As the COVID-19 pandemic continues to inflict enormous damage upon the restaurant and hospitality industry, restaurants across the country are suing their insurance companies over cash payouts for COVID-19-related losses. These restaurant owners believe that business interruption insurance, a special policy that covers income lost to disasters, should also cover work stoppages due to the novel coronavirus outbreak. But insurance companies disagree, arguing that because the disease does not physically damage a restaurant, coverage does not apply.
On Wednesday, attorneys from law firms in Chicago and Cleveland announced they are joining forces to represent restaurants and other businesses that have been denied business interruption claims. The firms’ first client is Maillard Tavern, the River West burger restaurant owned by Tony Priolo and Ciro Longobardo. The two also own Piccolo Sogno, the famed Italian restaurant across the street from Maillard, as well as Nonnina in River North.
The Maillard Tavern lawsuit claims that the restaurant suffered “losses incurred due to a ‘necessary suspension’ of its operations,” and should be entitled to a payout from its insurance company, Society Insurance. It cites states and cities across the country that have claimed “COVID-19 and the pandemic cause direct physical loss and damage to property,” and asks for both a jury trial and the money the restaurant believes it is owed by the insurance company. The dollar figured wasn’t shared.
Among those representing Maillard is Bobby Rutter, an attorney with the Cleveland firm Rutter & Russin who also has experience in the food and beverage world. He’s the chief operating officer at Forward Hospitality Group, a Cleveland company that owns nine bars and restaurants. The group intends to open its first Chicago restaurant, Shake-It, with the James Beard Award-winning chef Jonathan Sawyer sometime this year.
The timing of the pandemic puts Midwestern restaurants at particular disadvantages, as business during busy spring and summer months typically makes up for the slow winter season. This is one reason Rutter argues that restaurant owners need payouts from their claims. “Hospitality people aren’t sitting on massive cash reserves,” he says. “They’re just screwed.”
Illinois’s dine-in restaurants and bars have been closed since March 16, when Gov. J.B. Pritzker issued an executive order that he has since extended through April. Some restaurants have focused on delivery and carryout, but they’re still struggling without customers in their dining rooms.
Although Rutter’s attorney fees could provide his own hospitality company with a new revenue stream, Rutter says he engages clients on a contingency fee basis, so he only collects if the courts rule in favor of the plaintiff.
Other attorneys in the are have decided to pursue similar lawsuits at the county level. Chicago’s first high-profile business interruption suit was filed in late March in federal court, with a group of plaintiffs including Big Onion Tavern Group and the owners of the Whale and Happy Camper. As in the Maillard lawsuit, the defendant was Society Insurance.
A spokesperson for Society Insurance issued the same response the company has shared in regard to previous lawsuits: “Society does not comment on ongoing litigation. We look forward to a favorable resolution of this situation in the near future.”
Rutter’s firm is working in collaboration with the Cleveland firm Spangenberg, Shibley & Liber and the Chicago firm Romanucci & Blandin. Rutter says that he and his fellow attorneys plan on filing additional cases involving high-profile restaurants in the coming weeks; so far, he adds, “hundreds of restaurants” across the country have contacted them.