The suit is the first by an NBA team seeking to recover losses tied to the economic body blows wrought by the coronavirus. Fertitta said in court filings he paid around $719,000 in annual premiums for more than $400 million in business-interruption insurance. He said the policy covers the pandemic because it was not specifically excluded.
Steven Zenofsky, a spokesman FM Global, declined to comment on the Rocket’s suit.
Fertitta, who also owns the
The stakes in this wave of business-interruption cases are high for insurers, who say such policies were only intended for physical damage and were never priced to cover a global virus outbreak. Many specifically exclude pandemics.
U.S. companies with fewer than 100 workers could face aggregate losses of as much as $431 billion a month, the
Insurers could face as much as $100 billion in losses from the pandemic,
The NBA is straining to restart its suspended season by having 22 teams gather at a facility in Walt Disney World in Orlando, Florida. The plan is to have an eight-game wrap-up to the regular season, then hold playoffs at the facility. Players will live in seclusion at the park during the truncated season.
Lawyers for the Rockets and the team’s arena say in the suit that the pandemic, in which Houston has emerged as a new epicenter, has hit them especially hard. On July 14, Texas Covid cases increased by almost 11,000, a new record, with the statewide total numbering more than 270,000.
Toyota Center officials were forced to cancel not only NBA games, but rodeos, concerts, a World Championship BBQ cook-off and other revenue-generating gatherings, according to the suit. The Rockets’ lawsuit contend loss of use of the arena constitutes “physical damage” triggering the coverage.
“The property has been impaired,” the team’s lawyers said in their 30-page complaint. “The loss of functionality is no less physical than the impact of a property having lost its roof to a tornado or hurricane.”
The case is Clutch City Sports & Entertainment LP and Rocket Ball Ltd v. Affiliated FM Insurance Co., No. PC-2020-05137, Providence/Bristol County Superior Court (Providence)
(Updates with insurer declining to comment and details from suit starting in 10th paragraph)
--With assistance from
To contact the editors responsible for this story:
Anthony Lin, Steve Stroth
© 2020 Bloomberg L.P. All rights reserved. Used with permission.