NYC Mall Says Environmental Policy Covers COVID-19 Loss

By Daphne Zhang
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Law360 (October 14, 2020, 3:58 PM EDT) -- The owner of a major shopping mall in midtown Manhattan has filed suit against its insurer in federal court for refusing to cover an over $3.8 million loss after commercial tenants including H&M stopped paying rent, saying its environmental policy covers business interruption.

Jemb Realty Corp., which owns Herald Center, a Manhattan retail mall that housed one of the world's largest H&M stores, alleged in the Tuesday complaint that its insurer Greenwich Insurance Co. breached its obligations under the $3 million environmental policy.

The company claimed it suffered over $3.8 million in losses because multiple Herald Center tenants were not paying rent during the COVID-19 pandemic. And in order to prevent the renters from breaking their lease, Jemb had to negotiate rent abatements with commercial tenants including H&M and ASA College's Manhattan branch, according to the suit.

"Due to the fact that the plaintiff had purchased an environmental policy which did not contain any specific exclusions for virus, it expected that, after years of collecting annual premiums from the plaintiff, it would be responsive to them during their time of need," Jemb said.

In the complaint, the mall owner alleged that it filed a loss statement in late May, demanding the policy's $3 million coverage limits, but Greenwich had failed to make any payments or indicate whether it would accept or deny its claim as of Tuesday — over 120 days after it submitted the claim.

Jemb contended that New York insurance law requires carriers to reply to policyholders' communications within 15 days, and insurance companies have 15 business days to accept or reject a claim. But Greenwich failed to do so, Jemb said.

According to the suit, the mall owner held an environmental policy with Greenwich that covers business interruption losses, pollution, and remediation from May 2017 to May 2020.

Jemb said its revenue losses stem from its retail tenants' exposure to COVID-19, a pollutant, which should be covered by its environmental policy. The mall owner said its tenants were forced to shut down due to government closure orders in March.

The retail mall owner is asking the court to enter a $3 million monetary judgment against Greenwich, plus additional damages to be determined at trial.

Counsel for Jemb did not immediately respond to questions regarding the suit. Greenwich could not be immediately reached for comment. 

Jemb is represented by Joshua L. Mallin of Weg and Myers PC.

Counsel information for Greenwich is not available.

The case is Jemb Realty Corp. v. Greenwich Insurance Company, case number 1:20-cv-08537, in the U.S. District for the Southern District of New York. 

--Editing by Alyssa Miller.

For a reprint of this article, please contact reprints@law360.com.

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Case Information

Case Title

Jemb Realty Corp. v. Greenwich Insurance Company


Case Number

1:20-cv-08537

Court

New York Southern

Nature of Suit

Insurance

Judge

Mary Kay Vyskocil

Date Filed

October 13, 2020

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