Legal Sea Foods and an insurance company that sold it an "all risks" insurance policy on March 1 are now battling in court over whether the insurer has to pay the restaurant chain millions to cover losses from shutting its 34 restaurants due to Covid-19.
In a lawsuit filed in US District Court in Boston in May and updated last month, the Boston-based seafood chain says the Strathmore Insurance Co. of New York knew about the risk of Covid-19 when it issued the policy yet did not include any exclusions for viruses and so needs to pay up because of the "devastating effect" the Covid-19 pandemic has had on Legal.
Carry out or delivery services are not feasible for Legal Sea Foods given its menu, brand, and business, all of which were known to Strathmore when it underwrote and agreed to insure Legal Sea Foods.
And that's the issue right there, Strathmore responded, in a motion asking Judge Nathaniel Gorton to toss the Legal suit: Like other restaurants, Legal could have continued to operate and sell meals through takeout or delivery and it's not the insurance company's fault Legal was too hoity-toity to do so.
Plaintiff was required, at a minimum, to plead facts showing that civil authorities took action that completely prohibited and blocked access to its restaurants. The Complaint contains no such factual allegations, and the government orders cited in the Complaint... confirm that the opposite is true: the orders, without exception, permit access to restaurants and allow them to prepare food and beverages for carry-out and delivery service to their customers. As Plaintiff has not pled that a civil authority prohibited access to any of its restaurants, it is not entitled to Civil Authority coverage as a matter of law.
Equally important, the insurer continued, is that the policy relates to physical damage to premises. Legal has provided no proof that anybody at any of its restaurants actually contracted the virus, let alone showed “any direct physical loss of or damage to property” from the virus as it says its policy requires.
Gorton has yet to rule on Strathmore's request.