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Law360 (March 15, 2021, 3:23 PM EDT) -- The owner of Seattle's iconic Space Needle alleged in a federal lawsuit that North American Elite Insurance Co. must cover business interruption losses tied to the coronavirus pandemic and related government shutdown orders under the tourist attraction's $160 million policy.
Space Needle LLC, in Friday's complaint, claimed North American's all-risk policy covers lost revenue for its tourism attraction. The presence of COVID-19 and government shutdown orders prevented tourists from visiting the famous architectural landmark, according to the suit.
Space Needle alleged North American promised to cover this exact type of loss caused by a disease or imposed property restrictions by a government. There was a "direct physical loss and damage," Space Needle said because it was unable to use the property for its intended purpose.
"These events had an immediate and severe impact on Space Needle. The Space Needle's tourist attractions did not constitute an essential business and, further, it could not host public or private gatherings," the insured said. "Customers, too, were prohibited from visiting or entering the Space Needle."
Tourism and businesses were particularly affected by the global pandemic, and insurance coverage fights ensued across the country. In Washington, a cryotherapy clinic hit its insurer with a proposed class action regarding denied coverage for pandemic-related coverage. A group of dentist and orthodontic offices are asking for the Washington Supreme Court to decide common state law issues in its coverage battle with insurers.
In Friday's complaint, Space Needle said North American must pay for its business interruption losses because the coronavirus was present at its iconic landmark. As of January 2021, there were four positive COVID-19 cases for employees and one for a tourist, according to the suit.
Space Needle alleged it lost a significant amount of revenue when it had to close access to visitors in the upper levels where they can visit the outside view deck circling the structure or to a lower floor with a rotating glass floor, which allows visitors to look 500 feet down to the ground.
North American covers "communicable diseases" like COVID-19, Space Needle said. While the policy bars "contaminants," that exclusion applies to "discharge, dispersal, seepage, migration, release, or escape of contaminants, i.e., pollution," and not to virus particles, Space Needle said.
Space Needle has been able to resume with limited operations, according to the suit, but customer access remains "highly restricted." Despite having covered business interruption losses in the millions of dollars and providing sufficient notice, Space Needle claimed North American has not accepted coverage.
Representatives for the parties didn't immediately respond to requests for comment.
Space Needle is represented by Donald B. Scaramastra of Foster Garvey PC.
Counsel for North American wasn't immediately available on Monday.
The case is Space Needle LLC v. North American Elite Insurance Co., case number 2:21-cv-00347, in the U.S. District Court for the Western District of Washington.
--Editing by Amy Rowe.
Update: This story has been updated to clarify information about Space Needle's claims.
For a reprint of this article, please contact reprints@law360.com.
