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The company that owns several District of Columbia professional sports teams and a major sports arena has settled its lawsuit against its insurance company over losses related to the shutdown caused by COVID-19.

It was only a partial victory for Monumental Sports, owner of the Capitals, Wizards, Mystics, and the Capital One arena. In March 2023, it missed a big shot and lost under the major provisions of its insurance policies with but it has now settled its claims under another policy section and the parties jointly agreed to the dismissal of the lawsuit on April 4.

Monumental Sports — chaired by its founder Ted Leonsis— sued Factory Mutual Å˽ðÁ«´«Ã½Ó³»­ Co. in 2021 claiming it was entitled to recover millions in business losses under its all-risk insurance policies because from March 2020 to April 2021, the seasons of the Capitals, Wizards, Mystics and other teams were suspended, and all events at Monumental Sports’ indoor arenas were canceled or postponed. The sports company argued that it was entitled to payouts for lost business income, clean-up costs and other expenses related to the shutdown.

However, as it and other insurers have successfully done in many other cases, Factory Mutual argued that Monumental was not entitled to insurance payouts because there was no proof of physical loss or damage, which is required to trigger most of the coverages.

Factory Mutual said the sports and entertainment company came up short in pleading facts showing that COVID-19 plausibly damaged insured properties. “And for good reason: ‘COVID-19 hurts people, not property,'” the insurer told the court. Loss of use is not a substitute for facts showing physical damage, the insurer added.

However, the insurer acknowledged that unlike the other coverage provisions, the communicable disease provisions in its policies do not require physical loss or damage to trigger coverage. Instead, “actual not suspected presence of communicable disease” at an insured location triggers coverage, without regard to whether any property is damaged or destroyed by a covered cause.

In July 2021, the insurer first signaled its willingness to consider payments under the communicable disease provisions up to the limit of $1 million in a letter asking Monumental to submit proof of loss. In October, 2021 in its motion to dismiss the lawsuit, Factory Mutual said it was still waiting for proof. “Factory Mutual remains committed to adjusting plaintiffs’ claim under the Communicable Disease Provisions,” the insurer told the court at that time.

The communicable disease provisions allow Factory Mutual to recover up to $1 million in situations where there has been an “order of an authorized government agency” or a decision of an officer of the insured” relating to the “actual not suspected” presence of communicable disease. The provisions cover cleanup, removal and disposal; public relations and reputation management costs; and certain business income losses and expenses.

In March 2023, U.S. District Judge Richard Leon approved Factory Mutual’s motion to dismiss Monumental’s claims with regard to physical damage or repair and time element coverages. However, the judge found that Monumental had “more plausibly pled” coverage under the communicable disease coverages and declined to dismiss those claims.

On April 4, the parties entered a joint stipulation of dismissal, telling the judge that they had resolved the claims relating to communicable disease provisions but providing no details. As a result, the case was dismissed.

Topics COVID-19