Attorney Mark Bryant said Cynthia's Ristorante filed the suit Friday in McCracken Circuit Court against Cincinnati Insurance Company and three state government officials; Dr. Steven Stack of the Kentucky Department of Public Health, Eric Friedlander of the Cabinet for Health and Family Services, and Kerry Harvey of the Public Protection Cabinet.
The lawsuit says Cynthia's filed a claim with the insurance company for loss of business income caused by the government-mandated closure of all Kentucky restaurants on March 16. That's why the three state officials are also listed as defendants, so they can explain on the record why they made the declaration.
Bryant says the insurance company denied the claim based on a pollution exclusion, and because there was no direct damage to the property that required the state order be put in place.
"They're going to have to explain why they did that. Because the insurance company is going to say there was no evidence an order was entered because of direct damage to property. All you've gotta do is prove the presence of the virus on any surface could be property damage. You don't have to prove that there was enough to make anyone sick, just that it was on the property, and we certainly can do that," Bryant explained.
An epidemiologist is among the witnesses that Bryant will call to prove that the virus was present within a mile of Cynthia's, which he feels would solidify his case that the closure order was not arbitrary.
"They paid for insurance for business interruption for years and years, and when it comes right down to it, insurance companies don't want to pay. So we filed this lawsuit because the policy provides coverage for loss of business income caused by orders of civil authorities.
"The lawsuit says when Cincinnati Insurance denied coverage, "it knew of the existence of the order entered by the Kentucky Defendants on March 16, 2020, and knew that order was based upon substantial evidence of the widespread presence of the virus throughout the Commonwealth of Kentucky and that the virus constituted a dangerous physical condition and, in some cases, a deadly condition."
The document also says Cincinnati Insurance has exclusions for viruses in some policies, but Cynthia's policy does not include that language, so Bryant said they denied it under the pollution exclusion, which should not apply to this case.
The lawsuit requests a jury trial to determine if the plaintiff has a legitimate claim under their policy, and if so, for negotiations between the restaurant and insurance company to determine a mutually acceptable amount of lost income. If that doesn't happen, the policy has a procedure for appraisers representing both parties to present figures to an umpire, who would determine the amount.
On Monday, Governor Andy Beshear mentioned some Kentucky day care centers that have had problems with insurance companies denying similar claims because a child in the facility did not test positive for the virus. He said these insurance companies are mistreating their policy holders, and should, "do the right thing," to help child care centers survive and be available when they can reopen.
Bryant said that comment is interesting, since Beshear used to represent businesses in his law practice, but he agrees with the governor. He said the legal system is becoming very active because of these insurance policy denials.
"We've got a big day care center up in Cincinnati that we have filed on that. We've got an oyster restaurant in Baton Rouge that we're preparing to file on, and we've got claims all around the country for this very issue and we think we'll prevail on them."
Bryant believes the defendant will request that the lawsuit be moved into federal court.
For business owners who have encountered similar situations, Bryant said they should seek relief if they have had a claim denied.
He said, "Most people don't want to sue their insurance company because they are afraid their policy rate it going to go up. If you've got business interruption insurance and you don't make a claim, your policy is still going to go up, regardless of what happens."
On the Net:
Lawsuit document
