(March 19, 2020) - The owners of a New Orleans restaurant are suing their insurer for a declaration that their commercial policy will cover losses resulting from state and city restrictions on public gatherings to prevent the spread of Coronavirus.
Cajun Conti LLC et al. v. Certain Underwriters at Lloyd’s, London et al., No. 2020-02558, complaint filed (La. Dist. Ct., Orleans Parish Mar. 16, 2020).
Although the owners of Oceana Grill do not allege that their insurer has denied coverage, they filed a complaint March 16 in the Louisiana District Court, Orleans Parish, seeking a declaration that their Lloyd’s of London commercial policy must cover lost sales and costs of cleaning.
In the same action, Cajun Conti LLC, Cajun Cuisine I LLC and Cajun Cuisine LLC are also suing the state and its governor, John Bel Edwards, for a ruling on whether his March 13 ban on gatherings of over 250 people applies to restaurants.
According to the complaint, Oceana Grill is open 365 days a year and has the capacity to hold about 500 patrons.
The restaurant carries an all-risk commercial general liability policy with Lloyd’s, meaning coverage is available for losses unless a loss is specifically excluded, the complaint says.
The plaintiffs say there is no exclusion for losses due to a virus or global pandemic and that an exclusion for losses due to pathogens applies only to terrorism or malicious use.
The policy contains an extension for business coverage in the case of closure by civil authority, the suit says.
”Any effort by Lloyd’s to deny the reality that the virus causes physical damage and loss would constitute a false and potentially fraudulent misrepresentation that could endanger policyholders and the public,” the complaint says.
Coverage is necessary to ensure the survival of the business, the plaintiffs claim.
The suit also notes the potential impact of an order by the city’s mayor that all restaurants must limit customers to 50% of capacity and close by 9 p.m. and predicts more restrictive orders to come.
The plaintiffs also ask the court to determine whether the governor’s and mayor’s orders trigger the civil authority provision of the policy.