INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Bad day for the tribe
The Santa Ynez Band of Chumash Mission Indians of the Santa Ynez Reservation California (Chumash) sued its insurer, Lexington Insurance Company, for denial of insurance coverage that related to Chumash’s claim of physical property damage caused by the COVID-19 virus. The lawsuit asserted that its casino and resort suffered damage that required Chumash to make physical alterations to the properties and that such damage was covered by the Lexington all risk property damage policy.
The Chumash Casino and Resort remained closed from March 15, 2020, through June 10, 2020.
The court granted summary judgment in favor of Lexington, concluding that Chumash had not presented sufficient evidence to show that the COVID-19 virus caused physical damage to the casino and its resort such that it fell within the property damage provisions of the Lexington policy. Chumash filed a cross-motion for summary judgment and appealed.
The Chumash director of risk management stated that the policy did not contain any provision that purported to exclude coverage for physical loss or damage due to viruses or pandemics. He said that Lexington first added a communicable disease exclusion provision in its next policy on July 20, 2020.
Chumash filed an action against Lexington alleging causes of action for declaratory relief, breach of contract, and breach of the implied covenant of good faith and fair dealing. Chumash filed a motion for summary adjudication. Lexington filed a cross-motion for summary judgment claiming that Chumash did not qualify for coverage because the casino and resort did not sustain property damage because of the COVID-19 virus.
The court ruled in favor of Lexington, citing Chumash’s failure to provide evidence that would justify its claim of physical damage to property.
The Second Appellate District affirmed the trial court’s ruling granting summary judgment in favor of Lexington.
Santa Ynez Band of Chumash Mission Indians of the Santa Ynez Reservation California v. Lexington Insurance Company—Court of Appeal of the State of California, Second Appellate District, Division Six—
April 27, 2023—No. B320834.
