PHILADELPHIA – A sports facility in Chester County that has laid off around 30 workers joins the growing legion of businesses pursuing legal action against their insurance companies for allegedly not providing it business interruption coverage during closures connected to the coronavirus.
Chester County Sports Arena of Downingtown filed suit in the U.S. District Court for the Eastern District of Pennsylvania on April 24 against Cincinnati Specialty Underwriters Insurance Company of Fairfield, Ohio.
“The policy provides, among other things property, business personal property, business income and extra expense, contamination coverage, and additional coverages. Plaintiff faithfully paid policy premiums to defendant, specifically to provide, among other things, additional coverages in the event of business interruption or closures by order of civil authority. Under the policy, insurance is extended to apply to the actual loss of business income sustained and the actual, necessary and reasonable extra expenses incurred,” the suit states.
“The policy is an all-risk policy, insofar as it provides that covered causes of loss under the policy means direct physical loss or direct physical damage unless the loss is specifically excluded or limited in the policy. Based on information and belief, the defendant has accepted the policy premiums with no intention of providing any coverage for business losses or the civil authority extension due to a loss and shutdown from a virus pandemic.”
On March 6, Gov. Tom Wolf issued a Proclamation of Disaster Emergency, followed by an order on March 19 requiring all non-life-sustaining businesses in Pennsylvania to cease operations and close all physical locations.
The lawsuit also quoted President Donald Trump as supporting the concept of businesses receiving their specified interruption coverage, as included in their insurance policies.
“As a further direct and proximate result of the orders, plaintiff has been forced to lay off its full and part time employees, approximately 30 employees in total. Prior to March 13, Chester County Sports Arena’s hours of operation were Monday through Thursday, 3 p.m. to 11p.m., Fridays 3 p.m. to midnight, and Saturdays 7 a.m. to 10 p.m.,” the suit states.
“Chester County Sports Arena has a capacity of holding 400 people at one time. It is not a closed environment, and because people – staff, customers, community members, and others – cycle in and out of arena, there is an ever-present risk that the insured property is contaminated and would continue to be contaminated.”
The suit says the arena continues to incur loss of business income and other expenses and that a declaratory judgment compelling the provision of coverage under the Policy would “prevent the plaintiff from being left without vital coverage acquired to ensure the survival of the business due to the shutdown caused by the civil authorities’ response is necessary.”
“Chester County Sports Arena – like all of the other small businesses we represent – have been dutifully paying for their business interruption coverage and when they need help the most, the insurance company is unwilling to do so. The purpose of the litigation is to obtain an order as a matter of law so that their claims can be honored,” plaintiff counsel Richard M. Golomb stated.
The plaintiff is seeking a declaratory judgment stating the governmental orders trigger its insurance policy coverage, for the business interruption coverage to be provided by Cincinnati Specialty Underwriters Insurance Company and such other relief as the Court may deem proper, in addition to a trial by jury.
The plaintiff is represented by Richard M. Golomb of Golomb & Honik, in Philadelphia, as well as Beasley Allen in Alabama.
The defendant has not yet secured legal counsel.
U.S. District Court for the Eastern District of Pennsylvania case 2:20-cv-02021
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com