A celebrity chef and owner of a popular restaurant chain is seeking a declaratory judgment in a dispute that has emerged with his insurance company which is refusing to reimburse business losses incurred due to COVID-19 government shut down orders.
As of April 15, there were 24,424 positive COVID-19 cases statewide, according to the California Health Department’s dashboard, and 821 deaths.
Phillip Douglas and Scratch Restaurants LLC sued Farmers Group in the Superior Court for the State of California County of Los Angeles, requesting resolution as to the rights, duties, responsibilities and obligations of the parties under the policy.
“Plaintiff faithfully paid policy premiums to FARMERS to specifically provide all-risk coverage, including the actual loss of business income due to the necessary interruption of business operations due to direct physical loss or direct physical damage to property as well as a civil authority shutdown,” wrote attorney Brian Kabateck in his client’s complaint.
Plaintiff Scratch Restaurants LLC is the managing entity for Scratch Bar, Sushi Bar LA, and Sushi Bar Montecito.
The coverage should have allegedly kicked in starting March 11, when the World Health Organization officially recognized the COVID19 pandemic, however, when Douglas filed a claim with the insurer for business interruption reimbursement, he was told it wasn’t covered, according to Kabateck.
“That’s wrong,” Kabateck told the Southern California Record. “The shutdown we’re all under today is a severe example of business interruption.”
Gov. Gavin Newsom proclaimed a state of emergency on March 4, 2020 due to COVID-19 and subsequent stay-at-home orders on March 19, 2020.
"We decline comment on matters in litigation," said Carly Kraft, external communications manager with Farmers.
Lost profits, payment of wages to employees and payment of bills while the business is inoperable are some of the expenses that are typically covered under business interruption insurance, as previously reported in the Southern California Record.
“We are asking the judge to make a determination as to how the policy applies,” said Kabateck. “My client wants the determination for himself and other businesses.”