The Houston Rockets and their home arena the Toyota Center are suing their insurance company, Affiliated FM Insurance Co., alleging it denied them coverage for losses stemming from the COVID-19 pandemic.
The lawsuit filed on behalf of Rocket Ball Ltd., which owns the Rockets, and Clutch City Sports & Entertainment LP, which owns the Toyota Center, claims that both were denied coverage as the insurer enacted a blanket policy of denying all claims related to business losses suffered due to the pandemic. Both parties contend they’re owed coverage under the team’s $412 million property insurance policy.
“The loss of functionality is no less physical than the impact of a property having lost its roof to a tornado or hurricane,” the lawsuit states. “Where once the property could carry on its business function, the property with a blown away and crumbling roof cannot operate in that way. Where once the property could seat patrons away from the elements, it can no longer do so. That is physical damage, as is the loss of function at Toyota Center caused by COVID-19.”
As the NBA suspended the remainder of the 2019-2020 basketball season, the arena was forced to cancel 29 events, which included nine Rockets games. The presence of a communicable disease is considered physical loss and damage and is stated as such in the policy. Many businesses have found themselves in a similar position in recent months, including several Minor League Baseball teams, which have filed complaints against their own insurers.
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The arena and the team are represented by Stephen M. Prignano of McIntyre Tate LLP; W. Mark Lanier, Alex J. Brown, Ralph D. McBride and Matthew D. Przywara of The Lanier Law Firm PC; Denman H. Heard of Heard Law Firm PLLC; Adam J. Levitt, Mark A. DiCello and Kenneth P. Abbarno of DiCello Levitt Gutzler LLC; Timothy W. Burns, Jeff J. Bowen, Jesse J. Bair and Freya K. Bowen of Burns Bowen Bair LLP; and Douglas Daniels of Daniels & Tredennick.