A judge has ruled in favor of a group of hotels whose owners sued their insurance carriers over lost business during the coronavirus pandemic.

Businessman Mark Stebbins of Schleicher & Stebbins Hotels, LLC, one of the plaintiffs, said the pandemic caused tens of millions of dollars in lost revenue for about two dozen hotels in New Hampshire, Massachusetts and New Jersey.

The group had paid for $600 million in insurance. In April 2020, it filed an insurance claim to cover COVID-19-related losses. The insurance companies questioned “direct physical loss of or damage” to property and said the hotels did not provide enough details. The hotel owners said they hosted infected guests and staff. They sued the insurance companies; both sides asked for a court ruling.

“The court is satisfied that any requirement under the policies of ‘loss or damage’ or ‘direct physical loss of or damage to property’ is met where property is contaminated” by the COVID-19 virus, Merrimack County Superior Court Judge John Kissinger ruled Tuesday.

(Source: AP News)


The Anderson Kill law firm represented Stebbins’ hotel chain, seeking to recover $00 million in COVID-related losses from eight insurers (Starr Surplus Lines Insurance Co., Lloyds’ of London, Everest Indemnity Insurance Co., Hallmark Specialty Insurance Co., Evanston Insurance Co., Axis Surplus Insurance Co., Scottsdale Insurance Co., and Mitsui Sumitomo Insurance Co. of America). The law firm said in a press release that the New Hampshire Superior Court based its decision in Schleicher & Stebbins Hotels on the 2015 New Hampshire Supreme Court decision in Mellin v. Northern Security Insurance Company, which concerned the impact on property of cat urine odor.

That Schleicher & Stebbins Hotels court found that the SARS-CoV-2 may, like cat urine, be removed from surfaces through cleaning and disinfection, and that certain guests might decide to stay at the plaintiffs’ hotels despite the risks involved, does not prevent a conclusion that the properties have been changed in a ‘distinct and demonstrable’ fashion.

See related article: Is COVID Physical Damage? Plaintiffs Relying on Bacteria, Ammonia and Cat Urine Rulings

“Like the cat urine in Mellin, SARS-CoV-2 did not originate in the plaintiffs’ properties and cannot be seen or touched,” the opinion says. “Although cat urine may be smelled while a virus may not, the presence of SARS-CoV-2 is detectible, was found by various government authorities to be widespread in the regions in which the Hotels were located, and has been ‘consistent[ly]’ determined to ‘surviv[e] . . . on certain surfaces’ of the kind available within and around the hotels.”

According to Anderson Kill, the Court also rejected the insurance companies’ argument that a “microorganism” exclusion applied because a virus is not unambiguously understood to be a “microorganism.”

Anderson Kill noted that in one finding in favor of an insurer, the Court did grant the motion for summary judgment filed by AXIS Surplus Insurance Company, holding that an exclusion that AXIS added by endorsement for “pollutants or contaminants” applied where the meaning of “pollutants or contaminants” specifically included “virus.”

Source: Anderson Kill