A California trial judge said Friday that an airplane lessor sustained covered physical loss or damage as a result of Russia’s refusal to return three leased airplanes after the February 2022 invasion of Ukraine, thereby triggering coverage under policies issued by units of Tokio Marine Holdings Inc.
The judge in BBAM US LP et al. v. KLN 510 Tokio Marine Kiln et al. was not persuaded by the arguments of nine insurers that the planes were not physically damaged or lost as a result of Russia’s refusal to return them and that a loss of use exclusion was inapplicable.
In ruling against the insurers, the judge cited the California Supreme Court’s recent ruling in Another Planet Entertainment LLC v. Vigilant Insurance Co. — a COVID-19-related case — to find that BBAM’s inability to access the planes constituted physical loss.
Dallas-based BBAM leased two commercial airplanes to Russian airline company Aeroflot, of which the Russian government is the majority owner, that were subleased to subsidiary Pobeda. The lease began in November 2015 and provided for monthly payments of $334,488.65 and $332,101.10, respectively.
The third airplane was leased to Russian airline Izhavia, Russia’s national airline, beginning in October 2021 and required payments of $950 per flight hour and $185,000 per month, court records show.
Following Russia’s invasion of Ukraine in February 2022, the Russian government imposed a ban on exporting aircraft, preventing BBAM from recovering its planes. BBAM terminated the leases on Feb. 27, 2022, and demanded their return.
BBAM submitted claims to the Tokio Marine units in May 2022, seeking $127 million in coverage, and filed a lawsuit seeking a court order on the issue.
Representatives for the parties did not respond to requests for comment.
