Florida Sports Bar Says Lloyd's Must Cover COVID-19 Closure

By Mike Curley
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Law360 (April 2, 2020, 1:55 PM EDT) -- A sports bar in Florida filed a suit against Lloyd's of London in federal court Thursday after the insurer denied coverage for its state-mandated closure in response to the COVID-19 pandemic.

Prime Time Sports Grill Inc., which operates Prime Time Sports Bar in Tampa, told the court that its business has been devastated by Gov. Ron DeSantis' orders to close bars and other nonessential businesses in an effort to slow the spread of the virus.

According to the complaint, Prime Time holds a policy protecting it from risks to its business that's effective through June, and the policy does not exclude government orders to suspend business.

DeSantis first ordered businesses to close for 30 days on March 17, then issued a further stay-a-home order and an additional 30-day closure for nonessential businesses on Wednesday, according to the complaint.

Prime Time requested that Lloyd's pay up under its policy and cover it for the loss of business shortly after DeSantis' first shutdown order, but the insurer denied coverage on March 23, saying the policy only covers work stoppage that results from physical losses and property damage, according to court documents.

As a result, Prime Time said it is uncertain about Lloyd's obligations and asked the court to find that the policy does cover the COVID-19 shut down and that Lloyd's must pay out up to the $200,000 policy limit.

Michael V. Laurato of Austin & Laurato PA, representing Prime Time, said he believes this is a simple case, as the policy does not have a clear reason to exclude coverage, and in fact has clauses providing coverage for loss of business as a result of a civil authority's actions.

"This whole coronavirus thing and the shutdown has just been completely devastating to these folks, especially the smaller businesses that have paid these premiums for this coverage," he told Law360 on Thursday. "You expect the insurance company to step up, give these people some value for their premiums and do their fair part."

He added he expects that the courts will find that having the government shut down one's business should be considered a "physical loss" that triggers the policy.

A spokesperson for Lloyd's declined to comment.

The suit is one in a string of actions across the country by bars, theaters and other establishments hit by government-mandated closing orders who are looking to their insurance carriers to cover their costs. Earlier this week, a group of Chicago movie theater and restaurant owners hit Society Insurance Inc. with a similar suit seeking coverage.

And earlier in March, Lloyd's was hit with a separate suit over the COVID-19 shut down by a restaurant in New Orleans, while a pair of Napa Valley-based French restaurants owned by prominent chef Thomas Keller hit Hartford Fire Insurance Co. with similar claims.

Legislators and insurance companies throughout the country have been butting heads on how to handle insurance claims from businesses closed as a result of government orders in the last few weeks.

Some insurance attorneys have told Law360 since the closing orders that while they believe such policies do cover the COVID-19 shutdown, proving it in court may depend on scientific experts to determine whether, and how long, the buildings are affected by the outbreak.

Some states have introduced legislation to make the business interruption policies retroactively cover the COVID-19 outbreak, though attorneys representing insurers have told Law360 that such measures may be unconstitutional in restricting their freedom to contract.

Prime Time Sports Grill is represented by Michael V. Laurato of Austin & Laurato PA.

Counsel information for Lloyd's was not available Thursday.

The case is Prime Time Sports Grill Inc. v. Certain Underwriters at Lloyd's London, case number 8:20-cv-00771, in the U.S. District Court for the Middle District of Florida.

--Additional reporting by Jeff Sistrunk. Editing by Alyssa Miller.

Update: This story has been updated with comment from Prime Time Sports Grill's attorney and a response from Lloyd's to a request for comment.

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

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