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Horvitz & Levy convinced the Ninth Circuit to affirm a judgment on the pleadings in favor of an insurer on claims to recover nearly $35 million of costs and expenses allegedly caused by the COVID-19 pandemic. The opinion creates citable precedent as the first decision to determine the availability of such coverage under a Film Producer’s Risk Policy.
Defendant Chubb National Insurance Company issued a Film Producer’s Risk Policy to plaintiff Always Smiling Productions, LLC to cover its production of the Apple TV+ television series The Morning Show. The policy provided a variety of coverages to insure against certain types of production delays. Covered causes included the illness or death of cast members, imminent threats of direct physical loss or damage to property that in turn require expenditures to protect persons or property, and civil or military orders preventing access to production facilities. After plaintiff shut down production of The Morning Show at the onset of the COVID-19 pandemic, Chubb determined that plaintiff was entitled to coverage because of government orders limiting public gatherings and paid the $1,000,000 per occurrence sublimit under the Policy’s coverage for civil or military orders preventing access to production facilities. But Chubb determined none of the Policy’s other coverage provisions were triggered because the show’s production was never delayed due to any covered cast member suffering a COVID-19 illness, and the virus did not threaten any direct physical loss or damage to property that in turn required expenditures to protect against such physical loss or damage. Plaintiff sued Chubb, asserting claims for breach of contract and breach of the implied covenant of good faith and fair dealing, seeking to recover nearly $35 million of costs and expenses associated with production disruptions and delays allegedly caused by the COVID-19 pandemic.
The district court granted Chubb’s motion for judgment on the pleadings, concluding that none of the Policy’s coverage provisions were susceptible to the interpretations offered by plaintiff, and that in the absence of coverage there could be no breach of the covenant of good faith and fair dealing. Plaintiff appealed, and Chubb retained Horvitz & Levy to defend the judgment on appeal.
Horvitz & Levy persuaded the Ninth Circuit to affirm the judgment on the pleadings in every respect. In its most significant holding, the Ninth Circuit’s memorandum disposition determined that Plaintiff did not allege covered losses under the policy’s imminent-peril provision. The Ninth Circuit held that coverage is triggered under that provision only if imminent direct physical loss or damage at a location caused Plaintiff to incur costs to protect property or people, or to experience impaired production. The Ninth Circuit further held that allegations of the actual or potential presence of COVID-19 on plaintiff’s premises did not establish such direct physical loss or damage to property.
