By Melissa Angell

Law360 (March 5, 2021, 10:17 PM EST) -- A luxury Manhattan hotel sued its insurer Friday in New York state court, arguing it was wrongfully denied coverage for pandemic-related losses and quoting former President Donald Trump, who implied insurers should pay virus claims if pandemics aren't specifically excluded from policies.

Hôtel Plaza Athénée New York argues in its complaint that it is entitled to business interruption coverage under its insurance policy from Continental Casualty Co. because the presence of individuals who have the coronavirus makes the property unsafe, creating a direct physical loss to its property.

The hotel added that though its policy does contain exclusions, the pandemic itself was not excluded.

"While the policy contains a virus exclusion -- the policy does not exclude coverage for a national state of disaster like the current pandemic," the complaint says. "The insurance industry knows how to exclude 'pandemics and epidemics' and has done so in other contexts. Here it did not."

The hotel says it suffered direct physical losses due to the stay-at-home order issued by New York state last year and that it submitted a claim related to those losses.

But the insurer denied the hotel's claim because the covered properties did not sustain any physical damage, according to the complaint.

The question of whether businesses are incurring physical damage from the pandemic and worthy of loss coverage has fueled debate as business owners face off with insurers in court over pandemic-related loss claims.

In the Western District of Missouri, a judge ruled in August that the presence of the virus made a property unusable and therefore triggered a physical loss. But in Georgia federal court, a judge ruled Monday that shutdowns alone don't warrant such coverage.

But as Hôtel Plaza Athénée points out, former President Trump appears to think that insurers should foot the bill if pandemics are not excluded from a policy.

During a White House Coronavirus Task Force briefing in April of last year, the former president discussed how he had retained business interruption coverage in the past and when he did, he expected to be paid.

Businesses have "been paying for years, sometimes they just started paying, but you have people that have never asked for business interruption insurance, and they've been paying a lot of money for a lot of years for the privilege of having it," Trump said in response to a reporter's question. "And then when they finally need it, the insurance company says 'we're not going to give it.' We can't let that happen."

The hotel underlined that the former president made several core points, specifically that businesses pay premiums for their coverage and therefore they should expect that coverage in the event that they might need it.

But in this case, the hotel argues that its insurer already made up its mind to deny coverage for any business interruption claims related to the pandemic, the complaint says.

In its suit, the hotel urged a judge to declare that its insurance policy extends business income coverage if the coronavirus has directly or indirectly created losses or damages for the hotel.

The hotel also seeks compensatory damages for the alleged breach of policy.

Representatives for the hotel did not immediately respond to request for comment on Friday. The insurer could not be immediately reached for comment.

The hotel is represented by Randolph D. Janis of Douglas & London PC.

Counsel for Continental Casualty Co. could not be ascertained on Friday.

The case is Plaza Athenee Hotel Company Limited v. Continental Casualty Company, case number unknown, in the Supreme Court of the State of New York, County of New York.

--Additional reporting by Shawn Rice. Editing by Ellen Johnson.

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