Restaurant groups file suit after business insurance rejections during coronavirus pandemic

Two Boston restaurant groups that include various well-known downtown bars including Carrie Nation, The Black Rose and Coogan’s have filed lawsuits against their insurance companies, saying the underwriters owe the struggling eateries large sums of money after denying claims related to the coronavirus impact on business.

Glynn Hospitality Group, which owns The Black Rose, Brownstone, Central Wharf, Clerys, Coogan’s, Dillon’s, Granary Tavern and Sterling’s, and East Coast Tavern Group, which includes Carrie Nation Cocktail Bar & Restaurant, Scholars American Bistro & Bar, Sunset Cantina, Emmets and Magnolia Smokehouse — filed separate suits last week in Suffolk Superior Court. Both groups were represented by Sweeney Merrigan Law.

Glynn is suing insurer Lloyd’s of London, and East Coast filed against RSUI. While the suits have some differences in the specifics, they include much of the same language and general arguments.

“They’re paying exorbitant amounts for insurance, and then getting nothing when they need it,” attorney Tucker Merrigan, who’s working on the cases, told the Herald. “Every single one of these restaurants is employing dozens and dozens of people.”

The lawsuits contend all of the restaurants have “coverage for physical loss of or damage to the insured property” as well as “extra expenses from all risks including but not limited to civil authority actions affecting the functionality of one’s property.” They allege its restaurants have “suffered substantial losses of insured business income.”

The lawsuits don’t include dollar amounts — they just talk about “compensatory” and “punitive” damages — but Merrigan said, “You’re talking millions of dollars.”

Neither of the insurance companies responded to calls and emails for comment, other than a receptionist at RSUI saying she’s been told to say the company doesn’t do interviews.

The “lynchpin” of these cases, Merrigan said, is whether the COVID-19 pandemic counts as “physical damage” to the restaurants — which the insurers contend isn’t the case. Merrigan cited Bay State case law that found that carbon monoxide issues did count as physical damage for these purposes, and he said coronavirus should be treated the same.

“You wouldn’t take a used mask from someone, right?” he said. “It’s physical damage.”

The lawsuits argue, “The COVID-19 virus was an external physical force detrimental to people and/or property, that caused damage to Plaintiffs’ properties. The COVID-19 virus was present at each of insured’s locations at all relevant times, or there was an imminent risk of on-site viral presence at all relative times, or both.”

Merrigan said the companies are keeping an eye on a soon-to-be decided case in federal court by Hampshire House, which owns both Cheers locations, which filed a similar suit in July against a different insurer.

Read More