A large group of restaurant owners, including some of the most recognizable names in Chicago’s restaurant scene, have filed suit against their insurers, accusing the insurance companies of wrongly denying their claims for coverage after Gov. JB Pritzker and Mayor Lori Lightfoot shut them down this spring in the name of fighting COVID-19.
Even after they were allowed to reopen, the restaurant owners said continued state and city restrictions have continued to cost them big money, and should require their insurers to help them cover their losses.
On July 30, attorneys John H. Mathias Jr. and Gabriel K. Gillett and others with the firm of Jenner & Block in Chicago filed suit in Cook County Circuit Court on behalf of more than 30 restaurant groups and owners.
The plaintiffs included such restaurant groups and brands as Lettuce Entertain You Enterprises; Gibson’s; Hubbard Inn; Manny’s Cafeteria and Delicatessen; Bangers & Lace; Wow Bao, and more.
It also included chains such as Noodles & Company; Roti; Golden Corral; and more.
The Peggy Notebaert Nature Museum was also among the list of plaintiffs.
“Among the Plaintiffs are owners and operators of some of the most iconic and well-known restaurants in the Chicago metropolitan area,” the complaint said. “They comprise a diverse cross section of Chicago’s legendary restaurant industry: from large national outfits with hundreds of locations and millions in revenue, to small single-location, family-run neighborhood restaurants and bars; from independently owned fine dining establishments to fast-casual franchises.”
The complaint asserts the restaurants and other plaintiffs suffered steep losses after Pritzker and Lightfoot moved to shut them down, except for carryout and delivery orders, in March upon the outbreak of the novel coronavirus that causes COVID-19.
The shutdown orders, the complaint said, “brought an end” to the restaurants’ storied “bustling” energy and life, “by imposing direct physical restrictions that impaired Plaintiffs’ properties and rendered them nonfunctional.”
Further, as the restaurants positioned themselves to reopen this summer, continued restrictions left the businesses with steep new bills to install new equipment and redesign their dining rooms and workspaces. The rules were simply designed to “prevent the congregation of people in close proximity to one another – not because the coronavirus was found in or anywhere near” any specific restaurants.
However, the restaurants said when they sought assistance from their insurers for these “mounting losses that directly resulted from the Shutdown Orders,” they were turned down. They said their claims were rejected, even though the restaurant companies had purchased expensive “all-risk” insurance policies that “provides consumers with the comfort of knowing that even unprecedented and unanticipated risks of loss are covered.”
“Each of the Plaintiffs understood, expected, and believed that their Policies would cover the direct physical loss of or damage to their property that they suffered as a direct result of the Shutdown and Reopening Orders,” the complaint said. “This understanding and expectation is both subjectively and objectively reasonable. Defendant Insurers cannot now redefine or narrow the meaning of physical loss or damage—or any other undefined terms in the Policies—to support a denial of coverage in these unprecedented circumstances.”
Defendant insurance companies include Affiliated FM Insurance; Argonaut Great Central Insurance; Badger Mutual Insurance; Charter Oak Fire Insurance, an affiliate of Travelers; Cincinnati Insurance; Citizens Insurance; Employers Insurance, an affiliate of Liberty Mutual; Ohio Security Insurance, an affiliate of Liberty Mutual; Illinois Casualty; Hartford Fire Insurance, an affiliate of The Hartford Financial Services Group; North American Elite Insurance; Secura Supreme Insurance; Sentinel Insurance, an affiliate of The Hartford; Society Insurance; Spriska; Starr Surplus Lines Insurance; Twin City Fire Insurance, a Hartford affiliate; Vigilant Insurance, an affiliate of Chubb Ltd.; and Zurich American Insurance.
The complaint accuses the insurers of breaching their contract with the restaurants. The plaintiffs allege the insurers still required them to pay full premiums for policies which provided them little protection against devastating government actions outside their control.
The complaint asks for the courts to pay unspecified damages, as well as refund the plaintiffs “the full amounts of excess premium for business interruption coverage” the restaurant owners have paid, yet from which they have received little to no coverage.
The Chicago lawsuit has been followed by a similar lawsuit filed in New York court, centered on the similar anti-COVID-19 actions taken by New York Gov. Andrew Cuomo and New York City Mayor Bill De Blasio, attorney Gillett said.
“Our clients suffered direct physical loss and damage—and hundreds of millions of dollars of losses—as a result of the executive shutdown orders,” Gillett said in a statement.
“Despite promising to cover ‘all risks,’ the insurers have wrongly refused to cover those losses. We look forward to vindicating our clients’ rights in court.”