Chicago Restaurant Hits Insurer With COVID-19 Coverage Suit

By Mike Curley
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Law360 (April 15, 2020, 6:03 PM EDT) -- A Chicago restaurant is taking its insurer to state court, alleging that it wrongfully denied business interruption coverage after an order from the governor of Illinois seeking to stem the tide of COVID-19 shut its doors and left it with "devastating financial losses."

In a complaint filed in Cook County on Tuesday, the owners of Maillard Tavern LLC said despite paying the premiums for business interruption insurance and making a timely claim after Gov. Jay Pritzker shut down all sit-down restaurants and nonessential businesses, Society Insurance denied the claim.

According to the complaint, the insurance policy that Maillard holds includes coverage for "physical loss" and for business interruption caused by orders from a civic authority, both of which the tavern owners say were triggered by the outbreak.

"We have lost our livelihoods and our ability to pay our valued employees, our vendors and our rent. As responsible business owners, we paid our business insurance premiums but have been denied the benefits of that policy when we need it most," the tavern's co-owners Tony Priolo and Ciro Longobardo said in a press release Wednesday. "This problem is not just about our company, this is an industry-wide problem that could crush our economy and community if all of the restaurants, retailers and other businesses lose the safety net we depended on from insurance."

According to the suit, because COVID-19 is a human pathogen that can physically contaminate surfaces, its presence or potential presence in the restaurant is a "physical loss" of the property during the pandemic, which the restaurant said triggers coverage in the policy.

In addition, the policy includes coverage for loss of access to the building because of orders from a civic authority, such as the governor's shut-down orders, according to the complaint. The suit is seeking a declaration of coverage, but is not making any claim of bad faith or for other damages, the attorneys said in the release.

"Clearly, restaurant owners sustained deep and devastating financial losses through no fault of their own; rather, they are complying with the state of Illinois' order to slow the spread of the COVID-19 virus," Antonio Romanucci of Romanucci & Blandin LLC, one of the three firms representing the restaurant, said in the release. "In an effort to protect their businesses, including their employees, from a situation like this, our plaintiff did the responsible thing in months and years gone by, and procured business interruption insurance that included a provision for losses incurred due to a 'necessary suspension' of their operations due to a government order."

Maillard Tavern's legal team also includes attorneys from Rutter & Russin LLC and Spangenberg Shibley & Liber LLP.

During a press conference held via video streaming on Wednesday, attorneys from the three firms took aim at the insurance industry as a whole, saying that numerous insurance carriers are issuing blanket denials of coverage for these shutdowns, with Romanucci calling the trend of insurers taking premium payments while denying coverage for the outbreak "predatory."

"A pandemic is not novel to insurance companies. They collect premiums from customers, and then those insurance companies earn profits when they do not pay out dollars on claims," Romanucci said at the press conference. "The insurance companies, such as Society, are sitting on billions and billions of dollars of premiums collected, claiming profits off these premiums, while restaurants and retailers are literally going hungry and their prospects for reopening after this pandemic is over, certainly their prospects are dim."

The attorneys said they are also talking to and representing numerous other businesses facing the same issue as Maillard, but added they don't expect the various COVID-19 insurance coverage cases to form a class action, though they might be consolidated in other ways down the line.

Robert P. Rutter of Rutter & Russin LLC added there's a danger in insurance companies giving blanket denials to COVID-19 coverage, as it might discourage business owners from filing claims.

A spokesperson for Society Insurance declined to comment.

Maillard Tavern is not the only one taking Society Insurance to court over the outbreak. In March, a group of Chicago movie theater and restaurant owners led by Big Onion Tavern Group LLC hit the insurer with a suit in federal court, similarly alleging Society wrongfully denied them coverage for work interruptions resulting from the state-mandated shutdown.

Other insurers are facing similar suits, as a growing number of businesses have taken them to court over denials of business interruption coverage stemming from the COVID-19 pandemic, including a D.C. restaurant, an Illinois dental clinic, a nonprofit professional theater in Indiana, a Florida sports bar, a scuba shop in the Florida keys and a group of Texas movie theaters.

Maillard Tavern is represented by Antonio M. Romanucci, Gina A. Deboni and David A. Neiman of Romanucci & Blandin LLC, Robert P. Rutter of Rutter & Russin LLC and Nicholas A. DiCello, Dennis R. Lansdowne and Jeremy A. Tor of Spangenberg Shibley & Liber LLP.

Counsel information for Society Insurance was not available.

The case is Maillard Tavern LLC v. Society Insurance Inc., case number 2020CH03843, in the Circuit Court of Cook County, Illinois.

--Editing by Michael Watanabe.

For a reprint of this article, please contact reprints@law360.com.

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