Allianz wins COVID-19-related ruling against hotel

Citing previous decisions, a federal appeals court on Friday ruled in favor of an Allianz SE unit in COVID-19-business interruption litigation filed by a Miami hotel owner.

Abbey Hotel Acquisition LLC, which owns and operates the Setai Hotel in Miami Beach, Florida, filed suit against Allianz unit National Surety Corp. seeking business interruption coverage under the all-risk commercial property insurance and extended business income loss coverage it had purchased from the insurer, according to the ruling by the 2nd U.S. Circuit Court of Appeals in New York in Abbey Hotel Acquisition, LLCD, Setai Hotel Acquisition, LLC, Setai Resort and Resident Condominium Association, Inc., Setai Valley Services, LLC. v. National Surety Corp.

In affirming a decision by the U.S. District Court in New York, a three-judge panel cited similar rulings by a Florida appeals court in Commodore, Inc., v. Certain Underwriters at Lloyd’s, by the 11th U.S. Circuit Court of Appeals in Atlanta in SA Palm Beach LLC v. Certain Underwriters at Lloyd’s London and the 2nd Circuit’s own ruling in 10012 Holdings Inc. DBA Guy Hepner v. Sentinel Insurance Co.

The panel said it agrees with the district court in New York that “Abbey Hotel failed to allege the requisite ‘direct physical loss or damage’ to trigger coverage under the relevant Policy provisions.” It also held the hotel was not entitled to coverage under its coverage’s communicable disease provision.

Allianz attorney Rob M. Hoffman, a partner with DLA Piper in Dallas, who is lead counsel for most of the COVID-19 litigation in the U.S. for Allianz and its affiliates, said, “The 2nd Circuit correctly interpreted the key policy language consistent with every appellate court that had addressed this same issue across the United States and consistent with Florida law. The opinion further affirmed the correct interpretation of National Surety Corporation’s communicable disease coverage." 

The hotel’s attorneys did not respond to a request for comment.

On Wednesday, the 11th Circuit issued its third ruling this week against a policyholder in a COVID-19-related business interruption lawsuit filed by an eyewear retailer against State Farm Insurance Co. units.