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Insurer Loses Bid to Dismiss Cinemark's Case Over COVID-19
In a rare ruling, the Cinemark movie theater chain won the chance to keep litigating against its insurance company, seeking losses under a $500 million policy for business interruption from COVID-19. Federal District Judge Amos Mazzant of the Eastern District of Texas ruled that Cinemark Holdings' allegations that COVID-19 entered its facilities — infecting 1,700 employees and physically changing the content of the air — were enough to survive Factory Mutual Insurance's arguments that the case should face an early dismissal. Cinemark Holdings Inc. v. Factory Mutual Insurance Co., 4:21-cv-00011.
The language that Cinemark used to describe the "physical loss or damage" to its properties has allowed the movie exhibitor to survive a litigation hurdle that has tripped up many businesses across the country. Judges in many states have sided with insurance companies, tossing COVID-19 business interruption lawsuits before they even get to discovery.
Cinemark, the third-largest theater chain in the United States, paid $3.7 million for an "all risks" insurance policy from Factory Mutual Insurance. It covered "physical loss or damage by a communicable disease." When the COVID-19 virus upended life in the United States, and so many Cinemark employees got sick, the company closed its theaters and incurred business income loss.
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