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Restaurants File First Business Interruption Suit in California

March 27, 2020 Coverage News

March 27, 2020 (Los Angeles, California) In what appears be the first lawsuit brought in California against an insurer for business interruption losses due to a government-ordered closure, two Napa Valley restaurants, The French Laundry and Bouchon Bistro in Yountville, California, have sued their insurer, Hartford Fire Insurance Company. The restaurants, headed by celebrity chef Thomas Keller, are seeking a judicial declaration that their business losses from a Napa County closure order are covered under their “all-risk” policy. In  their lawsuit, captioned French Laundry Partners LP dba The French Laundry, a limited partnership v. Hartford Fire Insurance Company, the restaurants allege that the Hartford policy covers direct physical loss or damage from the COVID-19 virus that allegedly stays on surfaces for up to twenty-eight days.

The lawsuit also names as defendant Dr. Karen Relucio, Napa County’s chief public health officer, who issued the county-wide closure directive. Among the lawyers representing the restaurants is John Houghtaling II, who is also representing Oceana Grill in a similar lawsuit in New Orleans, Cajun Conti LLC v. Certain Underwriters at Lloyd’s, London.

Governor Gavin Newsom’s Executive Order N-33-20 and like “shelter-in-place” orders issued by county and city official throughout the state suggest the likelihood that many other lawsuits will be brought in the coming months against insurers over business interruption losses – even though for the present, federal and state courthouses in California are largely closed for civil litigation.