Calif. French Eateries Sue Hartford For Coronavirus Coverage

By Jeff Sistrunk
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Law360 (March 27, 2020, 3:36 PM EDT) -- A pair of Napa Valley-based French restaurants owned by prominent chef Thomas Keller have sued Hartford Fire Insurance Co. in California state court, seeking a ruling that the insurer must cover the eateries' losses due to government-mandated closures tied to the outbreak of the novel coronavirus.

In a suit filed in Napa County Superior Court on Wednesday, Keller's restaurants The French Laundry and Bouchon Bistro said they are entitled to payment under the "civil authority" prong of their "all-risk" property policy with Hartford, which extends coverage for losses attributable to closures decreed by government authorities.

The restaurants, both located in Yountville, California, said they were forced to shut down and furlough 300 employees after Napa County's health officer issued a March 18 order directing all nonessential businesses to cease activities amid the coronavirus outbreak.

The French Laundry and Bouchon Bistro said the health officer's order specifically cited evidence that the virus causes physical damage to property. According to the complaint, such damage has occurred at properties in the "immediate area" of the restaurants, which is a requirement for civil authority coverage to apply.

The eateries said they expect Hartford to deny coverage for their losses. They are asking for a ruling that the March 18 order triggers civil authority coverage, noting the policy doesn't contain an exclusion for losses caused by viruses.

"To avoid payments for a civil authority shutdown the insurance industry is pushing out deceptive propaganda that the virus does not cause a dangerous condition to property," said an attorney for the restaurants, John W. Houghtaling II of Gauthier Murphy & Houghtaling LLC, in an emailed statement. "This is a lie, it's untrue factually and legally. The insurance industry is pushing this out to governments and to their agents to deceive policyholders about the coverage they owe."

A representative for Hartford declined to comment Friday. 

The complaint came a week after Houghtaling and his firm filed the first ever suit concerning business interruption coverage for coronavirus-related losses, asking a Louisiana court to hold that underwriters at Lloyd's of London must cover losses suffered by a New Orleans eatery called Oceana Grill due to government-ordered closures.

The restaurants are represented by John W. Houghtaling II and Jennifer Perez of Gauthier Murphy & Houghtaling LLC and Paul G. Carey and Valerie R. Perdue of Dickenson Peatman & Fogerty.

Counsel information for Hartford was not immediately available Friday.

The case is French Laundry Partners LP et al. v. Hartford Fire Insurance Co. et al., case number not immediately available, in the Superior Court for the State of California, County of Napa.

--Editing by Stephen Berg.

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