By Shawn Rice

Law360 (April 27, 2021, 4:14 PM EDT) -- LA Fitness has urged a California federal court to throw out a U.K. insurer's suit seeking to avoid coverage for pandemic-related losses, saying the dispute should instead be folded into the gym chain's pending action against other insurers in Washington state court.

Fitness International LLC, the owner of the gym chain, pushed back Monday against Beazley Underwriting Ltd.'s efforts to have the Central District of California decide coverage under a $500 million policy for losses at its 700 gyms caused by government shutdown orders tied to the coronavirus pandemic. Beazley, which subscribes to 10% of a $100 million primary layer, should be added to the gym chain's Washington state court suit involving other insurers under the same policy, according to LA Fitness.

"Having already suffered hundreds of millions of dollars in losses and been abandoned by its insurers, Fitness should not be required to litigate multiple actions in different forums simultaneously regarding the same coverage issues for the same insured locations," the gym chain owner said.

Earlier this month, Beazley filed the California federal suit, saying there wasn't any physical loss or damage to the LA Fitness gyms caused by the lockdown orders that would trigger coverage. Two days later, LA Fitness filed the Washington state suit, saying Zurich American Insurance Co. and others are on the hook under the policy for the losses after more than 1,200 of its employees tested positive for COVID-19, the respiratory ailment caused by the coronavirus.

In Monday's motion, LA Fitness argued that Beazley's suit should be tossed or stayed so the Washington court can decide the insurance and contract interpretation issues. Beazley preemptively filed suit to choose its own forum, according to the policyholder, to avoid "facing its reckoning in state court."

"Beazley's complaint cannot resolve all aspects of the parties' controversy because it does not address 100% of the coverage under the applicable policy," the gym chain owner said, arguing the $500 million policy requires it be treated as a single policy for purposes of contract interpretation.

Beazley's suit lacks the other insurers subscribed to the policy, the gym chain owner said, noting the U.K. insurer's coverage only represents a small part of the total limits. Without the other insurers defending their rights, LA Fitness argued, there is a risk of conflicting rulings and inconsistent obligations.

This isn't the first time a policyholder and its insurer filed competing suits over virus-related losses. The owner of the Space Needle in Seattle and North American Elite Insurance Co. are litigating in both Washington federal court and New York state court over business interruption losses to the iconic tourist attraction.

This month, a New York judge refused a preliminary injunction to force the tourist attraction's owner to litigate solely in that state's venue. The Space Needle's owner and North American had argued to the judge whether a forum selection clause put into the policy violated Washington's state law.

Representatives for Beazley and LA Fitness did not respond to requests for comment Tuesday.

Beazley is represented by James L. Wraith and Sara M. Parker of Selvin Wraith Halman LLP.

LA Fitness is represented by Michael J. Finnegan and Christopher Butler of Pillsbury Winthrop Shaw Pittman LLP.

The case is Beazley Underwriting Ltd. v. Fitness International LLC, case number 8:21-cv-00642, in the U.S. District Court for the Central District of California.

--Additional reporting by Daphne Zhang. Editing by Neil Cohen.

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