A federal judge last week dismissed Legal Sea Foods' lawsuit against its insurer over its "all risks" insurance policy, saying the policy only covered "physical" damage to its restaurants and that while Covid-19 might be devastating, the virus did no harm to the chain's physical assets.
US District Court Judge Nathaniel Gorton's decision could mean bad news for a number of other local businesses - including the Hampshire House - that also sued when their insurers refused to pay claims based on losses due to Covid-19 over the past year.
Restaurants in particular might be in for a legal loss because, in addition to declaring that the policies, which cost extra, exclude virus losses directly, Gorton also dismissed Legal's claim it was also due money under a separate clause calling for payments should a business be closed on the order of a "civil authority" - in this case, Gov. Baker and his Covid-19 emergency orders.
Gorton ruled that although Baker may have detracted from Legal's business by ordering its dining rooms shut, he did not, in fact, "prohibit access" to the restaurants as required by the "civil authority" clause of its policy:
Although Legal alleges that the Orders mandated the closure of and prohibited access to some of its insured restaurants, plaintiff fails to identify any specific Order that expressly and completely prohibited access to any of the Designated Properties. In fact, Legal acknowledges in both [its complaint] and its memoranda opposing the [request for dismissal] that the Orders permitted its restaurants to continue carry-out and delivery operations. Consequently, Legal cannot establish a necessary prerequisite of coverage under the civil authority provision of the Policy. ...
To the extent Legal suggests that dismissal of its civil authority coverage claim is inappropriate because it would have suffered greater financial loss by keeping its restaurants open for carry-out and delivery services, it does so in vain. It is immaterial whether it is economically feasible for Legal to continue restaurant operations solely for carry-out and delivery sales. Rather, the relevant inquiry is whether the Orders prohibited access to the Designated Properties, which they clearly did not for the reasons stated above.
Via Boston Business Journal.