An iconic Hollywood restaurant has filed a federal complaint against an insurer for callously disregarding its claim for COVID-19 business interruption losses.
As of May 14, there are 73,164 coronavirus cases statewide with 3,032 associated fatalities, according to the Department of Health, compared to Los Angeles, where there are 34,574 cases with 1,659 association fatalities.
Dubbed the oldest restaurant in Hollywood, Musso & Frank was founded in 1919 and served as a location for filming television shows and films, such as Once Upon a Time in Hollywood, Mad Men and Ocean’s Eleven.
Musso & Frank Grill
| Musso & Frank Grill website
“Good faith laws help our position because one of the fundamental obligations of an insurance company is to, upon presentation of a claim, conduct a prompt, balanced and thorough investigation with a view toward paying the claim,” said plaintiff’s attorney Michael J. Bidart. “That's well established noncontroversial law in California. In this case, the insurer immediately acknowledged receipt of the claim, said they were going to assign a company to investigate it but never did.”
The lawsuit alleges that the insurer’s denial is malicious, oppressive and fraudulent misconduct, representing an ongoing pattern and practice that is designed to earn illicit profits at the expense of policyholders.
“Because of the magnitude of the problem,” Bidart told the Southern California Record. “I think the Insurance industry has decided they're going to fight rather than pay and they'll only pay after they're ordered to do so or some kind of a program is instituted to support them in the effort of paying the claims, whether it's legislative or government action.”
According to the complaint, on April 1, Mitsui denied the claim as follows:
“The MSI Policy does not provide coverage for the Policyholder’s Claim because COVID‐19 is not a covered cause of loss...Here, the MSI Policy specifically excludes coverage for ‘loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease’ (the “Virus Exclusion”). Based on the information provided to date, it appears that the Policyholder’s Claim arises out of a virus – COVID‐19 –and thus is excluded under the Policy. MSI, therefore, respectfully declines coverage for the Claim under the Virus Exclusion.”
At the outset of the coronavirus plague, Los Angeles Mayor Eric Garcetti issued Safer-at-Home order on March 15, 2020 prohibiting all restaurants and retail food facilities to stop serving food for consumption on premises except to offer food to customers by delivery, curbside pick-up or drive-thru. However, Frank & Musso is not set up for delivery, curbside pick or drive thru, according to Bidart.
“Under California law, it's our position that the order of the government authority is the so-called efficient proximate cause of the loss,” Bidart said in an interview. “And that while certainly, the coronavirus was in existence in the world and in the United States, that alone did not cause the shut down of Musso &Frank. It was the order that prevented them from operating the business.”