How the MTA could get back billions it lost during the pandemic

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Did COVID cause 'property damage' to the subway?

And if so, is the MTA owed an insurance payout?

The MTA has billions of dollars riding on a lawsuit before New York’s highest court, which could enable the cash-strapped transit agency to recoup much of the money it lost during the COVID pandemic. 

The suit centers on an insurance claim filed by Consolidated Restaurant Operations, which owns and operates dozens of restaurants, including Cantina Laredo, El Chico and Good Eats, as well as catering groups. The company argues its policy with Westport Insurance should cover the financial hit in 2020 when restaurants were forced to shut down at the onset of the COVID-19 pandemic. The virus has since killed more than 1.1 million people in the U.S.

A mid-level appeals court dismissed Consolidated Restaurant Operations’ suit. But the company appealed — and now the case has reached the state Court of Appeals.

The dispute centers on whether COVID-19 particles contaminating surfaces "physically and detrimentally altered" the restaurant company’s property, constituting a "physical loss or damage" covered by insurance. 

Enter the MTA.

On Dec. 12, the transit agency filed an amicus brief in the case, siding with the Texas-based restaurant giant. 

"[The MTA’s] interest in this controversy accordingly could not be more direct," the agency wrote in its brief. "They have billions of dollars of insurance coverage at stake for the losses they incurred."

"To the contemporary policyholder, inhabiting a world of microelectronics, additive (3-D) manufacturing and precision medicine, 'physical loss or damage' includes detrimental alteration of any physical kind, regardless of whether visible or microscopic and whether temporary or permanent," the brief states.

Why does this matter?

The pandemic financially hammered the MTA. New York’s mass transit ridership — and the fares that come with it — dropped by more than 90% in April 2020, and still remains down 30% from pre-pandemic levels.

By early summer 2020, then MTA Chair Pat Foye said the agency was "losing $200 million a week." The MTA’s attorneys also note in their brief that the agency spent more than $400 million in 2020 to clean subway cars, buses and other equipment and facilities.

During oral arguments on Jan. 10, Westport’s attorney Aidan McCormack said it's a stretch to say the restaurant group suffered "physical loss or damage" from the pandemic that should be covered by the insurance policy.

"In order to have physical loss or damage, something must need to be repaired or replaced," said McCormack. "And we’re all sitting in this courtroom today, same furniture, same walls, same ceiling, nothing’s happened."

But the MTA’s hope for a multibillion-dollar insurance payout looks more like a lottery ticket than a sure bet. The appeals judges seemed skeptical of the restaurant group’s arguments. Judge Jenny Rivera — who wore a mask during the hearing — said the virus didn’t seem to cause physical loss or damage to the restaurant group’s businesses.

"It’s not like you can never use a chair if COVID got on it," said Rivera. "You clean it."

Anchor Tag

This week in New York City transit news

Listen here:

• The MTA's highly-touted new cars, which have accordion-style connectors allowing riders to walk the train's entire length, won't be able to run on the express A line as originally intended because their design makes a crucial safety procedure "impossible," according to an internal MTA memo obtained by Gothamist. Read more.
• Problems with MTA radios may have contributed to the slow-moving crash of two subway trains on the Upper West Side earlier this month, federal investigators wrote in a preliminary report Thursday. Read more.
• Nearly two dozen politicians are demanding that, when the MTA shuts down the G train this summer for signal upgrades, the agency also extend the line to Forest Hills and give it full-sized trains. Read more.
• Police said a man in his 50s was attempting to subway surf when he was fatally struck by a train at Brooklyn’s Prospect Park station Tuesday morning. Read more.
  • This comes days after a 14-year-old died while subway surfing on an F train near Coney Island, which prompted state lawmakers to demand social media companies do more to remove subway surfing content from their platforms. Read more.
• The MTA installed metal platform barriers at the 191st Street station as part of a safety pilot program. Read more.
• NJ Transit said it plans to raise bus and train fares by 15% starting July 1, marking the agency's first fare hike in nine years. Read more.
• The MTA says it will need to tear up five blocks of streets in East Harlem to build the Second Avenue subway extension into the neighborhood. The "cut and cover" method was used to build much of the city's subways — and the MTA says the technique will save money. Read more.
• NYC lost an estimated $108 million last year from drivers who used fake or obscured license plates to evade speed cameras, according to Comptroller Brad Lander. Read more.
• On New Year's Eve, a college student accidentally fell onto the East Broadway subway tracks and died. Here's how an India-based content farm spread the rumor that he was stabbed to death on the platform. (The New York Times)
• Riding the subway only costs $2.90, so why not take a date on the train? (amNewYork)

Anchor tag

Curious Commuter

Question:

Why is there no M15 select bus stop at Second Avenue and East 72nd Street [where the Q train stops]?

– Joanne Jahr, Upper East Side]

Answer:

The M15 select bus is the busiest bus route in the city, in no small part because it runs along the long-promised (but never built) route of the Second Avenue subway. And like the rest of the MTA’s select bus routes, the agency uses what it calls "subway-like spacing" — about 10 blocks — between its stops in order to help it run faster. 

That spacing allows for the southbound M15 select bus to stop along Second Avenue at East 96th and East 86th Streets, lining up with the Upper East Side’s Q train stations. But that means the route misses the East 72nd Street station. Instead, the bus stops at East 78th and East 68th Streets.

"It’s only four blocks away," says MTA spokesperson Eugene Resnick. But for riders like Joanne, he might as well be saying: "You got legs, don’t you?"

Have a question? Follow @Gothamist on Instagram for special opportunities and prompts to submit questions.

If you're not on Instagram, email cguse@wnyc.org or snessen@wnyc.org with the subject line "Curious Commuter question."

You must provide your first name + borough (or city if outside of NYC) to have your question considered. 

This week in transit history

The long-awaited Grand Central Madison Station opened exactly a year ago Thursday, finally bringing LIRR service to Manhattan’s East Side. The service was originally promised in 1968, the year the MTA was formed. But after 55 years and billions of cost overruns, riders on the commuter railroad can finally use the service — though they’re dropped off 15 stories underground.