The 5th Circuit U.S. Court of Appeals on Thursday awarded a settlement of more than $1 million to a Chubb Limited entity against SXSW LLC over defense and coverage to resolve a class action over the cancellation of the Austin, Texas-based music festival South by Southwest. Victory overturned. In 2020.
Three-judge appeals court panel, in SXSW LLC v. Federal Insurance CompanyDisagreement with the trial judge’s finding that SXSW’s policy contained a contract exclusion and a professional services exclusion from federally barred coverage.
Two ticket holders sued the concert host in April 2020 after it refused to refund their ticket costs after the event was canceled due to the COVID-19 pandemic. The lead plaintiff asserted claims for breach of contract, unjust enrichment and conversion. Court records show the suit was settled in February 2022.
SXSW sued Federated in October 2021 after it declined to defend itself against the lawsuit. Each side filed summary judgment motions, and the trial judge ruled that while the class action sought covered damages, the exclusion in the Chubb unit policy barred coverage.
Overturning the trial judge’s decision, the appeals court panel concluded that the contract exclusion did not apply because the class-action plaintiffs’ claims were not limited to SXSW’s purchase agreement. The Panel also found that the exclusion of professional services was inappropriate as refunding tickets by the festival host is not a professional service.
Representatives of the parties did not respond to requests for comment.
