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Sloan v. Phoenix of Hartford Ins. Co.

Court of Appeals of Michigan

January 4, 1973, Submitted Division One ; March 28, 1973, Decided

Docket Nos. 13979, 13980, 13981, 13982


 [*47]   [**435]  This appeal grows out of defendant's refusal to reimburse the plaintiffs for business losses under a policy of business-interruption insurance.

The facts of the case are not in dispute. Plaintiffs own and operate movie theaters in the City of Detroit. In addition to weekend matinee performances, the theaters are customarily [***3]  open daily from 7:30 p.m. to midnight. The theaters are covered by a business-interruption insurance policy issued by the defendant.

During a period from July 23, 1967 through August 1, 1967, widespread riots occurred in and around the City of Detroit. These civil disorders were accompanied by looting, burning, and other damage to both real and personal property. None of the plaintiffs' establishments were physically damaged however.

As a result of this civil strife, the Governor issued an executive order which imposed a 9 p.m. to 5:30 a.m. curfew and closed all places of amusement  [*48]  in Detroit. The curfew with some modifications remained in effect for the eight-day period noted above.

In compliance with the Governor's order, plaintiffs' theaters were completely closed the first four days of the period and opened on a restricted basis the remaining four days. Plaintiffs suffered an $ 11,359.95 net loss.

At trial, the defendant insurance company contended that per the terms of the business interruption policy, there is no coverage unless there has been direct and actual physical damage to the insured property and since none was inflicted on plaintiffs' theaters, it [***4]  was not liable for the loss.

Plaintiffs, on the other hand, asserted that the risk insured against was the prohibition of access to their premises by order of a civil authority stemming from one of the enumerated perils, e.g., riot and civil commotion, without any requirement of physical damage to the insured property. The lower court sitting without a jury agreed and entered a judgment in favor of the plaintiffs. Defendant appeals.

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46 Mich. App. 46 *; 207 N.W.2d 434 **; 1973 Mich. App. LEXIS 1168 ***


Prior History:  [***1]  Appeal from Wayne, George E. Bowles, J.

Disposition: Affirmed.


insured, physical damage, premises, insured property, benefits, civil authority, business-interruption, interruption, insurance contract, plaintiffs', theaters, perils, repair, riot

Contracts Law, Defenses, Ambiguities & Mistakes, General Overview, Insurance Law, Policy Interpretation, Reasonable Expectations, Reasonable Person, Contract Interpretation, Ambiguities & Contra Proferentem, Ambiguous Terms, Claim, Contract & Practice Issues, Plain Language