to pay for massive losses in the event of a pandemic,” the lawsuit says, in part. “Federal and Pacific also knew that they could use common and widely available exclusions to guard against being obligated to pay for pandemic-associated losses. However, they decided not to do so here, selling Jujamcyn the all-risks Federal Policy and all-risks Pacific Policy and deliberately omitting from the policies any potentially applicable exclusion associated with a virus-related pandemic.”
Jujamcyn Theaters is the third-largest theatre owner on Broadway, operating five– the Al Hirschfeld, August Wilson, Eugene O’Neill, Walter Kerr, and St. James Theatres. Frozen closed at the St. James due to the COVID-19 shutdown beginning in March, while Moulin Rouge! (Hirschfeld), Mean Girls (Wilson), The Book of Mormon (O’Neill) and Hadestown (Kerr) are on indefinite hiatus with hopes to reopen once authorities allow performances to resume. That will be in January of 2021 at the earliest, per the Broadway League.
Nearly 50,000 people had attended performances at a Jujamcyn property in the week prior to the shutdown of all performances brought on by New York Gov. Andrew Cuomo in March, which helps illustrate the level of financial loss that more than nine months of shutdown have and will bring to the company. It argues that its business income loss policies should cover the shutdown.
“Many New York businesses were subsequently authorized to reopen or have some prospect of resuming operations in the near future,” Jujamcyn said. “The Broadway theater industry, however, has no such prospects and no reason to believe that theater owners like Jujamcyn will be permitted to open—in any capacity—anytime soon. As a result, Jujamcyn has suffered, and continues to suffer, substantial financial losses.”
Chubb, parent of both insurance companies, disagrees. Pacific paid out $250,000 in coverages, while Federal denied the claims in full, according to the lawsuit.
“Creating false expectations about coverage that does not exist, including filing baseless lawsuits, will not solve this crisis,” Chubb told the New York Times after the lawsuit was filed.