Three restaurants in New Jersey have lodged class action lawsuits against their insurers over their denied business interruption insurance claims related to the COVID-19 pandemic.
The lawsuits were filed in the District of New Jersey by three law firms on behalf of the restaurants. The participating law firms were Carella, Byrne, Cecchi, Olstein, Brody & Agnello; Seeger Weiss; and Robbins Geller Rudman & Dowd.
All three firms filed a suit against Chubb on April 20, 2020 on behalf of Fiorino Ristorante in Summit, NJ. The three later filed another lawsuit against Cumberland Mutual Fire Insurance on April 29, 2020 on behalf of the operator of Millburn, NJ-based Cara Mia. The most recent of the lawsuits, filed May 05, 2020, was filed on behalf of Benito Ristorante in Union, NJ – the last lawsuit also named Chubb as the defendant.
New Jersey Law Journal reported that the lawyers have already requested the Judicial Panel for Multidistrict Litigation consolidate the business interruption lawsuits.
According to the Benito Ristorante lawsuit, Chubb’s policy language stated that business interruption insurance covers a disruption of the business that is caused by physical loss or damage to the property by a “covered peril.” The same language also established that an infectious agent or communicable disease does not constitute as physical loss or damage, it states.
However, the Benito Ristorante lawsuit claims that Chubb wrongly concluded that the policyholder suffered no physical loss or damage under the policy language.
“In fact, applicable case law holds that loss of use of property that has not been physically altered does constitute ‘physical loss or damage’ for purposes of first-party property insurance, such as that contained in the policy,” the lawsuit claimed.
The lawsuit also alleges that the policy language excluding coverage for an infectious agent or communicable disease does not apply, since the business losses were caused by the mandatory shutdown orders issued by the state government.
“Plaintiff’s, and other class members’, losses were not caused by a ‘virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease’. Rather, the efficient proximate cause of plaintiff’s, and other class members’ losses, were precautionary measures taken by the State of New Jersey to prevent the spread of COVID-19 in the future, not because coronavirus was found in or on Plaintiff’s insured property.”