Tilman Fertitta sues insurance companies to cover COVID-19 losses

Houston billionaire Tilman Fertitta is locked in several legal battles arguing that insurance companies must cover businesses for financial losses caused by the COVID-19 pandemic, and two judges agree with him.

Earlier this year, several of Fertitta’s business ventures — including Landry’s and Golden Nugget — filed two lawsuits in Louisiana against several insurance companies, claiming that losses suffered by the businesses as a result of the shutdown during the COVID-19 pandemic should have been covered by their insurance. When COVID-19 spread across the United States and local governments imposed lockdowns and social distancing restrictions in early 2020, Fertitta furloughed 45,000 employees and borrowed $300 million to maintain Landry alive. He then offered take-out meals to furloughed workers and donated $1 million to a relief fund for their financial support.

In July, two Louisiana state judges entered partial summary judgments in favor of the Fertitta companies, finding without a trial that the companies should be covered.

Houston Rockets owner Tilman Fertitta departs after discussing the upcoming NBA Draft with the press Tuesday, June 21, 2022, at Practice Court Toyota Center in Houston.Yi-Chin Lee/staff photographer

The insurance companies appealed for the case to be heard in Texas, according to a spokesperson for Fertitta, and informed the general counsel that they also intended to appeal in Louisiana.

Great American Insurance, Lexington Insurance and National Indemnity Company did not respond to a request for comment. Chubb, Axis Surplus Insurance and American Insurance Group declined to comment.

In July 2020, the Houston Rockets – also owned by Fertitta – sued the team’s insurance provider in Rhode Island after the provider refused to cover losses from games canceled due to the pandemic.

“The loss of functionality is no less physical than the impact of a property losing its roof due to a tornado or hurricane,” a Rockets attorney told the Houston Chronicle at the time.

In March 2021, a judge decided to split multiple Rocket claims into separate trials. Do you want conversation? Yes. How is it going? I say it’s excellent, it’s hot.

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Louisiana is home to several Fertitta businesses, such as the Golden Nugget Lake Charles casino. The state also has a favorable legal landscape for COVID-19 insurance claims. In a separate case in June, a Louisiana appeals court took the side of an argument that contamination with COVID-19 in a restaurant constitutes material damage and must be covered by insurance companies. Decision 3-2 noted that other forms of non-physical damage such as asbestos and carbon monoxide contamination were considered property damage.

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Some of those losses should have been covered by insurance, according to Fertitta’s attorneys and the two Louisiana judges who ruled in their favor.

“As permitted by contract with our insurance companies, we filed a lawsuit in Louisiana when our insurance companies wrongly refused to honor our policies and claims.” Steve Scheinthal, executive vice president and general counsel for multiple Fertitta companies, said in a statement. “The Louisiana courts reviewed our policies and the law and ruled in our favor that we had insurance coverage,”

Fertitta isn’t the only Houston business owner to sue his insurance company for failing to cover pandemic-related losses. In October 2020, the Houston Livestock Show and Rodeo also claimed that their insured property was damaged after being ordered to close by local and national authorities. That case, filed in Harris County, is still pending.

Kristan F. Talley