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Legal battles with insurance company over Covid-19

Legal Sea Foods and an insurance company that sold it an "all risks" insurance policy on March 1 are now battling in court over whether the insurer has to pay the restaurant chain millions to cover losses from shutting its 34 restaurants due to Covid-19.

In a lawsuit filed in US District Court in Boston in May and updated last month, the Boston-based seafood chain says the Strathmore Insurance Co. of New York knew about the risk of Covid-19 when it issued the policy yet did not include any exclusions for viruses and so needs to pay up because of the "devastating effect" the Covid-19 pandemic has had on Legal.

Carry out or delivery services are not feasible for Legal Sea Foods given its menu, brand, and business, all of which were known to Strathmore when it underwrote and agreed to insure Legal Sea Foods.

And that's the issue right there, Strathmore responded, in a motion asking Judge Nathaniel Gorton to toss the Legal suit: Like other restaurants, Legal could have continued to operate and sell meals through takeout or delivery and it's not the insurance company's fault Legal was too hoity-toity to do so.

Plaintiff was required, at a minimum, to plead facts showing that civil authorities took action that completely prohibited and blocked access to its restaurants. The Complaint contains no such factual allegations, and the government orders cited in the Complaint... confirm that the opposite is true: the orders, without exception, permit access to restaurants and allow them to prepare food and beverages for carry-out and delivery service to their customers. As Plaintiff has not pled that a civil authority prohibited access to any of its restaurants, it is not entitled to Civil Authority coverage as a matter of law.

Equally important, the insurer continued, is that the policy relates to physical damage to premises. Legal has provided no proof that anybody at any of its restaurants actually contracted the virus, let alone showed “any direct physical loss of or damage to property” from the virus as it says its policy requires.

Gorton has yet to rule on Strathmore's request.

PDF icon Lega's complaint246.54 KB
PDF icon Strathmore's motion to dismiss153.45 KB



That has NO seafood-pun possibilities. Can't think of a single one.

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I'm sure Hub readers will be able to claw a few puns out of this.

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aren't you?

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Has to be.

You eat my seafood or you swim with the sharks...

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Gorton's decision!

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Carry out or delivery services are not feasible for Legal Sea Foods given its menu, brand, and business

Given that I ordered from Legal's on GrubHub a few times, the above statement is obviously untrue.

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grubhub and co don't always ask if the other company wants to deliver, will sometimes make fake ordering sites.

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I don't think any restaurant that doesn't do take-out will let you place an order over the phone and then have someone else come to the restaurant, sit down at the table and wait for it, and then immediately take it to-go...and I'm not sure how much GrubHub would have to charge for that to be an option they could offer, either.

Voting closed 12

The Legal upstairs at Copley has separate space, right at the entrance to the main dining room, dedicated to takeout. And I've absolutely picked up take out at the Kendall Square location (albeit back in the day, so take my anecdata with a grain of sea salt).

Voting closed 13

Looking at the insurance company's response, it's pretty clear that any coverage for an interruption in operations has to be due to physical damage to the properties in question. Unless there is another clause in the policy, they will probably win this one.

Always real THE WHOLE policy when taking out insurance, and make sure it covers even the wildest of possibilities. Yep, even frozen alien squids falling from the sky.

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This policy you were sold doesn't make any sense. Look at this: Flogging by a carnivorous plant. Double indemnity for being attacked by an enraged rug.

Good Old Fester. He gave me complete coverage.

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A headline writer's dream or nightmare?

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Death by kitchen.

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Commercial Property

In the event that real property is contaminated, or a threat of contamination exists, as a result of exposure to influenza, such property may be quarantined or otherwise rendered inaccessible either voluntarily or by governmental order. In addition, the actual or perceived presence of the influenza virus at or near such real property may cause decreased customer traffic for retail operations, as well as increased employee absences. Either of these scenarios may lead to claims under commercial property policies’ business income/extra expense coverage for damages flowing from such business interruption. Under many commercial property policies, insurers first determine whether the insured property suffered any direct physical loss or damage. The threshold issue is whether the presence of the influenza virus is considered direct physical loss or damage. For example, when the virus is detected on a desk, water fountain, or gym equipment, is that direct physical loss?

Even if direct physical loss is demonstrated, the insurer will most likely invoke the policy’s pollution or contamination exclusions, as well as other standard exclusions. Following the outbreak of SARS and Avian Flu in the 2004-2006 period, insurers bolstered the “contamination” exclusion to expressly exclude loss resulting from “…virus, disease causing or illness causing agent…” unless caused by otherwise insured physical damage. Given the volume of mold-related claims over the past decade, many insurers have also added specific mold exclusions which attempt to incorporate an exclusion for viruses. The application of the mold exclusion to airborne viruses, however, is inconsistent with the intent of the drafters and the representations made to state insurance regulators in securing approval of the exclusion.

Even without direct physical damage or loss to the insured property, coverage may be available under the common commercial property policy’s “civil authority” coverage extension, if the business interruption damages were caused by the order of a civil authority prohibiting access to the insured property, and the cessation of operations arises from actual damage to property other than the insured property. Given the increased volume of civil authority claims arising out of recent terrorist activity and catastrophic natural disasters, however, insurers have vigorously contested such claims.


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Sorry Legal, this doesn't fly. The contract doesn't v seem to cover this sort of thing. The insurance company also has a point. I'm not saying Legal should have opened for take out service but to claim a complete inability to due to style of food is disingenuous to say the least. What's the real difference between Kellys/Bell Aisle and Legal?

Granted you don't serve the whole menu and maybe you don't open every store but they have the facilities to manage making an attempt.

Once again I'm not judging their judgement but simply saying based on the facts and the coverage Legal took a leap assuming it was covered and is ballsy to sue. I kind of think like this would be if I had a Cadillac level health plan and I expected my health insurance company to cover my additional Covid related expenses. They would look at me like I was crazy. It's not terribly fair I got stuck with the bill but that's not really my insurances problem and it wouldn't be fair to them either.

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"Carry out or delivery services are not feasible for Legal Sea Foods"

This is such BS. Nearly every restaurant in my neighborhood now does take out, including ones that are more upscale than Legal Sea Foods and have never done take out before.

Or how about the fact that Legal Sea Foods actually HAS a take out only restaurant called Legal Fish Bowl in Quincy Marketplace?

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That thing that raised my taxes. Thank you, again, Romney, you piece of garbage.

If they sell such a great product, why are they always either in court or begging government to force people to buy it? A fair economy would exclude the concept entirely.

That's a (expletive) excuse from Legals, though. I hate this story because one of these entities is going to not lose.

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"All perils" actually means "all perils except the one that caused your claim".

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