The gym owners told a Virginia federal court Monday that Markel Insurance Co. can't show that the presence of the coronavirus caused their losses, as they place the blame on the various government orders across the country.
"Unlike other versions of the virus exclusion, the form used in the policies does not contain any language regarding its application to multiple or concurrent causes of loss, nor does it extend to losses caused 'indirectly' by events or actions that are 'related to' a virus," the gym owners said.
The owners filed suit against Markel on behalf of a proposed class of 4,500 Anytime Fitness franchisees across the U.S. for losses caused by government-ordered restrictions in response to the COVID-19 pandemic. Last month, Markel pushed to have the proposed class action tossed.
Markel argued that the gyms weren't physically damaged by the coronavirus, which is a precondition for coverage under their commercial insurance policies. Several exclusions preclude coverage, the insurance company said, relying heavily on the virus exclusion in its policies.
The Anytime Fitness franchisees said in Monday's brief that the virus exclusion is ambiguous, as seen in statements from drafters of this version of the exclusion. Markel can't be allowed to "publicly renege" on its version, which applies to losses caused by actual viral contamination, the owners said.
The franchisees said Markel can't escape coverage under exclusions for decisions of government bodies that result in loss, as well as ordinances or laws that cause loss by regulating the use of insured property.
The Anytime Fitness franchisees also argued that the government closure orders caused "direct physical loss of" access to and use of the gyms. A physical loss doesn't require structural damage or alteration, they argued, saying the loss of their gyms' intended purpose is enough to trigger coverage.
Gyms, like many other businesses, resorted to filing suits against their insurance companies for losses when they were forced to close during the pandemic under government orders.
Another Anytime Fitness franchise saw its business interruption suit tossed by a Florida state judge who said the fitness center's "purely economic loss" from the pandemic isn't covered. And a New Jersey gym couldn't escape a virus exclusion in its federal suit for pandemic-related losses.
This year, the owner of L.A. Fitness filed a Washington state suit, alleging its insurers wrongfully denied coverage for losses from the coronavirus, which damaged its gyms. And an Illinois fitness center filed a federal suit to cover losses from closing its gym, health clubs, spas and cafes during the pandemic.
Representatives for the parties didn't immediately respond to requests for comment Tuesday.
The gym owners are represented by William H. Monroe Jr., Marc C. Greco, Kip A. Harbison and Michael A. Glasser of Glasser and Glasser PLC and M. Elizabeth Graham and Adam J. Gomez of Grant & Eisenhofer PA.
Markel is represented by Henrik Jonathan Redway, Nicole M. Meyer and Timothy M. Strong of Dickinson Wright PLLC.
The case is Fountain Enterprises LLC et al. v. Markel Insurance Co., case number 2:21-cv-00027, in the U.S. District Court for the Eastern District of Virginia.
--Additional reporting by Eli Flesch, Daphne Zhang and Lauren Berg. Editing by Neil Cohen.
For a reprint of this article, please contact reprints@law360.com.