Chubb’s COVID-19 Claim Denials Draw Litigation from Hollywood
Well-known policyholder and insurance recovery attorney Kirk Pasich and his firm have sued Chubb insurance companies on behalf of policyholders in the entertainment industry to recover millions in losses they suffered as a result of the Covid-19 pandemic.
Entertainment Business Interruption
On Nov. 11, 2020, the firm filed suit on behalf of United Talent Agency LLC in Los Angeles County Superior Court against Vigilant Insurance Co. and Federal Insurance Co. UTA seeks coverage for the millions it lost when concerts and television and movie projections had to be cancelled. The complaint says both carriers are part of the Chubb group, “which has adopted a universal practice of denying coverage for all business interruption claims associated with SARS-CoV-2, Covid-19, and subsequent events” (UTA v. Vigilant, No. 20STCV43745, Calif. Super. Ct., Los Angeles). Acts affected include Post Malone, Guns N’ Roses, and Toby Keith.
The case hinges in part on the carriers’ assertion that there was no “physical loss or damage.” UTA finds Vigilant based its finding on little information, and knowing for decades that “many courts have held that the presence of a hazardous substance on a property, including the airspace inside buildings, constitutes property damage and that there may be ‘direct physical loss’ to property even if the property is not structurally damaged.”
Pasich and his partner Michael S. Gehrt represent UTA.
Film Coverage “Fraudulently Reformed”
On Sept. 9, 2020, motion picture production company Hoosegow (Hypnotic) Productions Inc. sued Chubb National Insurance Company in federal court in California, arguing that the carrier breached its agreement to extend coverage for the film, titled Hypnotic starring actors including Ben Afleck, should production be delayed.
When Covid-19 hit and stopped production, Chubb, instead of extending the policy, cancelled it and offered to renew it with a Covid-19 exclusion. This is a “material reduction in the scope of the insurance,” the complaint states (Hoosegow v. Chubb National, No. 2:20-cv-08253, C.D. Calif.).
“Chubb National’s conduct is despicable,” the complaint continues, “and has been done with a conscious disregard of Hoosegow’s rights, constituting oppression, fraud, and/or malice.” The production company claims substantial financial losses due to the carrier’s “intent to injure,” justifying an award of punitive damages. Breach of contract, bad faith, fraudulent promise without intent to perform, fraud in the inducement, negligent misrepresentation, and fraudulent reformation of the contract are among the claims brought against the carrier.
Pasich and his colleague Jacquelyn M. Mohr represent Hoosegow.
Chubb CEO Evan Greenberg reportedly said on an earnings call this summer that plaintiff attorneys are “attempting to torture or reverse engineer insurance contract language to conjure up business interruption coverage that for the most part simply doesn’t exist.”
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