By Daphne Zhang

Law360 (October 6, 2020, 4:41 PM EDT ) A landmark Miami-area theater dropped its virus-related coverage claims against SCOR SE on the same day it filed a response urging a Florida federal judge to reject the insurer's subsidiary's bid to toss the case and demanded a hearing.

On Monday, Actors Playhouse Productions Inc., which operates the Miracle Theatre in Coral Gables, Florida, said it would voluntarily dismiss all claims against SCOR without prejudice. The theater had on the same day requested that the court reject the dismissal motion from SCOR's subsidiary General Security Indemnity Co. of Arizona.

Steven C. Marks, counsel for Actors Playhouse, told Law360 on Tuesday that the theater is not dropping the entire suit, but only tossing its claims against SCOR because General Security rather than SCOR is the one who provided the policy. "The case will continue against the issuing insurer," Marks said. 

In its 52-page response on Monday, the theater said its losses from COVID-19 closures should be covered, because the policy does not contain any virus exclusion or similar endorsements. The playhouse said the carrier can't rewrite the policy to deny coverage by citing other exclusions such as the policy's pollutant and microorganism exclusions.

"Having chosen not to adopt a virus exclusion, defendants cannot now seek to deny coverage for virus-related losses," the theater said. "By definition, the novel coronavirus is not a biological agent, not mold and not pollution."

Actors Playhouse said the exclusion should be read narrowly in favor of the policyholders and the "ordinary meaning" of the exclusions does not include COVID-19-related losses. The theater claimed that though insurers have prevailed in some COVID-19 coverage suits so far, those rulings are different because they involve policies that have an express virus exclusion.

In July, Actors Playhouse sued SCOR and its subsidiary General Security, seeking recovery for revenue loss from government closure orders related to the pandemic. The theater has argued that it experienced a loss of functionality, which should be interpreted as physical damage after it was forced to close by state-mandated orders in March.

In early September, SCOR urged the Florida federal court to toss the theater's proposed class action, saying it didn't issue the policy in question and should be dismissed from the case. The reinsurer also adopted the same position as insurer General Security, which filed its own dismissal motion saying the theater failed to allege physical damage and the policy's microorganism, pollutant and biological exclusions bar coverage. 

General Security has said the theater failed to present any evidence that its staff lost access to the theater because of COVID-19 or related government closure orders. The theater's position that physical loss also means loss of use fails because its alleged losses were "solely economic in nature," the carrier maintained.

In its Monday response, the theater said that courts have "repeatedly" denied such "restrictive interpretation" that "physical loss of or damage" requires a structural injury to the property, and have acknowledged that a loss of use can be covered under an all-risk policy.

Actors Playhouse contended that its policy never defined "physical loss or damage" so the meaning of the term should be construed in favor of the insured. 

"Nothing in the phrase 'direct physical loss of or damage to' property, or elsewhere in the policy, requires that the loss or damage be 'structural' or otherwise impossible to restore," the theater said, adding that its losses did not stem from unfavorable economic conditions but its inability to physically use its property.

Counsel for SCOR and General Security did not respond to requests for comment on Tuesday.

Actors Playhouse is represented by Steven C. Marks, Aaron S. Podhurst, Lea P. Bucciero, Matthew P. Weinshall, Kristina M. Infante and Pablo Rojas of Podhurst Orseck PA, and Stephen N. Zack, Bruce Weil, James Lee, Marshall Dore Louis, David Boies, Nick Gravante and Alex Boies of Boies Schiller Flexner LLP.

SCOR SE and General Security are represented by Armando Pedro Rubio of Fields Howell.

The case is Actors Playhouse Productions Inc. et al. v. SCOR SE et al., case number 1:20-cv-22981, in the U.S. District Court for the Southern District of Florida.

--Editing by Amy Rowe.

Correction: A previous version of this story misstated the nature of the parties' dismissal motions. The error has been corrected. 

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