District Court Allows Cinemark Virus Suit To Proceed

By RJ Proie, Taylor DeVore & Padgett PC

On May 5, 2021, the United States District Court for the Eastern District of Texas denied Defendant Factory Mutual Insurance Company’s motion for judgment on the pleadings and allowing Cinemark Holdings, Inc.’s, suit for business losses related to COVID-19 to continue.  Cinemark is a nationwide theater chain with approximately 345 theaters in the US and over 500 locations worldwide that closed in the wake of the pandemic, remaining shuttered for much of the summer of 2020.

The Court held that the all-risk policy in question provides additional coverage for “Communicable Disease Response” and “Interruption By Communicable Disease Response,” and that Cinemark had adequately pleaded a cognizable claim for physical damage to the theater chain’s properties’ surfaces and air, and that over 1,700 Cinemark employees tested positive for COVID-19.  The Court determined that Cinemark’s pleadings and policy were sufficiently distinguishable from other suits in the district that have been dismissed due to standard policy language requiring demonstrable physical alteration of the property to avoid dismissal.

Read the Court’s Order here.

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