Swank NYC eateries sue for COVID-19 business interruption coverage
These New York City destination restaurants also argue in their insurance lawsuit that pandemic safety rules rendered them non-functional.
Celebrity chefs including Rick Bayless, Marcus Samuelsson and Andrew Zimmerman have taken to social media to spotlight the plight of restaurants during the global pandemic, many of which have suffered millions of dollars in potentially uninsured losses.
Now, a group of New York restaurants and bars, including well-known establishments such as Ess-a-Bagel, Junior’s Cheesecake and Smith & Wollensky steakhouse, have sued their insurers in state court, arguing they are entitled to business interruption insurance coverage for losses and expenses associated with the coronavirus pandemic.
Related: Pandemic Risk Insurance Act and the future of business interruption insurance
In a complaint filed in Brooklyn Supreme Court, New York-based Jenner & Block partner Jeremy Creelan argued that the restaurants’ losses have been a direct result of “unprecedented” shutdown orders and restrictive reopening rules.
The state and city government orders required alterations that “rendered plaintiffs’ properties non-functional or only partially functional as restaurants or bars,” Creelan wrote.
The complaint included photos and diagrams demonstrating how restaurants’ floor plans changed in connection with the pandemic, drastically reducing the number of customers who could partake in sit-down meals or pick up items to go. Restaurants have rearranged their fixtures and spent money on new equipment, including floor markers for social distancing and plexiglass barriers, according to the complaint.
Pandemic insurance coverage question
All of the plaintiffs purchased all-risk commercial property insurance policies, which included business interruption coverage, Creelan wrote. They paid a “substantial premium” for insurance to cover “even unprecedented and unanticipated risks of loss,” he argued.
Each of the businesses submitted a timely claim for coverage amid the pandemic, Creelan wrote, but all have been actually or constructively denied.
“On information and belief, insurers have taken a nearly blanket approach of issuing denials to policyholders claiming losses caused by the shutdown and partial reopening executive orders,” Creelan wrote. “The denials are based on the wholly incorrect contention that plaintiffs’ claims did not result from “direct physical loss of’ or ‘damage to’ insured property, as required by their policies.”
The plaintiffs share a common legal threshold question, Creelan wrote: whether the insurers must provide coverage for direct physical loss or damage caused by the “unprecedented” executive orders.
In a statement, Creelan said the restaurants are seeking the coverage for which they already paid.
“These restaurants paid their premiums and believed in good faith that when their businesses were interrupted for situations covered by their insurance policies, they would be made whole. But they weren’t. And that’s not right. We believe they are entitled to the benefit of their bargain,” he said.
The case is captioned Abruzzo DOCG d/b/a Tarallucci e Vino v. Acceptance Indemnity Insurance.
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