A National Restaurant Association affiliate has sided with a southern Florida restaurant in its closely watched federal lawsuit calling on insurers to honor business-interruption policies during the COVID-19 pandemic.
The Restaurant Law Center filed an amicus brief late last month in the litigation before the 11th Circuit Court of Appeals brought by the Palm Beach Restaurant Sant Ambroeus. Restaurants like Sant Ambroeus in Florida and elsewhere have paid top dollar for business-interruption coverage under “all-risk” insurance policies, according to the brief.
The restaurant owners who purchased such insurance thought the policies would cover business income lost as a result of a physical loss or damage to their properties and that all risks would be covered unless expressly excluded in the policies, according to Angelo Amador, the center’s executive director and author of the amicus brief.
Attorney Angelo Amador
| National Restaurant Association
“What we’re saying is that this is not about the pandemic,” Amador told the Florida Record. “This is about the government orders, and it is the government orders that shut down a lot of these restaurants. … What we’re saying is that the property loss was caused by government action, and some of these policies cover government actions.”
Federal district courts have so far ruled on different sides of the issue, he said. Some have concluded that the damage sustained by an enterprise covered by business-interruption insurance must be physical, such as fire damage, while other courts equate damage as anything that renders the property nonfunctional, according to Amador.
The 11th Circuit case may be about a restaurant’s plight, but it will likely have repercussions on many businesses, he said.
“This decision is going to have an impact on everyone else,” Amador said. “... Florida is a big market, a big state, a large population, with many restaurants.”
The U.S. Supreme Court probably won’t get involved in the issue, though, since business-interruption claims tend to hinge on state laws, he said.
The Florida governor’s coronavirus orders that led to the closing down of parts of the economy represented a physical loss of property, according to the amicus brief. The orders brought about alterations to physical property – by “requiring physical changes to it and materially impairing their physical spaces, thereby rendering them nonfunctional for their intended purposes,” the brief says.
In the Sant Ambroeus case, the defendants are underwriters at Lloyd’s London, whose policy provided that the insurer would pay for loss of business income that results from “direct physical loss or of damage to property,” the brief states.
“Courts across the country have long held that a property may be physically lost or damaged when it is rendered nonfunctional for its intended purpose, even if it is not structurally damaged,” the brief says.