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Plaza Athenee’s pandemic insurance claim struck down

Upper East Side hotel one of several to suffer defeat

Plaza Athenee at 37 East 64th Street (Plaza Athenee, iStock)
Plaza Athenee at 37 East 64th Street (Plaza Athenee, iStock)

The Plaza Athenee is taking another loss, this time courtesy of a federal judge.

Judge Mary Kay Vyskocil struck down the Upper East Side hotel’s insurance claim to recover money lost during the pandemic, Crain’s reported. The hotel was seeking to have Continental Casualty Company cover losses, claiming the spread of the coronavirus contaminated property and resulted in damage and government-ordered closure, warranting insurance coverage to step in.

The judge noted in the decision that other hotels attempted to make similar claims in front of the Second Circuit and failed to come out victorious, according to Crain’s. Insurance carriers and the courts have been largely aligned that physical damage did not occur and hotels weren’t legally required to close during the pandemic.

The hotel at 37 East 64th Street temporarily closed at the start of the pandemic, laying off 165 employees. Those layoffs became permanent after the state disclosed in October 2020 that the Plaza Athenee would remain closed permanently.

Earlier this month, three hotels in the city sued their insurers over pandemic-driven losses. The Life Hotel at 19 West 31st Street; the Pearl, at 233 West 49th Street in the heart of the Theater District; and the Belvedere, at 319 West 48th Street, are plaintiffs in three separate cases.

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All three hotels had “all risk” insurance policies, which their complaints claim included pandemic coverage.

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The Plaza Athee is one in a slew of hotels that have not had much luck in their fight against insurance carriers to recover pandemic-related losses. The St. George Hotel in Brooklyn Heights sought more than $9.6 million from Affiliated FM Insurance. Crain’s reported that case was struck down in December.

The Blue Moon Hotel also tried and failed to recover funds from its insurer. Last week, the Lower East Side hotel filed for Chapter 11 bankruptcy protection after racking up $11.2 million in liabilities. The owner of the property noted that he doesn’t expect the hotel to stop operating despite the bankruptcy proceedings.

[Crain’s] — Holden Walter-Warner

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Commercial Real EstateHotelsInsuranceUpper East Side