In a lawsuit that offers a glimpse of COVID-19’s economic threat to the Broadway industry, Jujamcyn Theaters, owner of five major Broadway venues, is suing its insurance companies after the insurers offered to pay a mere $250,000 of what Jujamcyn claims should be “tens of millions of dollars” in losses due to the coronavirus shutdown.
Jujamcyn, which owns the theaters housing hits Hadestown, The Book of Mormon, Moulin Rouge and Mean Girls (and, until its recent permanent closing, Disney’s Frozen), filed the suit this week in the U.S. District Court for the Southern District of New York alleging the Chubb group’s Federal Insurance Company and Pacific Indemnity Company have denied claims under a property insurance policy and paid out only $250,000 for all five theaters under business interruption insurance.
All Broadway theaters — including those of the other two major owners, the Nederlander and Shubert organizations — closed on March 12 under executive orders from New York Gov. Andrew Cuomo and New York City Mayor Bill de Blasio to close theaters due to the COVID-19 pandemic. Although various productions have announced target openings, or re-openings, for next spring, an official industry reopening has not been set.
“There is no date set or anticipated by which theaters will be permitted to reopen in any capacity,” Jujamcyn’s suit states. (Read the full complaint here). “There is also no set date set or anticipated by which theaters will be permitted to reopen at full capacity (or if theaters will ever be permitted to do so absent, for example, the worldwide availability of a vaccine).”
Elsewhere in the suit, Jujamcyn states there is “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.” Further, Jujamcyn might need to incur costs by making physical alterations to its venues, such as “protective barriers and partitions, new or re-designed air flow and filtration systems, and even the redesign and physical alteration of the theaters themselves.”
Shortly after Cuomo’s shutdown order, Jujamcyn filed a claim with Federal, but was denied coverage, according to the suit, when the insurance company determined that the financial losses were not due to “direct physical loss or damage.” Jujamcyn counters that its policy does not exclude losses due to pandemics.
The Federal and Pacific insurance companies, the suit claims, “sold Jujamcyn insurance policies that together provided tens of millions of dollars of insurance and promised a broad blanket of coverage for business income and other losses. After the outbreak of the pandemic and the issuance of various closure orders, Jujamcyn turned to Federal and Pacific. However, instead of honoring their promises, Federal flatly denied coverage, refusing to pay even a penny to help Jujamcyn, and Pacific adopted an interpretation severely limiting how much it would pay Jujamcyn.”
More specifically, Jujamcyn claims that Federal has completely denied coverage on the grounds that COVID did not result from “direct physical loss or damage” to the theaters; Pacific, rather than paying $250,000 for each of the five Jujamcyn venues, agreed to pay $250,000 in total.
With regard to Federal’s argument, Jujamcyn cites case law to support its contention that the coronavirus “in a building’s airspace and on or around property” constitutes a direct physical loss or damage to that property. (At least seven performers or support staff at Jujamcyn theaters tested positive for the coronavirus or its antibodies, the suit says. Moulin Rouge‘s Danny Burstein has written about his battle with the illness.)
Deadline has reached out to Jujamcyn and Chubb for comment.