Orange County restaurants included in lawsuit against Farmers Insurance over pandemic losses [The Orange County Register]

Orange County Register (CA)

A group of restaurants, including three in Orange County, is suing Farmers Insurance, alleging the company breached contracts by denying the restaurants compensation for losses due to health orders during the ongoing coronavirus pandemic.

The lawsuit, filed by three San Diego law firms in Los Angeles County Superior Court, on Jan. 4, seeks unspecified damages and claims Farmers Insurance immediately denied the restaurants’ claims without investigating them, according to the complaint.

The list of plaintiffs includes the Black Trumpet Tapas Bistro and Wine Bar and Capone’s Italian Cucina in Huntington Beach, as well as Fly N Fish Oyster Bar and Grill on the Balboa Peninsula in Newport Beach.

The attorneys claim in the complaint that the business loss caused by the pandemic was akin to losses that resulted from natural disasters, such as earthquakes, hurricanes and fires.

They also claim that health orders issued by the state damaged the restaurants because certain physical spaces became nonfunctional.

However, when the plaintiffs tried to file claims, Farmers Insurance was accused of denying each claim with little or no investigation, despite the restaurants paying monthly premiums for coverage, the complaint alleges.

The denials have left the restaurants “in dire straits – precisely the situation they sought to avoid when they obtained coverage for loss of business income,” the complaint says. “Insurance coverage is important, if not vital, because profit margins for small business owners are slim and, unlike the insurance industry, reserve funds tend to be low.”

Jessica Williams, an attorney representing the restaurants, said the restaurants were seeking to get the compensation owed to them by the insurance company, which in most of the policies, equated to the restaurant’s estimated net profits plus added expenses each month.

“(Farmers Insurance) has a duty to investigate and we do not think they did their due diligence,” Williams said. “Some have lost millions, it depends on the business and we’ve seen numerous restaurants go bankrupt (during the pandemic).

“Instead of the insurance company doing the right thing, they’re fighting these people,” Williams added.

Luis Sahagun, a spokesman for Farmers Insurance, said the company generally does not comment on specific litigation. However, Sahagun sent a company statement Tuesday.

“Farmers understands the impact of COVID-19 has been difficult for communities and local businesses across the country,” the statement read. “Out of fairness to all policyholders, our obligation is to pay those claims covered under our policies and to apply policy exclusions where they exist. In this circumstance, the claim for COVID-19 related damages, including those resulting from governmental stay-at-home orders is not covered under the policy and is subject to applicable policy exclusions.”

Black Trumpet Tapas Bistro and Wine Bar and Capone’s Italian Cucina, both owned by Chef Dino Ferraro, had paid premiums to Farmers Insurance for about a year and a half. Prior to the pandemic, the restaurants had employed 24 and 36 workers, according to the complaint.

Fly N Fish Oyster Bar and Grill had been paying monthly premiums for more than six years and employed 38 workers prior to the pandemic.

Starr’s Products of Santa Clarita, Centerpark Café in San Diego and NJND, LLC, a San-Diego based limited liability company, were also named as plaintiffs in the lawsuit.