Acclaimed Triangle restaurant owners win lawsuit over pandemic shutdown
Posted October 28, 2020 4:00 p.m. EDT
Updated October 28, 2020 10:36 p.m. EDT
Raleigh, N.C. — Two acclaimed Triangle restaurant owners have won a lawsuit filed earlier this year against their insurance company for not honoring their business interruption policies when they had to close as a result of the COVID-19 pandemic.
The suit was filed in May on behalf of Matt Kelly, who owns Mateo Bar de Tapas, Mothers & Sons Trattoria, Saint James Seafood and Lucky's Delicatessen, and Giorgios Bakatsias, owner of Vin Rouge, Parizade, Rosewater, Bin 54, City Kitchen, Village Burger and Kipos, Farm Table and Gatehouse Tavern, against the Cincinnati Insurance Company.
In the lawsuit, the owners asked the insurance company to honor its contracts by "requiring payment for lost business income, extra expenses, and other business related losses in light of COVID-19 and the related actions by governmental authorities requiring closure of their covered business premises."
"It’s quite simple from our end," Kelly said. "We pay the insurance premium, and, you know, when you pay your insurance premium and this is your expectation and this is how your policy reads, they have to live up to their end of the deal."
"At some point, you pay for certain support, and that’s all we’re asking," Bakatsias said. "We’re not trying to be – we don’t want anything for free. We want to make sure we get what we invest in."
Jennifer Noble Kelly, who does public relations for Giorgios Hospitality Group, confirmed Wednesday afternoon that a Durham County Superior Court judge ruled earlier this month in favor of the restaurants, saying the losses should be covered.
Cincinnati Insurance Companies spokeswoman Betsy Ertel said the company plans to appeal the decision.
"We continue to believe that business interruption coverage under our property policy in this case does not apply because there was no structural alteration to property. The prevailing view by courts around the country has been that an economic loss alone doesn’t qualify as direct physical damage or loss to property, which is the trigger for business interruption coverage," Ertel said in a statement to WRAL.
North Carolina Insurance Commissioner Mike Causey addressed the issue of business interruption claims in an April letter to business owners.
"Standard business interruption policies are not designed to provide coverage for viruses, diseases, or pandemic-related losses because of the magnitude of the potential losses," Causey wrote. "Insurability requires that loss events are due to chance and that potential losses are not too heavily concentrated or catastrophic. This is not possible if everyone in the risk pool is subject to the same loss at the same time."
In the letter Causey wrote that mandating that type of coverage would "end the very existence of the business interruption insurance market as we know it" and "cripple the insurance industry causing many companies to fail, which would put the protection of homes, automobiles and businesses at risk."
"We can’t legally force insurers to cover a risk which they didn’t intend to cover and which, in some instances, was specifically excluded in the policy," Causey wrote.