The Houston Rockets might be back at it in a big way with James Harden’s 49 points against the Dallas Mavericks, but the organization and the operators of the Toyota Center are embarking on a new challenge—fighting for business interruption coverage related to COVID-19 shutdowns. The new complaint filed on July 15, 2020, in Rhode Island state court by Clutch City Sports & Entertainment, L.P. and Rocket Ball, Ltd. (collectively, the “Rockets”) against their insurer, Affiliated FMI Insurance Co. (“FMI”), seeks coverage under its business interruption insurance policy for the suspension of the team’s play due to COVID-19 concerns.
Specifically, the Rockets argue that COVID-19 triggered coverage under their “all risk” policy because of the existence and actual presence of the virus at the Toyota Center and on property away from the Toyota Center. The Rockets assert that “[t]he loss of functionality is o less physical than the impact of a property having lost its roof to a tornado or hurricane.” The Rockets further assert that multiple coverages are triggered, including the policy’s: communicable disease business interruption coverage, protection and preservation of property business interruption coverage, business interruption coverage, extra expense, attraction property coverage, civil authority coverage, ingress/egress coverage, and supply chain coverage.
The Rockets further plead that no exclusion applies, specifically including the contamination exclusion. Moreover, the communicable disease sublimit does not apply. In addition to other remedies, the Rockets seek a declaratory judgment that the various coverage provisions are triggered under the policy, no exclusion applies to bar or limit coverage, and the policy covers the Rocket’s claim.
FMI denied coverage primarily relying upon lack of physical damage or loss to the property.
This case, and many others filed in courts across the nation, will be interesting to watch. The resolution will, hopefully, be a good one for businesses everywhere. For more analysis of business interruption insurance issues as it relates to COVID-19, see our prior article available at here. Our lawyers continue to keep a close eye on the rulings of courts across the nation on these hotly contested issues.
The lawyers of LeMaster & Ahmed PLLC are here to help businesses nationwide present the best available arguments for business interruption coverage related to COVID-19 business income and extra expense losses. Contact us at our Houston location at 832-356-7983 or our DFW location at 972-483-0410. You can also message us any inquiries directly on our website.
***The foregoing is not meant to serve as legal advice relating to your insurance coverage issue. Please contact one of our lawyers if you have questions specific to your particular insurance issue.