Omni Berkshire Corp. v. Wells Fargo Bank, N.A

Plaintiff borrowed $250 million and secured the loan with five of its hotels in 1998. The loan agreement required Plaintiff to carry comprehensive all risk insurance on the hotels as well as reasonable other insurance as the lender might reasonably require to insure against risks that were insured against for similar properties in the area in which the hotels were located. Neither provision referred specifically to terrorism coverage. Before the terrorist attacks of September 11, 2001, comprehensive all risk insurance included terrorism. After those attacks, terrorism was excluded from all risk policies and was instead provided in stand-alone, expensive policies. Plaintiff did not purchase a terrorism policy due to the cost of that coverage. The loan servicing company, which later became Defendant, informed Plaintiff that it needed to carry terrorism coverage. Plaintiff claimed that this coverage was not required under the terms of the loan agreement. The parties negotiated a reduced amount of coverage at a reduced price, but ultimately Plaintiff decided not to purchase it. Plaintiff then sued for a declaratory judgment that the terms of the loan agreement did not require Plaintiff to carry terrorism insurance. After the action was filed, the Terrorism Risk Insurance Act of 2002 was enacted, requiring insurers to provide insurance for non-domestic terrorism without restricting what insurers could charge for such coverage.