December 3, 2021

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Soundview Cinemas Loses Lawsuit Against Insurer

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Soundview Cinemas, a movie theater located at 7 Soundview Marketplace in Port Washington filed a lawsuit claiming that their insurer, Great American Insurance Group, was responsible for covering the cost of losses they endured due to COVID-19.

The theater closed on March 16, 2020, following New York State Governor Andrew Cuomo’s executive order, which declared the state a disaster emergency—forcing all non-essential businesses to cease operation until further notice due to the pandemic.

Soundview Cinemas was issued a commercial insurance policy from Great American Insurance Group. The policy provided coverage for direct physical loss or damage to the property from April 10, 2019 to April 10, 2020.

On March 16, 2020, the cinema company submitted a notice of loss claim to the insurance company, but the claim was rejected.

“We regret to inform you that there is no coverage for this loss because according to our investigation, we are not currently aware of any evidence of direct physical loss or damage, and your policy’s exclusions, including loss due to virus or bacteria, apply to the claimed loss,” a letter from Great American Insurance Company that was sent to the plaintiff on May 11, 2020, stated.

Court documents stated that the plaintiff accused the defendants of “breaching the insurance policy, negligence, failure to properly procure insurance and for a breach of fiduciary duty.”

Justice Timothy S. Driscoll of the Supreme Court’s Nassau County Commercial Division dismissed the lawsuit from the defendants, which included Great American Insurance Group, Great American Insurance Company of New York, Jimcor Agency Inc., Five Star Coverage Corp. and Wilkinson and Krause Agency Inc. ruling that a commercial insurance policy is not responsible for covering the cost of economic losses due to the pandemic.
Court documents stated that “federal courts in New York and throughout the country have almost uniformly held that loss of use of premises due to COVID-19 related government orders does not trigger business income coverage based on physical loss to property.”

In his Feb. 10 ruling, Driscoll stated that, “while the court is sympathetic to the economic consequences resulting from the closure of plaintiff’s movie theater, the court concurs with the majority view that loss of use of the premises due to COVID-19 related government orders does not constitute ‘direct physical loss of or damage to the property,’ that would trigger Business Income coverage under the policy.”

The insurance brokers’ motion to dismiss the case was granted.

Movie theater’s have been allowed to reopen with reduced capacity as of Oct. 23, 2020 but Soundview Cinemas has yet to reopen. PEBB Enterprises, a private real estate investment firm, along with New York-based Sagamore Hill Partners purchased the Soundview Marketplace complex in December 2020 for an undisclosed price. There is no word yet as to if or when the movie theater will reopen or if the purchase of the property will affect the theater’s reopening.

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