Court of Appeal affirms dismissal of movie theater’s property insurance claim for pandemic-related business losses

During the COVID-19 pandemic, Starlight Cinemas suffered business losses as a result of government closure orders and reduced ticket and concession sales.  Starlight sued its property insurer (GMSR’s client) to cover these losses, claiming the closures and reduced attendance constituted “direct physical loss” to its insured property—a coverage requirement.  The trial court dismissed the complaint on the pleadings.

Affirming in a published decision that quoted from GMSR’s brief, the Court of Appeal agreed that Starlight’s property did not undergo direct physical loss.  Four other appellate courts in the state had held likewise—but GMSR was briefing to California’s most resistant appellate division on pandemic-coverage issues, with two published decisions reversing dismissal of policyholder lawsuits on a related issue.  This time, the court affirmed for GMSR’s client.

To read the Court of Appeal Opinion, click here:  Starlight Cinemas, Inc. v. Massachusetts Bay Insurance Company (2023) 91 Cal.App.5th 24 [Second District, Division 7]