The owners of two Marriott hotels in Syracuse, New York’s Carrier Circle, a popular circle of hotels near the airport, have filed a lawsuit against their insurance company and their corporate franchise for leaving them to flounder in $6.5 million of COVID-19-related lost revenue without any help.
The lawsuit filed in Onondaga County Supreme Court by the owners of Fairfield Inn & Suites and Springhill Suites names Zurich American Insurance Company and Marriott International. The complaint states that the hotels “paid handsomely” over the years for the “sophisticated companies to protect them from risk.” But in their most desperate time of need, the insurer and franchise were “nowhere to be found.”
The hotels’ operations were greatly impacted by the state-mandated shutdowns of nonessential businesses to stop the spread of COVID-19. Hotels were deemed essential, but with fewer Americans traveling during a time when they see much of their business, revenues sunk — $3.37 million for Fairfield and $2.54 million for Springhill Suites. One notable reason, Syracuse University canceled its graduation due to the pandemic.
In June, the hotels filed a business insurance claim with Zurich seeking a lifeline for payroll, bills and other operating expenses. But Zurich rejected the claim, alleging viruses are not covered under the plan.
Business interruption insurance is part of a business owner’s insurance plan. It provides coverage of operating expenses in the event a business has to temporarily close due to a disaster. Zurich rejected the claim “without even a cursory investigation” according to the lawsuit. Marriott, meanwhile, “denied all responsibility.” Marriott produced its contracts with Zurich which showed “communicable disease” was not covered. But the hotels say they were never informed of such “exclusions.”
Zurich is facing at least 23 COVID-19-related business interruption lawsuits across the U.S. from companies including In-N-Out Burger, a Missouri barbecue restaurant, and a chain of Minnesota gyms.
Beasley Allen lawyers are actively investigating and filing similar claims against various insurance companies for denial of business interruption coverage during the COVID-19 pandemic, and are involved in advocating for consolidation of these actions in multidistrict litigation (MDL). Dee Miles, head of our Consumer Fraud & Commercial Litigation Section, Rachel Boyd, and Paul Evans, lawyers in the Section, are spearheading this litigation for our firm and are monitoring all MDL developments as they arise.