Virus Exclusion Cooks The French Laundry's Coverage Suit

By Shawn Rice
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Law360 (April 27, 2021, 4:58 PM EDT) -- A California magistrate judge on Tuesday dished out a dismissal in famed California eatery The French Laundry's suit seeking coverage for pandemic-related government shutdown orders, saying a virus exclusion precludes coverage for economic losses caused by COVID-19.

U.S. District Magistrate Judge Jacqueline Scott Corley ruled Hartford Fire Insurance Co. doesn't have to cover business interruption losses to either The French Laundry or Bouchon Bistro, a pair of Napa Valley-based French restaurants owned by prominent chef Thomas Keller.

"While the court acknowledges the havoc that the COVID-19 pandemic and consequent shelter-in-place orders have caused businesses throughout this country and the world, the court cannot read an ambiguity into an insurance contract where none exists," Judge Corley said.

The owners of the restaurants filed suit in March 2020, alleging Hartford is responsible for their losses caused by closing down the Yountville, California, locations under government orders amid the coronavirus outbreak. The French Laundry famously became connected to California Gov. Gavin Newsom, who dined there after he imposed a statewide stay-at-home order. The California governor now faces a recall.

In Tuesday's order, Judge Corley dismissed the suit without leave to amend, finding the restaurants don't allege losses covered under their policy's limited virus coverage. That coverage extends to viral contamination resulting from "a specified cause of loss, equipment breakdown or flood," the judge said.

Judge Corley found nothing inconsistent with Hartford's position under the virus exclusion. The restaurants only offer vague allegations, according to the judge, that Hartford and the insurance industry gave conflicting statements to California's insurance department about the removal of pandemic risk from the policy.

Judge Corley was also not persuaded that potential discovery might reveal more restrictive versions of the virus coverage provision or evidence that Hartford recognized the risks of a viral pandemic. Even if this were true, the judge said it doesn't change the fact that the policy bars coverage for these types of losses.

Representatives for the restaurants and Hartford didn't respond to requests for comment Tuesday.

The restaurants are represented by J. Scott Gerien of Dickenson Peatman and Fogarty, John W. Houghtaling II and Jennifer Perez of Gauthier Murphy & Houghtaling LLC and David P. Matthews of Matthews & Associates.

Hartford is represented by Johanna Oh, Sarah D. Gordon, James E. Rocap III and Johanna Dennehy of Steptoe & Johnson LLP.

The case is French Laundry Partners LP et al. v. Hartford Fire Insurance Co., case number 3:20-cv-4540, in the U.S. District Court for the Northern District of California.

--Additional reporting by Jeff Sistrunk. Editing by Vincent Sherry. 

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