Court of Appeals ruled against Chumash in insurance case against COVID-19 | Local news

Appellate judges have sided with an insurance company against the Santa Ynez Band of Chumash Indians in a lawsuit seeking payment of COVID-19-related losses.

The Second Circuit Court of Appeals sided with Lexington Insurance Co. after the Chumash sued in May 2020 to deny insurance coverage under a business interruption provision.

“We conclude, among other things, that the Chumash has not presented sufficient evidence to show that the COVID-19 virus caused physical damage to its casino and resort so as to fall within the property damage coverage provisions of the insurance policy Lexington,” said the opinion by Presiding Judge Arthur Gilbert.

Justices Kenneth Yegan and Hernaldo Baltodano concurred.

The 431-page civil complaint, filed by attorneys at Roxborough, Pomerance, Nye and Adreani in Woodland Hills, seeks monetary, non-monetary and punitive damages, with the amount sought exceeding $25,000.

In its response, Lexington Insurance, represented by Gibson, Dunn & Crutcher LLP of Los Angeles, denied the allegation.

Court documents note that the Chumash Casino Resort includes a 320-room hotel, 145,000 square feet of “gaming floor,” 2,500 video game machines, 50 table games, a poker room and a bingo hall.

The facility also includes four restaurants, a 325-seat buffet, a 125-seat cafeteria, a 145-seat diner and a 125-seat “fine dining restaurant”. The facility also has a 1,500-seat “multipurpose venue” known as Showroom Samala.

Chumash Casino Resort employs “an average of 1,767 people,” according to the appellate opinion, and records “an average of 9,012 visitors per day on weekdays and 11,392 per day on weekends,” according to court documents.

COVID-19 led to a closure from mid-March 2020 to early June 2020. Several steps were taken before reopening, including the installation of temperature-checking machines, plastic barriers at “gaming machines and tables” and barriers “between the tables in the employee break areas.”

The Chumash filed a property damage claim, claiming that COVID-19 has made the facilities “unsafe and unusable.”

Judge James Rigali granted summary judgment in Lexington’s favor in May 2022, stating in part, “Under California law, COVID-19 does not cause ‘direct physical loss or damage’ to property.”

The Chumash were not alone in seeking an insurance payout, with other lawsuits filed in state and federal courts by companies from various industries.

“We do not dispute recent decisions in California that hold that business claimants may be able to prove that the COVID-19 virus caused damage to their property so that they fall within the property damage provisions of a business insurance policy,” it said. in the appellate opinion.

“However, the question here is whether the Chumash presented sufficient evidence to show that the virus actually caused physical damage to his property.”

The original complaint said the Chumash is seeking damages for “loss of business income, amounts spent on wages, reimbursement and other expenses, in an amount as evidenced at trial but in excess of $100,000.”

In a different but similar case, the California Supreme Court was asked to answer the broader question of “Can the actual or potential presence of the COVID-19 virus on an insured’s premises constitute “direct physical loss or damage to property” for purposes of coverage on a commercial property insurance policy?’

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