May 15, 2020

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“You pay your payments for business interruption in case something like this does happen where you’re forced to shut down by sheltering in place,” Ivy Room owners say. “And then you get a denial for your claim.”

Legal battles are brewing between music venues and insurance companies — and The Ivy Room is ready to fight. “We’re fighting, fighting, fighting every day to hang in there,” Summer Gerbing, co-owner of the Albany, CA music venue near San Francisco, tells Rolling Stone. As the named plaintiff in a new class action legal complaint, The Ivy Room is hoping to represent other California music venues who may have purchased insurance from the defendant, First Mercury Insurance Company.

Garbing and partner Lani Torres say they’ve paid thousands of dollars for comprehensive, premium insurance to protect themselves from unexpected scenarios of business interruption. They believe that insurance agencies are taking advantage of vague, overarching language that would exclude instances of virus and bacteria, arguing that the magnitude of the current crisis is unprecedented.

In the suit, the club states that on March 25th, First Mercury denied their claim for coverage. “First Mercury took the position that Plaintiff’s claim ‘for business income loss [and/or extra] expense resulting from the closure of the Premises relating to COVID-19 does not arise out of direct physical loss or damage to the covered premises due to a Covered Cause of Loss. To that end, the claim does not indicate that the Premises was physically damaged in any way.'”

. . .

The Bay Area became an early coronavirus hotspot and forced the venue to become one of the nation’s first to close their doors indefinitely in early March. Gerbing and Torres are now approaching their third month of no business. The 200-capacity venue typically has shows seven nights a week and the virus’s impact is emblematic of many clubs nationwide. “This impacts not only on us, but the employees, the fans, everyone who’s been affected by this little club,” Torres says. “Everyone has rallied around the space. The queer community, for one, is huge.”

Nestled in Berkeley’s famously artistic neighborhood near the University of California, the venue quickly became a hidden gem for underplays by major artists, practice gigs, and surprise shows by Jawbreaker, Meat Puppets and members of Green Day. Now, they say they’re worried about how long they can stay afloat. Gerbing and Torres independently own The Ivy Room and have been fervent protectors of the venue, which originated in the 1940s, since they set out to acquire and refurbish it in 2011 and re-introduced the public to it almost five years later. “It’s a magical little spot,” Gerbing says. “It’s inviting, comforting, and all-inclusive.” It’s also not part of a chain, and the two owners have no parent company to support them.

. . .

Andre Mura, a partner at Gibbs Law Group LLP that is representing the Ivy Room along with Washington, DC-based Cohen Milstein Sellers & Toll PLLC, agrees that Smith’s comments reflect what First Mercury Insurance Company is saying publicly: that there isn’t coverage here, and to the extent that there is, that coverage is excluded by language that discusses viruses. “We disagree with that broad reading of the policies,” Mura tells Rolling Stone. “Ordinarily, exclusions are read narrowly, and it’s the obligation of the insurer to prove the applicability of those exclusions. But this is essentially what this legal fight is going to be about — whether there’s going to be business interruption insurance coverage.

“Many businesses throughout the United States that see premiums for such coverage were responsible in obtaining that insurance and now are faced with a serious business interruption,” he says. “They’re looking to insurance coverage as a lifeline, and insurance companies are pretty uniformly denying that coverage — often providing very cursory reasons for that denial. That has prompted a wave of lawsuits from a variety of businesses. This class action lawsuit is on behalf of music venues.”

The complete article can be viewed here.