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MSG owner says insurers can’t escape pursuit of COVID coverage

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Law360 (June 4, 2021, 4:47 p.m. EDT) – The owners of Madison Square Garden and related entertainment entities on Thursday rejected their insurers’ offer to sue in New York for losses due to the presence of the coronavirus in their properties, arguing that one of the insurers recognizes the ambiguity of the meaning of “physical loss or damage”.

The owners of the Garden, the New York Knicks, the New York Rangers and dozens of other sports and entertainment entities launched their brief, claiming that Factory Mutual Insurance Co., one of their insurers, admitted in another Federal lawsuit that “physical loss or damage” has more than a reasonable interpretation.

“MSG has four insurance policies which should be fully integrated and harmonized, but they are irreconcilable,” said the arena and related entities, adding that two of the four policies issued to them omit “direct” in what concerns the meaning of “physical loss or damage” of their covers.

MSG and the other entities, which include places like the Beacon Theater and Radio City Music Hall, slammed four insurers with a lawsuit in March. They allege they should be eligible for $ 1.8 billion in property and business income coverage for losses resulting from the shutdown under government orders and the coronavirus.

Last month, Factory Mutual and the other insurers called for the lawsuit, arguing that there must be physical damage to trigger coverage. The mere presence of the coronavirus is not “physical loss or damage,” insurers said. And policies prohibit coverage for contamination and loss of use, they added.

Insurers have argued that MSG and related entities cannot receive coverage from civil authorities without any physical damage to their properties or properties within a 5 mile radius. Additionally, stay-at-home orders were issued to stop the spread of the virus, not in response to physical damage, insurers said.

In Thursday’s brief, the Arena and related entities argued that science confirms the presence of the coronavirus – citing positive cases in the arena and venues – is physically altering the air and surfaces of the property, preventing these properties to be used for the intended purpose.

In response to their insurers’ stance on “physical loss or damage” regarding the virus, MSG and related entities rejected Factory Mutual’s admission to Factory Mutual Insurance Co. v. Federal Insurance Co. that the phrase is ambiguous and “should” be interpreted against insurers.

According to policyholders, civil authority coverage is available for losses related to the pandemic, as the government orders customers and MSG employees to be banned from entering or using the properties. Additionally, insurers ignore mitigation coverage, MSG and related entities said.

“If MSG’s businesses had not closed in accordance with government orders, SARS-CoV-2 would have remained in and on MSG’s properties,” they said, adding that the arena and sites “had avoided actual and imminent property damage, as well as potential damage third party claims. “

Finally, MSG and related entities argued that the exclusions do not apply because insurers rewrite the actual terms of many of these exclusions “to match their narrative.”

A Factory Mutual representative told Law360 in an emailed statement that the company values ​​its relationships with policyholders and finds it “unhappy when legal issues arise.”

“We strongly believe that our insurance policies are clear on the coverage provided,” said the representative.

A representative from Allianz Global Corporate and Specialty SE, one of the insurers named in the lawsuit, told Law360 that the company has not commented on individual claims or pending legal issues. But the representative noted that the insurer has received a number of claims related to the pandemic.

“We will certainly honor claims related to COVID-19 when they are part of our policies and the coverage is clear,” said the representative from Allianz Global. “However, many businesses will not have purchased coverage that will allow them to claim their insurance for losses related to the COVID-19 pandemic.”

Representatives of other parties did not immediately respond to requests for comment on Friday.

MSG and the other owners are represented by Jeffrey L. Schulman, Peter A. Halprin, Stephen Wah, Kirk Pasich and Christopher T. Pasich of Pasich LLP.

Factory Mutual is represented by Harvey Kurzweil, Kelly A. Librera, George E. Mastoris and Matthew A. Stark of Winston & Strawn LLP.

AIG Specialty Insurance Co. is represented by Sandra D. Hauser and Catharine Luo of Dentons.

Allianz Global Corporate and Specialty SE is represented by Michael D. Hynes and John O. Wray of DLA Piper.

Assicurazioni Generali SPA (UK Branch) is represented by Wayne R. Glaubinger and Jared Markowitz of Mound Cotton Wollan & Greengrass LLP.

The case is Madison Square Garden Sports Corp. et al. v. Factory Mutual Insurance Co. et al., Case Number 651521/2021, in the Supreme Court of the State of New York, County of New York.

–Edited by Vincent Sherry.

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