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Restaurant Chain Seeks to Recover COVID-19 Losses Under Food Contamination Theory

A group of Las Vegas-based restaurants recently filed a class action lawsuit to recover business interruption damages against their insurer. The Egg Works chain alleged that U.S. Specialty wrongly denied their claims for financial losses stemming from the Nevada governor’s closure of non-essential businesses during the COVID-19 pandemic. The governor’s orders limited the restaurants to takeout and delivery service only.

As discussed on the Hunton Retail Blog Recall Roundup, this case is somewhat unique. Unlike many other COVID-19-related coverage claims under property or event cancellation policies, Egg Works’ seeks recovery under a “Restaurant Recovery” policy as an “Insured Event,” defined in the policy to include accidental or unintentional contamination or impairment of food products. U.S. Specialty has moved to dismiss on the basis that suspension of business operations following the governor’s orders was not an “Insured Event” because these losses did not derive directly and solely from contamination or impairment of food products. If Egg Works succeeds, restaurants and other businesses in the food service industry may follow suit and consider pursuing similar claims under other food contamination policies. The full case name is Egg and I, LLC v. U.S. Specialty Insurance Co., No. 2:20-cv-00747 (D. Nev.).

Matt Revis contrivuted to this article.

 

Copyright © 2020, Hunton Andrews Kurth LLP. All Rights Reserved.National Law Review, Volume X, Number 169

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About this Author

Syed S. Ahmad Insurance Coverage Attorney Hunton Andrews Kurth Washington, DC
Partner

Syed represents clients in connection with insurance coverage, reinsurance matters and other business litigation.

Syed has been admitted to the US Court of Appeals for the Second Circuit, US Court of Appeals for the Sixth Circuit, US District Court for the District of Columbia and US District Court for the Eastern District of Virginia. 

Relevant Experience

  • Advised clients on COVID-19 insurance claims for business interruption, contingent business income (CBI), extra expense, civil authority, ingress/egress, D&O, and general liability...
202-955-1656
Geoffrey B. Fehling Associate Washington, DC Insurance Coverage Litigation
Associate

Geoff focuses on complex civil litigation matters, with an emphasis on insurance coverage litigation and counseling.

Geoff represents corporate policyholders and other insureds in insurance coverage disputes involving directors’ and officers’ (D&O), errors and omission (E&O), and other professional liability claims, SEC investigations, breach of fiduciary duty claims, asbestos liabilities, environmental liabilities, consumer protection class actions, and property damage. He has worked with clients to maximize insurance recoveries through policy reviews and audits, claims presentation and negotiation, litigation, and alternative dispute resolution. He has particular experience advising mutual funds, hedge funds, banks, and other policyholders in the financial services sector. Geoff has been selected as a Rising Star for Insurance Coverage by Washington, DC Super Lawyers magazine each year since 2015.

202-955-1944