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Law360 (April 15, 2021, 6:33 PM EDT) -- Burger chain Steak 'N Shake on Wednesday accused Zurich North America of illegally withholding coverage of losses stemming from the COVID-19 pandemic, hitting the insurer with yet another suit over virus coverage denials in Ohio federal court.
According to the complaint, Steak 'N Shake purchased a $10 million policy from Zurich unit American Guarantee & Liability Insurance Co. that covered March 2020 through March 2021. The policy covers "all risks of direct physical loss of or damage from any cause" unless specifically excluded, Steak 'N Shake said.
Indiana-based Steak 'N Shake owns 238 restaurant locations, 31 of which are in Ohio, it said. Starting in March 2020, the company was forced to shutter its restaurants across the country to comply with public health orders as the virus ravaged the U.S.
"As a direct result of the government orders, the insured locations have suffered 'damage' directly caused by 'a covered cause of loss' not otherwise excluded, which actually occurred during the policy period," Steak 'N Shake said in its suit.
It said that its restaurants have been damaged and suffered a loss as a result of suspending their onsite operations. But Zurich has refused to cover its losses, a breach of its contract with Steak 'N Shake, the restaurant chain said.
Steak 'N Shake asked the court to enter declaratory judgment finding that Zurich must cover Steak 'N Shake's pandemic losses.
Insurers are currently contending with a mountain of pandemic coverage litigation. As of February, policyholders had filed more than 1,500 suits over insurance coverage stemming from the pandemic, according to a COVID-19 coverage litigation tracker from the University of Connecticut's Insurance Law Center. More than 122 of those suits were filed against Zurich.
On Wednesday, the Ohio Supreme Court agreed to certify whether COVID-19 causes property damage covered in business owners' insurance policies. An Ohio federal judge had asked the state's high court to step in after refusing to rule on whether Cincinnati Insurance Co. should pay for an Ohio audiology practice's business loss due to the pandemic and state-mandated closures. The judge said such "unresolved" questions of Ohio law belong to the Ohio Supreme Court to ensure uniformity of state law applications.
As "dozens, if not hundreds of cases" seeking pandemic-related coverage hit the Ohio court systems, "differing interpretations of Ohio contract law by different courts threaten to undermine the uniform application of that law to similarly situated litigants," U.S. District Judge Benita Y. Pearson said in January.
A handful of other state supreme courts, including those in Pennsylvania, Florida and New York, have been asked to certify similar COVID-19-related coverage questions but haven't responded.
Zurich representatives and counsel for Steak 'N Shake didn't immediately return requests for comment Thursday.
Steak 'N Shake is represented by Tracey S. McGurk, Edward O. Patton and Brendan P. Friesen of Mansour Gavin LPA.
Counsel information for Zurich wasn't immediately available Thursday.
The case is Steak 'N Shake Inc. v. American Guarantee & Liability Insurance Co., case number 1:21-cv-00795, in the U.S. District Court for the Northern District of Ohio.
--Additional reporting by Daphne Zhang. Editing by Ellen Johnson.
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