Omni Berkshire Corp. v. Wells Fargo Bank, N.A. case brief
Omni Berkshire Corp. v. Wells Fargo Bank, N.A. case brief summary
307 F.Supp.2d 534 (2004)
Plaintiff hotels asked the court to
rule whether its obligation to maintain comprehensive all risk
insurance required it to continue to maintain terrorism coverage,
even though terrorism insurance was typically excluded from all risk
policies; and, assuming no such obligation existed, whether it was
reasonable for defendant servicing company to require the hotels to
obtain terrorism insurance under the other reasonable insurance
CASE FACTS The hotels borrowed $ 250 million in
1998 pursuant to an agreement which required the hotels to obtain and
maintain comprehensive all risk insurance on the hotels as well as
such other reasonable insurance as the lender might request. After
September 11, 2001, however, insurance companies began excluding
terrorist attacks from their all risk policies. Terrorism insurance
was still available at a substantial additional expense. In the
instant case, the servicing company requested that the hotels obtain
additional terrorism insurance, but the hotels refused, citing the
cost. The parties did not define all risk insurance in the agreement
at least in part because there was a general understanding in the
insurance industry as to the meaning of all risk insurance.
held that if the parties had intended to require the hotels to
maintain for the life of the agreement all risk insurance in the form
that existed in 1998, i.e., that included terrorism insurance, they
surely would have said so.
The court also concluded that the
servicing company acted reasonably in requiring the hotels to obtain,
as other reasonable insurance, an additional $ 60 million in
Judgment was entered in favor of the servicing company and the
hotels' complaint was dismissed with prejudice. Recommended Supplements and Study Aids for Contract Law
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