7 more hotels file lawsuits to recover pandemic-related losses, but success unlikely
Each lawsuit claims that “the pandemic has had an unprecedented and catastrophic effect on [the] properties and business operations, causing millions of dollars in losses.
The Pearl claims no less than 3 million dollars.
The hotel’s attorney, Richard Ellis of Reed Smith, declined to comment.
In December, the Giraffe Hotel, owned by Henry Kallan, rebounded from overdue mortgage payments which Trepp data shows have not been made since March 2020.
The $32.6 million loan became delinquent shortly after the pandemic forced hotels to close, putting the 72-room Midtown South property at risk of foreclosure with its lender, Cantor Fitzgerald, according to the data from Trepp. He is now up to date with his payments, according to the data.
Kallan also owns the Casablanca, Library and Elysee hotels.
Across the city, hotels, restaurants and theaters have filed similar claims against insurers throughout the pandemic, but no ruling has been issued in favor of a New York City hotel.
Mark Browne, president of risk management and insurance at St. John’s University, said the majority of American companies have failed to enforce their business interruption claims.
An October 2020 case brought by the owners of the St. George Hotel in Brooklyn Heights seeking more than $9.6 million from Affiliated FM Insurance was overturned in December by a federal judge in Brooklyn.
BD Hotels, whose portfolio includes the Bowery Hotel in the East Village and the Jane on the West Side, filed a lawsuit against its insurer, Federal Insurance, for denial of coverage, prompting a lawsuit against the company from Federal in February 2021 .
So far, the 2nd, 4th, 6th, 7th, 8th, 9th, 10th and 11th Circuit Courts have ruled that Covid-19 restrictions imposed by jurisdictions that did not cause physical loss or harm do not not trigger claims for loss of business from salespeople. property insurance policies.
The general argument advanced by insurers is that the pandemic has not caused direct physical damage to hotels.
But in their complaints, the hotels say even former mayor Bill de Blasio wrote in an executive order that “the virus physically causes property loss and damage” because it makes surfaces unsafe.
“We all believe that this language was in place to help companies file claims like this,” said real estate attorney Michael Pensabene of Rosenberg & Estis.
In another case, Assa Properties, owner of the MAve Hotel in the Flatiron District, sued its insurer, Lloyds of London, for $1 million because it was denied coverage after it said New Yorkers homeless people who resided there at the start of the pandemic destroyed its furniture.
“Generally speaking, I think these hotels should get something,” Pensabene said. But given how courts have ruled in favor of landlords in rent disputes with tenants, hotels are unlikely to recoup much, he said.
“They won’t hold insurers accountable,” he added.
An attorney for Greater New York Mutual Insurance declined to comment on the ongoing litigation.