Florida Theater Sues Over Lack of Business Interruption Coverage

Elizabeth DiNardo, Esq. | Associate Counsel

theater-1477670_1280On July 20, 2020, another class action suit was filed against an insurance company over the failure to provide business interruption coverage related to losses from the COVID-19 pandemic. In the suit, filed in federal court in the Southern District of Florida, the operators of the well-known South Florida theater, Miracle Theater, filed an action against General Security of Arizona (“General Security”) and SCOR SE (“SCOR”), alleging that the insurance carriers breached contractual obligations and failed to pay the plaintiff for losses and expenses caused by the coronavirus outbreak.

In the complaint, the plaintiff details how in April 2019, the theater obtained an insurance policy with the defendants with a policy period of May 8, 2019 to May 8, 2020. The policy in question, according to the plaintiff, is an all-risk insurance policy, in which all risks of loss are covered unless specifically excluded. In particular, the plaintiff’s policy includes coverage for loss of business income, or “business interruption” insurance.

According to the complaint, the defendants were contractually obligated to pay for loss of business income sustained due to the necessary suspension of the insured’s operations during the so-called period of restoration. The plaintiff argues that business income consists of the net profit that the business would have earned absent the suspension of operations, plus any continuing normal operating expenses, including payroll. Additionally, the plaintiff’s policy provides for Civil Authority coverage. Under this type of coverage, the defendants must provide payment for the loss of business income and additional expenses that the plaintiff ultimately sustained as a result of action by a civil authority that prohibits access to the theater.

Since March 2020, as the COVID-19 pandemic continued to sweep across the United States, the city of Coral Gables, home to the plaintiff’s theater, has been ravaged by the virus causing the local government to issue orders closing non-essential businesses. The plaintiff claims that even when other non-essential businesses were allowed to reopen, theaters were required to remain shuttered. The plaintiff argues that as a result of the COVID-19 pandemic, it has suffered a suspension of business operations, sustained losses of business income and incurred additional expenses. Finally, the plaintiff argues that despite the clear applicable language in its insurance policy, the defendants are refusing to pay for plaintiff’s losses as it continues to remain shut down.

The plaintiff seeks to represent a class made up of all persons and entities with business income coverage under a property insurance policy by any of the defendants, who suffered a suspension of business due to COVID-19 and for which defendants have denied a claim for losses or have otherwise failed to acknowledge, accept as covered loss, or pay for the covered losses.

The case is: Actors Playhouse Productions Inc. et al. v. SCOR SE et al., Case No.: 1:20-cv-22981, in the U.S. District Court for the Southern District of Florida.


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