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Roundabout Theatre Co. v. Cont'l Cas. Co.

Supreme Court of New York, Appellate Division, First Department

November 26, 2002, Decided ; November 26, 2002, Entered



 [*2]   [**4]  Gonzalez, J.

This appeal requires us to determine whether the business interruption clause of an insurance policy issued to plaintiff theatre company covers losses occasioned by an order of the City of New York closing the street and denying access to [**5]  the insured's theatre due to a construction accident in the area, notwithstanding the absence of any physical damage to the theatre premises. Because the language of the business interruption clause in the policy clearly and unambiguously provides coverage only where there is direct physical loss or damage to the insured's property, we reverse the IAS court's determination and grant summary judgment to defendant insurer declaring that plaintiffs' losses are not covered by the subject policy.

In February 1998, plaintiff Roundabout, a nonprofit theatre company, began staging a production of the musical Cabaret at the Kit Kat Klub (the theatre), located at 124 West 43rd Street.  [*3]  On the morning of July 21, 1998, a portion of a 48-story exterior elevator being used in the construction of the Conde Nast building, located 65 feet west on the south side of West 43rd Street, collapsed [***3]  into the street and adjacent buildings. As the Conde Nast building and the theatre were separated by one building, the theatre sustained only minor damage to its roof and air conditioning system, which was repaired within one day. However, because of the substantial damage to the area and the danger from the partially collapsed scaffold, the City's Office of Emergency Management closed West 43rd Street between Broadway and 6th Avenue until August 18, 1998. As a result, the theatre became inaccessible to the public and Roundabout was forced to cancel 35 performances of Cabaret. Roundabout sustained substantial monetary losses in the form of ticket and production-related sales as well as additional expenses incurred in reopening the production.

At the time of the accident, defendant Continental insured Roundabout under a "Theatrical Package Policy," which included, inter alia, business interruption coverage. The "Insuring Agreement" provided:

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302 A.D.2d 1 *; 751 N.Y.S.2d 4 **; 2002 N.Y. App. Div. LEXIS 11526 ***

Roundabout Theatre Company, Inc., et al., Respondents, v. Continental Casualty Company, Appellant, et al., Defendant.

Subsequent History:  [***1]  

Subsequent appeal at Roundabout Theatre Co. v. Cont'l Cas. Co., 2004 N.Y. App. Div. LEXIS 6731 (N.Y. App. Div. 1st Dep't, May 13, 2004)

Prior History: Appeal from an order of the Supreme Court (Helen Freedman, J.), entered January 16, 2002 in New York County, which (1) denied defendant's motion for summary judgment seeking dismissal of the complaint and a declaration that it is not required to insure plaintiff Roundabout Theatre Company for its business interruption losses, and (2) granted plaintiffs' cross motion for summary judgment on the issue of coverage only.

Disposition: Order denying defendant insurer's motion for summary judgment reversed; summary judgment granted.


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