Some (actually not so) important background: when the TV show Cheers was popular, a bar opened in Boston which was named Cheers to attract tourists who were fans of the show. Natives knew that the “legitimate” Cheers bar was the Bull & Finch Pub, on Beacon Hill — because the exterior of the TV show’s bar was shot there. Back in the day, it was a pretty good bar, although nobody knew my name when I went there. Eventually the fake Cheers bar also took over the Bull & Finch and renamed it Cheers.
Yesterday Hampshire House Corporation, the owner of both Cheers bars as well as a couple of other restaurants, filed a lawsuit in the United States District Court for the District of Massachusetts against Fireman’s Fund Insurance Company, Associated Indemnity Corporation, and Allianz Global Risks United States Insurance Company, alleging that the insurers have wrongfully denied coverage for business interruption claims caused by — not the Covid-19 pandemic, but the emergency orders limiting the operation of restaurants during the pandemic. Presumably that is because the policies have a virus exclusion that would apply to pandemic losses.
According to the complaint, the emergency orders “were not a foregone conclusion or obvious consequence of the Covid-19 pandemic, as evidenced by the great variance between states and localities as to the types and extent of restrictions placed on business and public activities.”
The complaint alleges that the emergency orders caused Hampshire House to lose the ability to provide restaurant, alcohol, and retail sales, prevented its customers from physically occupying the premises, and caused the properties to be physically uninhabitable. According to the complaint, those losses constituted “physical loss of and damage to the insured properties for regular business operations.” Since the policies cover physical loss and damage, the business losses from the emergency orders are covered losses.
Hampshire House takes issue with the insurers’ across-the-board denial of all Covid-19 business interruption claims, alleging that the insurers have a duty to investigate the different circumstances that apply to each claim.