Lucha Libre Gourmet Taco Shops in California have launched a class action lawsuit against Century-National Insurance Company for denying them business interruption insurance coverage as they had to close due to COVID-19.

Lucha Libre says they purchased coverage from Century-National to protect their businesses in the event that they suddenly had to suspend operations for reasons outside of their control.

The policy they bought reportedly provides for “Business Income” coverage, which promises to pay for loss due to the necessary suspension of operations following loss to property.

The plaintiffs assert that the business income coverage (which is also known as business interruption coverage) policy they entered into with the defendant does not include an exclusion for losses caused by the spread of a virus or communicable diseases.

Lucha Libre states they had to suspend or reduce business at their restaurants due to COVID-19 and the closure orders were issued by civil authorities in California. The plaintiff put in a claim to Century-National to pay for their losses, but the insurance company denied their claim.

“Century-National has, on a wide scale and uniform basis, refused to pay its insureds under its Business Income, Civil Authority, Extra Expense, and Sue and Labor coverages for losses suffered due to COVID-19, any orders by civil authorities that have required the necessary suspension of business, and any efforts to prevent further property damage or to minimize the suspension of business and continue operations,” the Lucha Libre taco shops class action lawsuit states.

The plaintiffs state that most property policies sold in the United States are “all-risk” property damage policies, which means they cover all risks of loss except for those expressly and specifically excluded.

They claim Century-National agreed to pay for the risks of direct physical loss to their business unless the loss was excluded or limited by the policy.

Lucha Libre says their insurance policy did not exclude or limit the coverages for losses due to a virus. The policy does contain an exclusion for losses caused by “Fungus, Wet Rot, Dry Rot, and Bacteria,” but it does not exclude losses caused by viruses.

In its Special Coverage Property Form, Century-National agreed to pay for the insureds’ actual loss of business income due to the necessary suspension of operations during the “period of restoration” caused by direct physical loss or damage, the plaintiffs claim.

Lucha Libre says the presence of virus or disease constitutes physical damage to property, which the insurance industry has recognized since 2006.

In addition, the defendants also agreed to pay necessary extra expense that its insureds incur during the “period of restoration” that the insureds would not have incurred if there had been no direct physical loss or damage to their property.

“Losses caused by COVID-19 and the related orders issued by local, state, and federal authorities triggered the Business Income, Extra Expense, Civil Authority, and Sue and Labor provisions of the Century-National policy,” the taco shops go on to state.

Luca Libre points out that on March 4, 2020, California Gov. Gavin Newsom issued an executive order declaring a state of emergency in response to COVID-19. In addition, on March 16, 2020, San Diego County issued a civil authority order which required the closure of bars in San Diego County as well as a ban on dine-in eating.

Due to these orders, Lucha Libre argues that it was forced to prohibit on-site dining at its taco shops, which severely limited the number of customers that they could service, effectuating an evaporation of their business income.

“The presence of COVID-19 caused direct physical loss of or damage to the covered property under Plaintiffs’ policy, and the policy of the other Class members, by denying use of and damaging the covered property, and by causing a necessary suspension of operations during a period of restoration,” Lucha Libre goes on to explain.

The plaintiffs then submitted a claim for loss to Century-National under its policy due to the presence of COVID-19 and the closure orders; the insurance company reportedly denied the claim.

Prospective Class Members include: “All persons and entities that: (a) had Business Income coverage under a property insurance policy issued by Century-National; (b) suffered a suspension of business related to COVID-19, at the premises covered by their Century-National property insurance policy; (c) made a claim under their property insurance policy issued by Century-National; and (d) were denied Business Income coverage by Century-National for the suspension of business resulting from the presence or threat of COVID19.”

Do you own a business that was affected by COVID-19? Leave a message in the comments section below.

The taco shops are represented by Charles S. Limandri and Paul M. Jonna of Limandri & Jonna LLP; Adam J. Levitt, Amy E. Keller, Daniel R. Ferri, Mark Hamill, Laura E. Reasons, Mark A. DiCello, Kenneth P. Abbarno and Mark Abramowitz of Dicello, Levitt, Gutzler LLC; Mark Lanier and Alex Brown of The Lanier Law Firm PC; Timothy W. Burns, Jeff J. Bowen, Jesse J. Bair and Freya K. Bowen of Burns, Bowen, & Bair; and Douglas Daniels of Daniels & Tredennick.

The Taco Shops Business Interruption Class Action Lawsuit is Unmasked Management Inc., et al. v. Century-National Insurance Company, Case No. 3:20-cv-01129, in the U.S. District Court for the Southern District of California.

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