Madison Square Garden Loses Appeal of Covid-19 Insurance Claim Dismissal

A New York appeals court last week upheld the dismissal of Madison Square Garden’s Covid-19 business interruption claim against Factory Mutual Insurance Co.

The court agreed with a New York County court’s dismissal in January, 2002 after it found that MSG failed to show it suffered physical damage or loss due to the pandemic.

“[A]lleging loss based on COVID-19-related closures is insufficient to state a cause of action for breach of contract and insufficient to warrant coverage under plaintiffs’ policies with defendant insurance companies,” the appellate court wrote, citing its own April, 2022 ruling denying a similar appeal by Consolidated Restaurant Operations Inc. of a dismissal of its Covid-19 suit against Westport Insurance Corp. That was the first ruling by a New York appeals court on Covid-19 business loss claims.

The court reiterated that physical loss or damage are required to trigger commercial property insurance coverage and that loss of use is not “direct physical loss or damage.”

In the Madison Square Garden opinion, the appeals court also said the lower court properly declined the sports and entertainment venue’s request to take judicial notice of various executive orders, scientific studies, and other matters, as the cited portions of those documents are not “matter[s] of common and general knowledge, well-established and authoritatively settled.”

Topics COVID-19