No ‘Cheers’ For Boston Bar Owner In Pandemic Coverage Lawsuit

By John Hilton

A federal judge dismissed a business interruption lawsuit brought by the owner of four Boston-area tavern-restaurants, including the famed Cheers tavern that inspired the popular 1980s sitcom.

U.S. District Judge F. Dennis Saylor IV sided with insurer Associated Indemnity Corp. in ruling that the policy in question doesn't cover losses related to the pandemic. The breach of contract suit was brought by Hampshire House Corp., which had operated two "Cheers"-related restaurants and two other restaurants in Boston.

The plaintiffs failed to prove any property loss or property damage, Saylor ruled. "As discussed, the mere presence of the coronavirus does not constitute property damage," he wrote.

With the onset of the COVID-19 virus in early 2020, Massachusetts Gov. Charlie Baker followed Centers for Disease Control guidelines in suspending "on-premises consumption of food or drink" on March 15, 2020.

Between March 15 and June 8, 2020, Hampshire was permitted to provide takeout dining services, which at least one of its restaurants did, but not on-premises dining, the lawsuit noted.

In addition to the "Cheers" location in the same building that was used for the exterior shot of the sitcom, Hampshire ran a second location at the Faneuil Hall Marketplace until it closed in August 2020. The company operates two unrelated restaurants in Boston.

'No Direct Physical Loss'

Hampshire's July 2020 lawsuit, later amended in September 2020, accused AIC, along with Fireman's Fund Insurance Co. and Allianz Global Risks United States Insurance Co., of breach of contract, breach of the covenant of good faith and fair dealing, and unfair trade practices.

Hampshire sought insurance coverage for the tavern-restaurant closures almost immediately. AIC denied the claim on June 16, 2020, its denial letter stating: "“[b]ecause there has been no direct physical loss of or damage to property, there has been no Covered Cause of Loss under the Policy’s Business Income, Extra Expense or Civil Authority coverages of the Policy.”

Hampshire House's policy had blanket coverage limits of $10,860,000 for business income losses and expenses, the complaint said.

Hampshire alleged that Allianz violated its contractual, statutory, and lawful obligations to pay its losses because Hampshire had coverage for “physical loss of or damage to the insured property from all risks unless expressly limited or excluded by language in the body of the Policy or through a separate exclusion endorsement,” and

The plaintiff claimed there were "no exclusions in Hampshire’s policy for the loss of business income caused by emergency [o]rders, or the COVID-19 virus.”

But Saylor cited his previous decision from March in the Kamakura LLC v. Greater New York Mutual Ins. Co. lawsuit, in which he also issued a dismissal.

"There, plaintiffs operated two restaurants in Boston, and sought a judgment that their insurance policies covered the losses they sustained following Governor Baker's orders during the COVID-19 pandemic," the judge wrote. "The court dismissed the case, noting that it did so with some reluctance due to the many hardships faced by restaurant owners."

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.