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June 2, 2020

Lenny & Joe’s heads class-action lawsuit over COVID-19 insurance denial

PHOTO | New Haven BIZ Lenny & Joe’s Fish Tale on Long Wharf Drive in New Haven.
By Michelle Tuccitto Sullo

The owners of Lenny & Joe’s Fish Tale restaurants are suing their insurance provider for refusing to pay for business losses related to the coronavirus pandemic shutdown.

LJ New Haven LLC, doing business as Lenny & Joe’s Fish Tale, filed the lawsuit in U.S. District Court in Connecticut on June 1 against AmGUARD Insurance Co. of Wilkes-Barre, Pa. 

In an acknowledgement that Lenny & Joe’s situation is being widely experienced by restaurant owners around the state and country, the lawsuit was filed as a class action, with plaintiffs also including “all others similarly situated.”

Gov. Ned Lamont in mid-March ordered non-essential businesses, including restaurants, to close due to the threat of coronavirus spreading among the population. Restaurants in the state can have takeout service, and as of May 20, they were allowed to have outdoor dining. Indoor dining remains prohibited, though Lamont is expected to lift this restriction around June 20.

Lenny & Joe’s has three restaurants along the shoreline, including in New Haven, Madison and Westbrook.

Attorney Christopher M. Barrett with the West Hartford law firm of Izard Kindall & Raabe filed the lawsuit on Lenny & Joe’s behalf. 

“The result of these far-reaching restrictions and prohibitions has been catastrophic for most non-essential businesses, especially restaurants and other food-service businesses…who have been forced to close, furlough employees, and endure a sudden shutdown of cash flow that threatens their survival,” the lawsuit asserts.

LJ New Haven LLC is owned by Brian Faye and Luis Linares, according to the Secretary of the State’s office.

No attorney is listed yet as representing AmGUARD, according to federal court documents. The insurance company did not immediately respond to a request for comment Tuesday.

Business loss cause: virus vs. shutdown

The lawsuit notes that most businesses insure against catastrophic events like the unforeseen COVID-19 pandemic through all-risk commercial property insurance policies.

Such policies promise to cover business losses when operations are involuntarily suspended, interrupted, or curtailed, or by a civil authority order that restricts or prohibits access to the property, the lawsuit states.

“This coverage is commonly known as ‘business interruption coverage’ and is standard in most all-risk commercial property insurance policies,” the lawsuit states.

According to the lawsuit, AmGUARD and other insurance companies have been denying any obligation to pay for business losses associated with government closure orders. 

The litigation also alleges that AmGUARD has breached its contract with Lenny & Joe’s and policyholders in the same circumstances by not providing coverage. 

The lawsuit seeks a declaratory judgment finding that the insurance company is liable for losses suffered by policyholders.

Insurance providers have asserted that communicable diseases aren’t covered under business interruption policies, according to the lawsuit.

The “plaintiff brings this action on behalf of a proposed class of policyholders who paid premiums in exchange for business insurance policies that included lost business income and extra expense coverage,” the lawsuit states.

While Lenny & Joe’s business coverage excludes losses caused by a virus, bacterium or microorganism, the lawsuit alleges that this exclusion doesn’t apply in this situation, because their losses weren’t caused by COVID-19.

“Rather, the efficient proximate cause of plaintiffs’, and other class members’ losses, were precautionary measures taken by their respective states and/or counties to prevent the spread of COVID-19 in the future, not because coronavirus was found in or on plaintiffs’ insured property,” the lawsuit asserts. 

The litigation alleges that AmGUARD has denied claims related to COVID-19 on a uniform and class-wide basis, without conducting any individual investigations. Therefore, the lawsuit claims the court can render a declaratory judgment whether class members have filed an individual claim or not.

Contact Michelle Tuccitto Sullo at msullo@newhavenbiz.com.

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