PROVIDENCE – A federal judge last week dismissed a $100 million breach of contract lawsuit filed by the Procaccianti hotel group.
The Procaccianti Cos. of Cranston, had claimed Zurich American Insurance Co. had refused to cover losses the hotel giant incurred during the COVID-19 pandemic due to “direct physical loss of or damage” caused by the virus.
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Zurich had maintained that the presence of the virus on property covered by the $300 million “all risk” insurance policy had not caused, “as a matter of law, ‘direct physical loss of or damage.’”
The court agreed with the insurer. In a memorandum issued on May 18, U.S. District Judge William E. Smith, of the District of Rhode Island, wrote that Procaccianti could not “sustain a claim for coverage” because there was no lasting physical damage. Judge Smith cited previous cases that determined the virus either quickly dissipated on its own, or was removed by simple cleaning.
“Further, [in similar cases] numerous courts across the country have independently reached the same conclusion,” wrote Judge Smith.
Procaccianti, founded in 1958 by former U.S. Air Force pilot Armand Procaccianti, is a real estate transactions holding company described in the suit as one of the largest privately held owner-operators of hotels in the United States. Its subsidiary, TPG, either operates, or has developed, 130 hotels under the myriad global brands including Accor, InterContinental, Hilton, Hyatt, Marriott, Starwood, and Wyndham.
Sam Wood is a PBN staff writer. Contact him at Wood@PBN.com
