As insurers and subscribers of Emerald's Lloyd's of London event cancellation policies, W.R. Berkley Syndicate Ltd. and Great Lakes Insurance SE have paid more than $100 million for Emerald's canceled events, but the insurers have yet to pay another $100 million that they still owe, according to Emerald's complaint.
Emerald said it purchased event cancellation policies years ago that even cover events impacted by the outbreak of a communicable disease like COVID-19, but that W.R. Berkley and Great Lakes have been trying to get out of paying by pretending not to receive information, prolonging investigations and improperly denying coverage for several events.
As more events have been cancelled or postponed amid the pandemic, the insurers have become increasingly nonresponsive and obstructive to Emerald, according to the suit, and are trying to delay or reduce further payments.
"They know Emerald's claims are legitimately covered, and they know many tens of millions of dollars in much needed coverage payments are already long overdue, including payments for some events as far back as March and April 2020," Emerald said. "The insurers just want to hold on to the money."
The insurers even contended that three events in late 2020 shouldn't have been canceled, despite gatherings being legally prohibited, in order to argue that they don't qualify for coverage, according to the suit.
The suit includes claims of breach of contract and bad faith and seeks a declaration that adopts Emerald's contentions, as well as litigation costs and interest.
Representatives for the parties did not immediately respond to requests for comment.
Unlike Emerald's quest seeking to squeeze out the rest of its policy, some businesses are fighting to get their insurance companies to cover their financial losses in the first place.
In October, a group of companies that own more than 120 Wendy's, TGI Friday's, Marriott and Hilton franchises said a Zurich American Insurance Co. subsidiary needs to cover more than $40 million in losses from being forced to close.
ViacomCBS in January said Great Divide Insurance Co. reneged on its coverage agreement by refusing to protect the media giant from losses when it was forced to delay or cancel production for its television shows and live events.
And on Friday, the New Jersey Performing Arts Center said Chubb Insurance Co. of New Jersey improperly refused to cover the venue's losses stemming from the coronavirus outbreak under a policy that does not include a virus exclusion.
But many judges have been tossing those kinds of coverage cases left and right.
Last week, an Ohio federal judge ruled that Zurich didn't have to cover a bar and grill's virus losses, while an Illinois federal judge tossed a dentist's proposed class action seeking business interruption coverage from Hartford Financial Services Group.
A Minnesota federal judge threw out a hotel, restaurant and event center company's lawsuit seeking business interruption coverage from Continental Casualty Co., while a Missouri federal judge trimmed a sporting goods company's suit against Owners Insurance Co.
Meanwhile, an Ohio federal judge ruled that The Travelers Indemnity Co. of America isn't obligated to cover a hotel operator for direct physical loss or damage to property due to the pandemic, rejecting the reasoning of another jurist in the same district who favored a restaurant chain in a similar case.
Emerald is represented by Marc D. Halpern, Gwendolyn M. Toczko and Susan P. Welch of Halpern May Ybarra Gelberg LLP.
Counsel information for the defendants was not immediately available.
The case is Emerald Holding Inc. v. W.R. Berkley Syndicate Ltd. et al., case number 8:21-cv-00340, in the U.S. District Court for the Central District of California.
--Additional reporting by Bill Wichert, Hailey Konnath, Melissa Angell, Joyce Hanson and Jeff Sistrunk. Editing by Nicole Bleier.
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