Lakers lawsuit to move forward – Los Angeles Business Journal
The Los Angeles Lakers secured a procedural victory in their fight to secure insurance coverage for losses suffered by the team during the Covid-19 pandemic business shutdowns – a development that some say could set a precedent for similar cases.
“This decision will impact matters involving restaurants and hotels, venues, bars, goods and services and places where people gather,” said Doug Rawles, litigation partner at Reed Smith. “It’s still an evolving landscape (for now), so it could have quite a big impact, depending on how the Ninth Circuit rules and how this case plays out.”
The amount of money the team is seeking in insurance claims has not been disclosed. Neither the Lakers, their representatives nor representatives of the defendant, the subsidiary of Chubb Federal Insurance Co., responded to requests for comment.
The team’s legal progress came in an Oct. 26 order from U.S. District Judge Terry J. Hatter Jr. The order upheld a previous ruling in March that the team had correctly alleged that the Staples Center, now called Crypto.com Arena, had been damaged by the Covid. -19 virus insofar as it had a financial impact on the team. Specifically, the Lakers alleged that the virus altered surfaces and objects on the property through physical and chemical reactions.
Many Covid-inspired business interruption cases against insurers have not gone far in court. The Lakers case is unusual in that it argues the arena she plays in has been physically altered by the virus. This creates a potential new front against insurers. Insurance against operating losses can intervene when a place of business is modified so that it is impossible to carry out work there.
The court found the Lakers’ theory to be plausible. Whether the Lakers can prove the theory will be determined at summary judgment or trial. The assertion gives the Lakers the ability to appeal part of the decision that initially denied the team’s request for business interruption coverage.
“The court lacks the scientific expertise to conclude, based solely on the allegations in the (Amended First Complaint) … that it is not plausible that Lakers property was physically altered by the virus, which the Lakers adequately alleged,” Chapelier wrote. “Therefore, the court, in the March 17 order, found the Lakers theory to be plausible.”
At this point in the appeal process, summary judgment or a trial will be required to determine whether the Lakers can sue.
One point the Lakers are trying to make is that they should have business interruption coverage based on the closure of insured properties and that claims by civil authorities be honored due to government orders prohibiting access. to his property.
To resolve his arguments, the Lakers previously filed a motion for an interlocutory appeal, which occurs when a decision is appealed while other parts of a case continue. The motion was granted by Justice Hatter in the October 26 order.
“The question of whether the Lakers have sufficiently declared the claims, here, regarding their business interruption insurance claims and civil authority coverage satisfies the standard of an interlocutory appeal,” Hatter wrote. “This issue has a significant bearing on the resolution of this case and the large number of nearly identical cases.”
Rawles, who is not involved in the Lakers case and who represents policyholders in claims against insurance entities, said at this point the Lakers case has essentially survived a court challenge and will continue until at trial unless interrupted by another motion.
Rawles added that because the case will reach the Ninth Circuit Court of Appeals, his decision naturally carries more weight as a decision would be binding on all district courts in the circuit.
According to a Law360 tracker that documents Covid business interruption cases, 1,428 Covid-related business interruption cases had been filed in the United States as of November 7, including 21 lawsuits in the Southern District of California. . However, of those cases, 39% were dismissed, according to the tracker.
Despite the unfavorable track record, Rawles doesn’t necessarily see a losing battle for policyholders. He pointed out that the success rates of these cases depend primarily on the state in which they are filed and whether they are brought in state or federal court.
Rawles said there are cases that go to trial and result in Approved Motion Practices, which are motions that ask the courts to decide a case for the moving party without a trial. “It really is an uphill battle and will continue to be an uphill battle on both sides,” Rawls said.
Entities that own assets such as hotels, restaurants, bars and entertainment companies account for many of those cases, according to Rawles.
In the Los Angeles area, local companies such as United Talent Agency, Paramount Pictures and Live Nation have sued with little success. In the case of Beverly Hills-based United Talent Agency, the company wanted to cover losses related to the cancellation of live events and film and television productions. It argued that its “all-risks” policies should have applied to pandemic-related losses, but the company’s case was dismissed.
“It is now widely established that the temporary loss of use of a property due to pandemic-related closure orders, without more, does not constitute direct physical loss or damage,” the Second District said. California appeal in an April order in the case.
Rawles said it’s hard to say whether there will be an increase in cases of Covid business interruption. He noted that the time frame within which companies must file such lawsuits varies from state to state.
“Some states are as short as a year, some will allow even shorter periods,” he said. “But usually a year is at the low end.”