MNLA photo by Jay Martin

A judge has dismissed a lawsuit brought by the owners of the Four Seasons Hotel Los Angeles at Beverly Hills against multiple insurance companies alleged to have breached a contract by not compensating the plaintiffs for millions of dollars in business losses incurred during the coronavirus pandemic.

Los Angeles Superior Court Judge Wendy Chang’s ruling involved the lawsuit filed by Burton Way Hotels LLC, naming Ace American Insurance Co., Allianz Global Risks U.S. Insurance Co. and Arch Specialty Insurance Co. among the defendants. Burton Way sought unspecified damages and a judge’s declaration that the losses are covered under the hotel’s policy with the insurers.

But in a motion filed Jan. 18, attorneys for the insurers argued in their court papers that the policies issued to Burton Way covered only business income losses and extra expense generated from direct physical loss or damage to its property. The plaintiffs demonstrated no evidence of such loss or damage, the defense attorneys’ argued in their court papers seeking dismissal of the lawsuit.

A state appellate court previously ruled that a hotel’s business losses caused by efforts to prevent the spread of the COVID virus were not covered under its property insurance policy, according to the defense attorneys’ court papers.

The judge heard arguments on the dismissal motion on April 5, took the case under submission and issued her ruling granting the dismissal motion on Wednesday.

The Four Seasons, located on Doheny Drive, is a five-star hotel and is the crown jewel in the Four Seasons portfolio of properties, opening in 1987 and obtaining an international reputation associated with the highest level of service and luxury, the suit filed last Sept. 10 stated. The hotel employs hundreds of individuals and has several restaurants, numerous amenities and more than 250 rooms, the suit stated.

In March 2020, the hotel had to suspend or reduce operations of on-site restaurants, bars, banquet halls, conference rooms, spas and other hotel amenities, plus operate at reduced guest capacity for intermittent periods, the suit stated. Government orders also required the hotel to curtail business operations, the suit stated.

“Simply put, the Four Seasons Beverly Hills could not function at its full capacity,” the suit stated. “As a result, Burton Way has suffered substantial financial losses, including lost profits and lost business opportunities.”

As of the date the suit was filed, Burton Way had incurred more than $25 million in losses, the suit stated.

The hotel’s management company bought property insurance policies from the Chubb insurers that provided broad, all-risk coverage, including coverage for economic losses resulting from direct physical loss or damage to property, the suit stated.

“The insurers have known for more than a decade that they and their insureds face a substantial risk of loss from viruses and pandemics and often have included an exclusion in their policies to limit or bar coverage for such losses,” the suit stated. “Yet, the Insurers elected not to include any of these exclusions in the policies they sold to the Four Seasons.:

The hotel sought coverage for the losses suffered, but the insurance companies “have thus far wrongfully withheld the policy benefits to which (the hotel) is entitled,” the suit stated.

“There is no basis for the Insurers to withhold policy benefits,” the suit stated. “In selling all-risk insurance, the insurers promised to provide broad coverage for financial losses unless an exclusion clearly and conspicuously applied as a bar to coverage.”

The hotel’s losses attributable to the presence of COVID-19 “fall squarely within the coverage afforded by the policies purchased from the insurers,” according to the suit.

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