In-N-Out Sues Zurich To Cover COVID-19 Shutdown

By Lauren Berg
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Law360 (May 29, 2020, 10:56 PM EDT) -- In-N-Out Burgers hit Zurich American Insurance Co. with a breach of contract suit alleging the insurance company wrongly refused to cover the Golden State burger chain's business losses during the coronavirus pandemic, according to a suit filed Friday in California federal court.

In-N-Out's "all-risk" insurance policy for business interruption losses with Zurich includes coverage for all kinds of "contamination," like radiation, viruses, pathogens and disease-causing illness, but In-N-Out's claim for losses in relation to the COVID-19 pandemic was denied anyway, according to the complaint.

In-N-Out is just one of a host of eateries suing insurers over COVID-19, including suits in Texas, New Jersey, Pennsylvania, Florida, California and Louisiana.

When the spread of the coronavirus was deemed a pandemic, many states launched "state of emergency" lockdowns that severely limited the movement of people by, among other measures, closing restaurant dining rooms. In-N-Out was one of those restaurants forced to close its dining rooms, according to the suit.

"Based on the phased reopening being permitted by numerous government agencies, it appears highly likely that the reopening of dining rooms will be allowed only in a phased approach that may vary by specific jurisdiction," the restaurant chain said. "In-N-Out has suffered and continues to suffer significant losses from the closures of its dining rooms and related losses from the COVID-19 pandemic. "

In-N-Out's policy with Zurich covers loss of or damage to property, according to the complaint, which asserts that the coronavirus has damaged the chain's property. Most of In-N-Out's business comes from people going to their restaurants, as opposed to ordering delivery, according to the suit.

Despite this, In-N-Out said it was denied coverage. In fact, the restaurant said Zurich made a public announcement that there is no coverage for "virtually all business interruption losses arising from the novel coronavirus."

In-N-Out is seeking a declaration that its losses are covered by the policy, as well as damages and costs of the suit.

Counsel for In-N-Out declined to comment. Representatives for Zurich did not immediately respond to requests for comment Friday evening.

In-N-Out is represented by Robert L. Wallan and Rebecca Tierney of Pillsbury Winthrop Shaw Pittman LLP.

Counsel information for Zurich was not immediately available.

The suit is In-N-Out Burgers v. Zurich American Insurance Co., case number 8:20-cv-01000, in U.S. District Court for the Central District of California.

--Additional reporting by Daphne Zhang, Jeannie O'Sullivan, Matthew Santoni, Joyce Hanson and Jeff Sistrunk. Editing by Michael Watanabe.

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

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Case Information

Case Title

In-N-Out Burgers v. Zurich American Insurance Company


Case Number

8:20-cv-01000

Court

California Central

Nature of Suit

Insurance

Judge

Karen E. Scott

Date Filed

May 29, 2020

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