Also this past week, in In re: New York Inn Inc. v. Associated Industries Insurance, 2023 WL 2938371, the United States Bankruptcy Court for the Northern District of Texas evaluated whether an additional insured to a general liability policy had standing to file a lawsuit for a denial of a business interruption claim.  The Court determined it did not.

Here, Viva Inn owned a hotel property in Arlington, Texas.  The hotel property was also listed as the principal place of business for New York Inn.  Viva Inn obtained property, business interruption, and commercial liability insurance from Associate Industries Insurance.  Then, Viva Inn’s principal requested through an insurance agent that Associate Industries add New York Inn as an additional insured on the policy.  In response, Associated Industries added New York Inn as an additional insured on the general commercial policy only.  In the February 2021 ice storm, the hotel suffered catastrophic water damage that required it to shut down entirely.  New York Inn declared bankruptcy and pursued a business interruption claim from Associate Industries that it denied.  New York Inn filed suit for the business interruption proceeds, and Associate Industries sought a dismissal, arguing that New York Inn was not an additional insured for the business interruption policy.

In evaluating and ultimately granting the dismissal request, the Court pointed out that separate insurance coverages are each distinct contracts.  So, when evaluating the business interruption contract within its four corners, there was no indication that it listed New York Inn as an additional insured.  Further, in considering whether New York Inn was a third-party beneficiary, that could only be implied and enforced if both contracting parties intended to add New York Inn as third-party beneficiary, and there was no documented intent that Associate Industries meant to do so.  For similar reasons, the Court found a lack of standing in New York Inn’s Deceptive Trade Practices (not the “consumer” that purchased insurance), Reformation of the contract (not the immediate party to the contract), Breach of Good Faith and Fair Dealing (no legal relationship to the insurer), and declaratory judgment actions (no standing).  Associate Industries therefore was not required to add business interruption proceeds to New York Inn’s bankruptcy estate.

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