Wins

HT-Seattle, operator of a large Seattle-area hotel and conference center, suffered business losses during the COVID-19 pandemic. HT-Seattle sued its property insurer (GMSR’s client) to cover these losses, claiming that the presence of COVID-19 virus at the hotel constituted “direct physical loss or damage” to property, a coverage requirement. The district court dismissed the complaint for failure to state a claim under Washington law.

Affirming, the Ninth Circuit adopted both of the arguments GMSR had made for affirmance—either one of which would have justified affirmance on its own. First, viral presence, without more, does not constitute direct physical loss or damage to property. Second, even if viral presence could amount to direct physical loss or damage, HT-Seattle’s claim was excluded by the Contamination exclusion in its policy.

GMSR also defeated HT-Seattle’s motion to certify issues to the Washington Supreme Court, and its motion for judicial notice of evidence extrinsic to the parties’ insurance contract.

To read the Court of Appeals’ Opinion, click here:  HT-Seattle Owner, LLC v. Am. Guar. & Liab. Ins. Co., No. 21–35916, 2023 WL 3562996 (9th Cir. May 19, 2023) (mem. disp.)

To read about the case in Law360, click here:  Zigterman, 9th Circ. Sides With Zurich In Hyatt’s Virus Coverage Appeal, Law360 (May 22, 2023) (subscription required)