Boston hotel’s antivirus policy only covered 2 days, insurer says

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Law360 (June 11, 2021, 3:31 p.m. EDT) – An insurer said Thursday it was too early for a group of Boston hotel investors to say it owed up to a year of coverage for losses related to a COVID-19 superspreader event, telling a California federal judge this discovery could cap the coverage period at two days.

Endurance American Specialty Insurance Co. urged U.S. District Judge Cormac Joseph Carney not to dismiss his argument that Sunstone Hotel Investors Inc.’s coverage expired after the two days it took to disinfect the Marriott Boston Long Wharf following a February 2020 Biogen conference that was later held linked to 300,000 coronavirus infections worldwide.

Investors, who are claiming $ 40 million for business losses the Marriott allegedly suffered when forced to close the hotel after the conference, asked Judge Carney on May 17 to declare that its insurance policy extended to cover the entire duration of the interruption of its operations by the pandemic.

But Endurance said Thursday it deserves a chance to uncover evidence showing that the bulk of the hotel’s losses were completely unrelated to the Biogen conference and therefore excluded under the “biological agent requirements” provision of the Politics.

“When the discovery is made, Endurance could show that the period of disruption ended when the presence of the virus at Marriott Boston Long Wharf was no longer a source of disruption to operations, although operations were subsequently suspended for other reasons, “said the insurer. mentionned.

Endurance said that with the right evidence, it could prove that the hotel has remained closed due to factors not covered, such as a decrease in demand in the hotel industry or state and local ordinances issued to prevent the spread of the virus.

The insurer noted that government-mandated closures are specifically excluded from coverage by language in the biological agent policy which indicates that the period of coverage ends when infections are no longer the direct cause of business interruption. , “Even though operations cannot resume at the planned location for the reasons.”

“Because Endurance could develop facts showing that the presence of the virus on, on or in the Marriott Boston Long Wharf was no longer a source of interruption of operations after a certain number of days – and that regulatory reasons were this. that prevented operations from resuming – Endurance is entitled to discovery on this issue, “said the insurer.

Endurance added that the investor motion inappropriately calls for a quick victory based on facts that are still the subject of controversy, such as when Biogen conference attendees tested positive for COVID-19 and in which As Marriott’s operations still remain limited.

He also said the investor motion falsely introduced new claims about the science behind COVID-19, such as that the coronavirus is not being killed enough by surface disinfection. The insurer said that as this issue is still under debate, it should be addressed by scientific experts upon discovery.

Investors complaint filed in November, seeking cover for losses related to a conference Cambridge-based biotech firm Biogen hosted at the Marriott, which led to the nation’s first superspreader event and forced the hotel to shut down .

Endurance moved to throw the lawsuit in January, claiming it had no obligation to provide benefits because investors failed to provide a required $ 100,000 reserve to cover cleanup costs.

Judge Carney rejected this argument in March, saying investors’ policy gave them “reasonable expectations” that their business interruption losses would be covered, even if they didn’t have significant cleanup costs.

Endurance’s lawyer and investors did not immediately respond to requests for comment on Friday.

Sunstone Hotel Investors is represented by Kirk A. Pasich and Jeffrey L. Schulman of Pasich LLP.

Endurance is represented by Zoheb Noorani and Richard Blair Goetz of O’Melveny & Myers LLP.

The case is Sunstone Hotel Investors Inc. v. Endurance American Specialty Insurance Co., Case Number 8: 20-cv-02185, in US District Court for the Central District of California.

– Additional reporting by Eli Flesch and Melissa Angell. Edited by Stephen Berg.

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