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Law360 (January 25, 2021, 3:35 PM EST) -- An Illinois pancake restaurant has hit Grange Insurance Co. with a suit, alleging that the carrier breached the insurance contract by issuing a "vexatious" denial to pay for its more than $400,000 in losses due to the COVID-19 and state-mandated closures.
In a suit filed on Sunday, the Old Fashioned Pancake House Inc. said Grange wrongfully denied coverage without conducting any effective claim investigation as required under Illinois law. The restaurant said it can only use 25% of its floor space at the moment.
The pancake house, which serves breakfast including crepes, french toast and pancakes in Joliet, Illinois, said it was forced to shut down due to government closure orders during the pandemic and has lost over $400,000 in revenue.
Since its restaurant property has been rendered not safe and unfit for its intended purpose, it has incurred physical damage or loss covered under the policy, the pancake restaurant said.
In the complaint, the eatery claimed that Grange's arbitrary and unreasonable coverage denial constituted improper claims practices under Illinois law. It is asking the court to hold that Grange has breached the insurance contract and acted in bad faith in refusing to cover its losses.
The pancake house is also seeking a declaration that the insurer should fulfill its coverage obligations and demanding damages to be determined in a jury trial.
The suit came a week after an Ohio federal judge held that an insurer must cover COVID-19 related losses suffered by over a dozen restaurants, agreeing with the eateries that the policies cover the loss of use of the property. It was the fourth time a judge has ruled outright that a policyholder is entitled to coverage for pandemic-related losses, according to data compiled by the University of Pennsylvania's Carey School of Law.
Earlier this month, the Cherokee Nation prevailed in a COVID-19 business-interruption coverage dispute with several of its insurers in Oklahoma state court. Also, restaurants in North Carolina and Washington state notched summary judgment victories last year.
Representatives for the parties could not be immediately reached for comment on Monday.
The pancake house is represented by Charles A. Silverman.
Counsel information for Grange is not immediately available.
The case is The Old Fashioned Pancake House Inc v. Grange Insurance Company, case number 1:21-cv-00402, in the U.S. District for the Northern District of Illinois.
--Editing by JoVona Taylor.
For a reprint of this article, please contact reprints@law360.com.
