Two French restaurants in California recently sued Hartford Fire Insurance over claims that the company should provide coverage during the coronavirus pandemic.

The French Laundry and Bouchon Bistro, both owned by well known chef Thomas Keller, argue that the businesses deserve payments under their “all-risk” insurance policies. Despite this, the restaurants allegedly expect Hartford Fire Insurance to deny coverage for their forced coronavirus closure.

Both of Keller’s restaurants were reportedly forced to shut down on March 18 after Napa County’s health officer ordered non-essential businesses to close. As a result, the restaurants are reportedly out of business and had to furlough 300 employees.

“Except for delivery or takeout, the Order does not specifically exempt restaurants and has caused a shutdown of plaintiffs’ business operations,” the restaurants note.

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Business interruption insurance provides coverage for policyholders in the event that they are forced to close down. Most often, this coverage applies to natural disasters such as wildfires or hurricanes. Keller’s California restaurants argue that their business interruption coverage should also apply to the global pandemic caused by COVID-19.

According to the restaurants, their business interruption policies include “civil authority” coverage, which protects for losses that result from government-mandated closures. The business interruption lawsuit claims this coverage would apply to the recent shutdown order in California.

“Under the policy, insurance is extended to apply to the actual loss of business income sustained and the actual, necessary and reasonable extra expenses incurred when access to the scheduled premises is specifically prohibited by order of civil authority as the direct result of a covered cause of loss to property in the immediate area of plaintiffs’ scheduled premises,” the restaurants explain in their business interruption lawsuit.

The business interruption lawsuit continues to argue that the coronavirus outbreak and subsequent closures should be treated seriously. The restaurants argue that the virus will likely create “significant physical damage.” In fact, the lawsuit points to the scientific community and people who have been affected by the virus as authorities who “recognize the Coronavirus as a cause of real physical loss and damage.”

The business interruption lawsuit says that physical contamination from the virus is one form of physical loss that could arise due to the coronavirus outbreak.

According to the plaintiffs, the virus “physically infects” and stays on certain surfaces for up to 28 days. To counteract this, the restaurants will allegedly be forced to undergo significant cleaning and fumigating processes as seen in China, Italy, France, and Spain.

“The virus is physically impacting public and private property, and physical spaces in cities around the world and the United States,” the restaurants conclude.

Based on this conclusion, and the lack of any policy exclusion for a viral pandemic such as the coronavirus, the plaintiffs argue that they should be provided payments under their business interruption insurance.

“Any effort by the Hartford Defendants to deny the reality that the virus causes physical loss and damage would constitute a false and potentially fraudulent misrepresentation that could endanger policyholders and the public,” the business interruption lawsuit argues.

Although Hartford has not denied business interruption coverage for the restaurants, the plaintiffs argue that this is a realistic possibility. To counteract this, the restaurants seek declaratory judgement from the court that failing to cover these closures will leave the restaurants without vital coverage they paid for in preparation for this exact situation.

Unfortunately, businesses may assume that most insurance companies will deny business interruption coverage for policyholders during the coronavirus. According to counsel for the restaurants, this belief is motivated by false statements from industry professionals.

“To avoid payments for a civil authority shutdown the insurance industry is pushing out deceptive propaganda that the virus does not cause a dangerous condition to property,” counsel for the plaintiff-restaurants told Law360 in an emailed statement.

“This is a lie, it’s untrue factually and legally. The insurance industry is pushing this out to governments and to their agents to deceive policyholders about the coverage they owe.”

The California business interruption lawsuit is not the first action taken by restaurants during the coronavirus pandemic. A popular New Orleans restaurant also took action against their insurance company earlier in March, similarly arguing that their mandated closures should be covered by business interruption insurance.

The California restaurants are represented by John W. Houghtaling II and Jennifer Perez of Gauthier Murphy & Houghtaling LLC and Paul G. Carey and Valerie R. Perdue of Dickenson Peatman & Fogerty.

The California Business Interruption Lawsuit is French Laundry Partners LP, et al. v. Hartford Fire Insurance Co., et al., Case No. unavailable, in the Superior Court for the State of California, County of Napa.