California Restaurants File Declaratory Relief Action Seeking Coverage for COVID-19-Related Losses

by Dominica C. Anderson, Philip R. Matthews, and Gina M. Foran

On Wednesday, French Laundry and Bouchon Bistro, two high-end Michelin star Napa Valley restaurants, filed the first California coverage suit for COVID-19-related losses including lost business income. Plaintiffs, represented by the same firm that filed the first COVID-19 coverage lawsuit in New Orleans two weeks ago, allege that the Napa County stay-at-home order related to COVID-19 caused them to lose business and furlough over 300 employees.

Plaintiffs allege they carry a property, business personal property, business income and extra expense policy issued by Hartford Fire Insurance Company. Plaintiffs allege that the policy’s “Civil Authority” insuring agreement entitles them to “the actual loss of business income sustained and the legal, necessary and reasonable extra expenses incurred” due to the Civil Authority’s order prohibiting access to the businesses. The “Civil Authority” is the Napa County Health Officer, Karen Relucio, a named defendant who is alleged to have issued the stay at home order. Like many similar orders around the state, the order restricts restaurant services to take out and delivery.

It is important to note that the policyholders in this case allege that the policy contains a Property Choice Deluxe Form that specifically extends coverage to direct physical loss or damage caused by virus. The policyholders do not cite the specific policy language at issue and are not seeking any determination in their suit that their facilities are directly damaged by the virus.

Duane Morris’ insurance and reinsurance group continues to monitor COVID-19-related events.