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Insurer: Aspen restaurant’s pandemic losses not covered by policy

An illuminated sign marks the entrance to L'Hostaria, an Italian restaurant at 620 E Hyman Ave. in Aspen.
Kaya Williams/The Aspen Times

An insurance company denied coverage to an Aspen restaurant financially hit by pandemic-related restrictions because there was no physical damage to the business’ property, attorneys said in a recent court filing.

In a written pleading filed Jan. 29, counsel for the Cincinnati Insurance Co. also argued for the dismissal of the lawsuit filed by L’Hostaria because the restaurant’s policy had property insurance coverage but not financial loss coverage.

“The coronavirus does not cause direct physical loss to property which is required for the coverage plaintiff seeks in this case,” according to Cincinnati Insurance’s response, which was filed by attorneys Michael Baniak of Chicago and Conor Boyle of Denver. “This is the majority view nationally in coronavirus-related insurance coverage cases like this. Plaintiff’s commercial property policy simply does not provide coverage for the purely economic loss alleged by plaintiff here. Finally, plaintiff has failed to allege a plausible claim for bad faith.



“Thus, plaintiff’s Complaint must be dismissed.”

L’Hostaria is seeking a court’s declaratory judgment that its general-coverage insurance policy applies to its business-loss claims. The case was originally filed Dec. 10 in Pitkin County District Court and in January was transferred to U.S. District Court in Denver. On Jan. 13, the date the case was transferred, Pitkin County restaurants were limited to 25% indoor seating capacity before Red-level orders closed indoor dining for 15 days starting Jan. 17.



“L’Hostaria ceased its business operations on March 16, 2020, pursuant to the applicable Executive and Public Health Orders,” the suit said. “Although L’Hostaria reopened on April 27, 2020, it resumed with only limited curbside pickup and dining, in accordance with the applicable Executive and Public Health Orders. … L’Hostaria incurred, and continues to incur, business interruption losses of approximately $40,000 per month as a result of the suspension of its operations caused by direct loss to property at its premises due to the presence of COVID-19.”

L’Hostaria’s Denver-based attorneys, Bradley Levin and Susan S. Minamizono, also argued in the suit that public health orders, by financially damaging the restaurant, triggered the restaurant’s civil authority coverage.

Cincinnati Insurance attorneys countered, “Direct physical loss to property other than property at plaintiff’s premises is necessary for civil authority coverage. Just as the coronavirus did not cause direct physical loss to plaintiff’s premises or property, it did not cause direct physical loss to other property.”

The response also argued that the Italian restaurant’s insurance “policy is a contract designed to indemnify loss or damage to property, such as in the case of a fire or storm. Coronavirus does not cause damage property; it hurts people.”

The parties are due in court March 30 for a scheduling conference before Magistrate Judge Gordon P. Gallagher.

rcarroll@aspentimes.com


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