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Law360 (August 24, 2020, 9:33 PM EDT) -- A Rhode Island-based insurance company has moved a sports and entertainment real estate developer's breach-of-contract lawsuit over COVID-19-related business interruption losses to Maryland federal court, saying the Baltimore-headquartered firm's suit doesn't belong in state court.
Affiliated FM Insurance Co. told U.S. District Judge Ellen L. Hollander in its Friday notice of removal that The Cordish Cos. Inc.'s suit seeking to redress the insurer's allegedly wrongful denial of its claim for hundreds of millions of dollars in business interruption losses due to the pandemic should not be heard in the Circuit Court for Baltimore City.
"This court has original jurisdiction," Affiliated FM told Judge Hollander. "There is true diversity of citizenship, and the amount in controversy exceeds $75,000, exclusive of costs and interest."
Cordish — a decades-old real estate firm known for its development of Live! entertainment districts, sports-anchored districts and hotels and casinos — sued Affiliated FM on July 9 in state court on claims that its insurance policy specifically provides coverage for interruptions tied to communicable diseases.
Despite Cordish's payment of $2 million in premiums, Affiliated FM has refused to provide business interruption coverage during the pandemic, even though the terms of the insurance company's policy don't exclude losses caused by a virus or other communicable diseases, according to the complaint.
"Because these risks [associated with viruses] are well known, there are exclusions in common usage in the insurance industry that specifically reference losses caused by viruses, communicable diseases and pandemics," the suit said. "However, FM did not include any such exclusion in the policy it sold to Cordish. To the contrary, it is otherwise stated in the policy that losses from communicable diseases are covered."
Lockdown orders around the country have prevented millions of customers from attending events held at Cordish's covered properties, including Live! Casino & Hotel in Hanover, Maryland; Texas Live! in Arlington, Texas; Ballpark Village in St. Louis; and Pier IV in Baltimore, according to the suit. As a result, the orders have caused hundreds of millions of dollars in business interruption losses, the suit said.
For example, the Live! property in Hanover, which typically has 18 million visitors each year that produce about $50 million in monthly revenue, was completely closed by various civil authority orders due to the pandemic, the suit said.
All told, 97 separately listed properties are covered in Cordish's all-risk insurance policy with Affiliated FM, according to the suit. The insurer touted the policy as providing "broad coverage," with policy limits of $1 billion for the policy period from Feb. 28 through Feb. 28, 2021, the suit said.
"The broad and various extensions of coverage included in the policy that Cordish purchased, for nearly $2 million in premiums, provide a menu of different coverages that independently insure against business interruption losses sustained at the covered properties," the suit asserted.
The suit seeks a court order favoring Cordish as to the insurance policy language and a judgment for economic and consequential damages, as well as compensatory and punitive damages.
Steve Zenofsky, a spokesman for Affiliated FM, told Law360 by email on Monday that the insurance company stands behind the contract it signed with Cordish.
"AFM values the long-term relationships we have with our policyholders and we are proud in leading the industry for claims service," Zenofsky wrote. "It is unfortunate when legal matters arise because we strongly believe our insurance policies are clear on the coverage provided."
Counsel for Cordish did not immediately respond to a request for comment.
The Cordish Cos. are represented by Daniel J. Healy, Marshall Gilinsky, Pamela D. Hans and Maria Brinkmann of Anderson Kill PC.
Affiliated FM Insurance is represented by Bryant S. Green and Craig D. Roswell of Niles Barton & Wilmer LLP.
The case is The Cordish Cos. Inc. v. Affiliated FM Insurance Co., case number 1:20-cv-02419, in the U.S. District Court for the District of Maryland.
--Editing by Nicole Bleier.
For a reprint of this article, please contact reprints@law360.com.
