Owner of theWit Hotel in Chicago Sues Zurich American Insurance for Lost Income Resulting from May 30, 2020 Events of Civil Unrest

CHICAGO, Feb. 2, 2021 /PRNewswire/ -- The owner of theWit hotel, an anchor of Chicago's revitalized theater and Loop business districts, and home to ROOF, the world-famous rooftop bar and lounge, filed suit last week in the Circuit Court of Cook County against Zurich American Insurance Company ("Zurich") related to Zurich's wrongful and bad faith denial of insurance coverage arising out the physical damage to and prolonged closure of theWit resulting from the events of civil unrest that occurred in Chicago on May 30, 2020.

As a result of the damage to the hotel, theWit (along with ROOF and the hotel's restaurant, State & Lake) was forced to shut down for the entire summer and early fall (the very season the hotel's business is at its strongest and ROOF in particular is a prime destination for outdoor dining and entertainment), and was unable to reopen until October. Recognizing the dire impact prolonged closures would have on Illinois businesses (like theWit) damaged by the events of civil unrest, Illinois Gov. J.B. Pritzker stated in a press conference on June 8, 2020 that "insurance companies must do everything in their power and are obligated to give their customers the funds they need to rebuild and get back on their feet as soon as possible." That same day, the Illinois Department of Insurance issued Company Bulletin 2020-15 that, among other requirements, directed all insurers licensed to transact insurance business in the State of Illinois to "base payouts" of business interruption claims related to damage caused by the civil unrest "on business activity levels that eliminate the impact of COVID-19."

Although Zurich received substantial premiums to provide coverage for the hotel's lost income resulting from a suspension of its business caused by property damage, the lawsuit alleges that Zurich has blatantly disregarded the terms of the insurance policy and the directive of the Department of Insurance to eliminate the impact of COVID-19 in making payment of the income lost by the hotel resulting from the events of civil unrest. "Zurich's conduct is even more appalling," the lawsuit asserts, given that "it has almost universally denied its policyholders' claims for business interruption coverage related to COVID-19. In short, in the most cynical fashion, Zurich is using the pandemic as a shield and a sword by denying US businesses' coverage for their lost income resulting from COVID-19 while simultaneously leveraging the pandemic to wipe out coverage for other catastrophic losses and business closures, including those resulting from the May 30, 2020 events of civil unrest. If Zurich has its way, COVID-19 will turn out to be a serendipitous boon to its bottom line."

According to the lawsuit, Zurich also has repeatedly acted in bad faith by, among other conduct: failing to acknowledge and respond to theWit's communications; delaying payment of undisputed amounts owed; initially ignoring theWit's lost income from ROOF and State & Lake; relying on market data skewed to reduce the hotel's lost income; and refusing to provide coverage for any income lost after September 2020.

"Zurich has failed to appropriately respond to our insurance claim and make payments to which we are entitled," said Scott Greenberg, principal of ECD-Great-Street DE, LLC, which owns theWit. "We have filed this lawsuit against Zurich in order to vindicate our rights and enforce Zurich's obligations under the policy. We look forward to prosecuting our claim against Zurich in Court and obtaining the legal relief to which we are entitled." 

The lawsuit seeks a declaratory judgment from the Court that Zurich has a duty to pay all amounts submitted or to be submitted by ECD-Great Street DE, LLC for payment, including but not limited to substantial unpaid business income loss incurred by the hotel through its extended period of indemnity, as required under the insurance policy. The lawsuit also seeks a ruling from the Court that Zurich has breached the insurance policy and has acted vexatiously, unreasonably and in bad faith in violation of Illinois' insurance bad faith statute: 215 ILCS §5/155.

The lawsuit is captioned: ECD-Great Street DE, LLC et al. v Zurich American Insurance Company, No. 2021-CH-00419, Circuit Court of Cook County, Illinois, Chancery Division. Zurich has since removed the lawsuit to federal court.

SOURCE ECD-Great Street DE, LLC