Band's Visit Nat'l Tour v. Hartford Fire Ins. Co.

307 A.3d 387

The BAND’S VISIT NATIONAL TOUR LLC; Bandstand Tour LLC; BMGNET Touring LLC; Bronx Touring LLC; Cats on Tour LLC; Chocolate Touring LLC; Escape on Tour LLC; Hosanna Tour LLC; LMS Touring LLC; My Fair Lady on Tour; OOTI Touring LLC; Sai Touring LLC; SBSP Touring LLC; TCP Touring LLC; and Waitress Touring LLC, Plaintiffs,

v.HARTFORD FIRE INSURANCE COMPANY, Defendant.

C.A. No. N22C-03-048 PRW CCLD

Superior Court of Delaware.

Submitted: October 15, 2023

Decided: November 29, 2023

Issued: December 11, 2023 *

Upon Defendant Hartford Fire Insurance Company’s Motion for Summary Judgment, GRANTED.

David J. Baldwin, Esquire, Peter C. McGivney, Esquire, and Zachary J. Schnapp, Esquire, Berger Harris LLP, Wilmington, Delaware; Peter A. Halprin, Esquire (argued), and Tae Andrews, Esquire, Pasich LLP, New York, New York; Kirk Pasich, Esquire, Pasich LLP, Los Angeles, California, Attorneys for Plaintiffs The Band’s Visit., et al.

Tracy A. Burleigh, Esquire, and Sarah B. Cole, Esquire, Marshall Dennehey Warner Coleman & Goggin, P.C., Wilmington, Delaware; Sarah D. Gordon, Esquire (argued), Elizabeth A. Cassady, Esquire, Johanna Dennehy, Esquire, Elise Haverman, Esquire, and Ansley Seay, Esquire, Steptoe & Johnson LLP, Washington, D.C., Attorneys for Defendant Hartford Fire Insurance Company.

OPINION AND ORDER

WALLACE, J.

When the COVID-19 pandemic first struck in March 2020, all types of businesses abruptly shuttered. When they tried to recoup just some portion of their mounting financial losses, many of those claims were denied by their insurance carriers. Since then, some have sued their insurers looking for coverage they believe is owed. This is one such lawsuit.

The Plaintiffs here are fifteen touring stage productions that were forced to suspend their performances in March 2020 and remain dormant for a substantial time thereafter. The Defendant is the insurance company from which those tours purchased coverage. The tours filed insurance claims for COVID-19-related losses that were denied, in whole or large part, by their insurer. So, the tours have brought here a suit with seven separate causes of action contesting those denials; their insurer now moves for full summary judgment thereon.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Parties

Plaintiffs (collectively, "the Tours") are fifteen touring theater productions.¹ Fourteen of them (the "Non-Hosanna tours") purchased a one-year "all risk" insurance policy from Defendant Hartford Fire Insurance Company.² NETworks Presentations LLC (the "NETworks tours" or "NETworks"), a company located in Maryland, manages nine of those theater productions.³ Troika Entertainment (the "Troika tours" or "Troika"), a company also located in Maryland, manages four others.⁴ Bandstand Tour LLC ("Bandstand") and Hosanna Tour LLC ("Hosanna") are the last two and are managed by Work Light Productions, a company located in New Jersey.⁵

Hartford is an insurance company incorporated in Connecticut.⁶ All fifteen of the Tours obtained insurance from Hartford for a one-year period.⁷ The NETworks tours procured their policies through an insurance broker, Maury Donnelly & Parr Inc. ("MDP"), and Robert Middleton, MDP’s Director of the Arts Program.⁸ Mr. Middleton’s role as Director of the Arts Program at MDP was primarily to provide proposals from different insurance carriers to potential policyholders.⁹ By 2020, MDP had been working with Hartford for close to two decades under The Hartford Agency Agreement (the "Agency Agreement").¹⁰

B. MDP and The Hartford Agency Agreement

On March 1, 2001, Hartford and MDP entered into the Agency Agreement.¹¹ The relevant provisions of that agreement are in the "Authority of Agent" and "Compensation" sections.¹²

In the "Authority of Agent" section, Hartford authorizes MDP "on [Hartford’s] behalf’ to "[s]olicit, quote and bind insurance in your territory for those lines of insurance and classes of business shown on the Declarations page," to "[d]eliver such policies as we may issue," to "[c]ollect, receive and receipt for premiums on such policies," and to "[p]rovide all usual and customary services of an insurance agent on all insurance policies you place with [Hartford]."¹³

The section also includes a limitations clause:

You have the authority and power to act as our agent only to the extent expressly granted in this Agreement and no further authority or power is implied. You are an independent contractor and not an employee of ours for any purpose …. Any authority granted hereunder to solicit, quote or bind insurance products on our behalf is non-exclusive, unless we agree otherwise in writing.¹⁴

C. The Tours’ Insurance Procurement

The tale of this insurance dispute begins in spring 2018, when the NETworks tours began working with MDP and Mr. Middleton to procure insurance for their 2019-2020 travelling productions.¹⁵ During the procurement, Mr. Middletori approached the NETworks tours with a new coverage form for performance disruption.¹⁶ This new coverage form did not include the standard requirement for "direct physical loss or damage" to property in order for such disruption to be, covered.¹⁷ Mr. Middleton also informed Sheila Gladding, the Hartford underwriter responsible for the NETworks tours, of Networks’ interest in this new form of coverage.¹⁸

That following winter, Mr. Middleton informed the NETworks tours that Hartford’s plan was to add the "literally brand new" coverage form, once finished, "automatically on renewals and new shows," but only "by endorsement" on "existing" shows.¹⁹ A couple months later, Mr. Middleton e-mailed Ms. Gladding:

We are getting ready to embark on the insurance coverage for new shows and the renewal of existing ones. I need to know if Hartford is going to be able to address this coverage in 2019. If not, we are prepared to work with other carriers in pursuit of this coverage feature.²⁰

Ms. Gladding informed Mr. Middleton on May 21, 2019, that Hartford was working on finalizing the new coverage form, but that it would not be ready until "3^rd quarter 2019."²¹

With the foregoing information in tow, the NETworks tours purchased coverage from Hartford for their 2019-2020 touring productions.²² The nine shows were all bound for a one-year period, with policies commencing between late June and late October.²³ The signed policies did not in- elude the yet-to-be-finalized new coverage form.²⁴

Next, the NETworks tours, Mr. Middleton, and Hartford embarked on an extended back-and-forth regarding a finalized version of the new coverage form. On September 30, 2019, Ms. Gladding informed Mr. Middleton that Hartford would "have [a] draft form … for your review within the next 2 weeks."²⁵ Mr. Middleton then told the NETworks tours that the new coverage form was "approved by Hartford" and that MDP would have the finalized version "within two, weeks" along with "the ability to provide coverage."²⁶ On October 8, 2019, Ms. Gladding informed Mr. Middleton that Hartford would "be able to amend an existing account via endorsement."²⁷ Mr. Middleton relayed to NETworks that the new coverage form "will be available 11/1. We will have the actual form by the end of next week."²⁸

On December 17, 2019, Ms. Gladding sent the finalized version of the new coverage form to Mr. Middleton.²⁹ Soon thereafter, Mr. Middleton forwarded the finalized version to NETworks, along with the message:

I am very excited about this proposal for Chicago Touring LLC,³⁰ as it incorporates our first policy with the enhanced Business Income coverage; To reiterate, this drops the requirement for property damage to trigger the coverage, just that you are unable to put on a performance due to something beyond your control.³¹

The NETworks tours responded, "[t]hanks Bob! How do we get that provision added to our other current tours? Or has it already been added?"³² Mr. Middleton replied, "[w]e are in the process of doing that. Should take a week."³³ Mr. Middleton, however, had not yet consulted Hartford.³⁴ Mr. Middleton then informed Ms. Gladding that the NETworks tours wanted to add the new coverage form to in-force shows.³⁵ Inexplicably, communications between all parties about this poten- tial change to the NETworks tours’ extant coverage then ceased until 2020.³⁶

D. The Pandemic Strikes.

In early March 2020, the COVID-19 pandemic was unfolding and the parties’ talks about the additional coverage resumed in earnest.³⁷ On March 2, 2020, Mr. Middleton told NETworks that he "would be contacting Hartford right away to get [the new coverage form] in place immediately."³⁸ Two days later, Mr. Middleton informed Ms. Gladding that NETworks wanted to "move coverage … to the new form this quarter."³⁹ Ms. Gladding responded, "I will facilitate that for you. Please go ahead and send me any information you have, and I will get started on this."⁴⁰

On March 6, MDP emailed Ms. Gladding requesting a quoted price for adding the new coverage form to each of the NETworks tours’ policies, effective March 15, 2020.⁴¹ Soon thereafter, NETworks reached out to Mr. Middleton for clarification as to whether the requested policy changes would be effective on March 15, 2020.⁴² Middleton responded, without consulting with or hearing back from Hartford, "[y]es, by 3/15."⁴³

On March 12, 2020, Ms. Gladding rejected Mr. Middleton’s requests: "With the continued uncertainty surrounding the impacts and effects related to the coronavirus, we have been asked to hold off on broadening coverage by adding the [new coverage form]."⁴⁴ On March 20, Ms. Gladding confirmed to MDP that, "[f]or inforce business, The Hartford does not intend to extend coverage for any potential Coronavirus exposure" by adding the new coverage form.⁴⁵

E. The Different Policies

There are two insurance policy types relevant to this summary judgment motion; The Non-Hosanna tours’ Commercial Inland Marine Business Insurance Policy (the "Standard Policy"), and Hosanna’s policy with the new Theatrical Property Policy Extension (the "Theatrical...