Gym franchisees lose COVID business interruption ruling

A federal appeals court on Thursday ruled in favor of a OneBeacon Insurance Group Co. unit in COVID-19-related business interruption litigation filed by gym franchisees.

Franchisees of four Planet Fitness locations sued OneBeacon unit Atlantic Specialty Insurance Co. seeking coverage under their commercial all-risk policies, according to the ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in PF Sunset View, LLC et al. v. Atlantic Specialty Insurance Co.

The U.S. District Court in Fort Pierce, Florida, ruled in the insurer’s favor and was affirmed by a unanimous three-judge appeals court panel.

As in previous rulings on the issue, the panel referred to the 11th Circuit’s earlier decision in SA Palm Beach v. Certain Underwriters at Lloyd’s London.

The franchisees’ arguments “are a non-starter — binding precedent mandates that franchisees show a ‘tangible alteration of the insured propert(y)’ and that losses stemming from suspension of operations and extra expenses incurred in response to COVID-19 closure orders do not count,” it said in affirming the lower court ruling.

Attorneys in the case did not respond to requests for comment.

The 11th Circuit also issued a pro-insurer ruling in a COVID case on Wednesday.