The Egg & I, Egg Works Sue Insurance Company Over Coronavirus Coverage Denial

The nine restaurants in the Egg Works and Egg & I breakfast restaurant chain in Las Vegas filed a business-interruption class action lawsuit against US Specialty Insurance/Tokio Marine and ACUITY, alleging the insurers unjustly denied their business-interruption claims.

Owner Brad Burdsall filed the lawsuit on April 24 in the U.S. District Court in Nevada.

Business-interruption insurance typically covers losses related to physical damage, such as from fire or flood, and insurance companies have argued that they’re not liable for losses related to the coronavirus pandemic.

Burdsall claims that after Gov. Steve Sisolak ordered nonessential businesses, including casinos, dine-in restaurants, and bars to close on March 17 and then issued a stay-at-home directive in effect until April 30, Egg Works and Egg & I restaurants resorted to curbside and takeout options, “neither of which are practicable to meet the high standards for food quality, service, and dining experience,” the suit alleges.

“I’ve built this restaurant chain from the ground up and invested my life’s blood into its success,” Burdsall says. “This insurance was supposed to be there as they promise in their policies when it was needed. This insurance was bought to best position the Egg Works to resume normal business operations as soon as possible.”

Nationwide, restaurant owners have filed similar lawsuits after learning that insurers are unwilling to payout coverage for losses tied to the pandemic. Chef Jean-Georges Vongerichten, who laid off 4,000 workers and temporarily closed 36 restaurants, including Prime Steakhouse at the Bellagio and Jean Georges Steakhouse at Aria, estimates he paid around $25 million in business-interruption insurance over the last 10 years in New York City alone.

Thomas Keller’s Napa Valley restaurants the French Laundry and Bouchon filed suit against the Hartford Fire Insurance Co. seeking another declaratory judgment to establish that coverage is warranted. Keller has an outpost of Bouchon Bistro and three bakeries at the Venetian.

Burdsall purchased business-interruption insurance in 1998 when he opened the first Egg & I to safeguard his businesses and 400-plus employees. The lawsuit claims that the restaurant chain’s business-interruption policy covers “all risks unless they are specifically excluded.” While Burdsall’s policy specifically excludes losses caused by avian influenza viruses, the lawsuit argues that it does not include COVID-19.

Burdsall requested payment from his insurance companies on April 22 to cover his loses, and says in the lawsuit that they have not responded.

Notable-named chefs such as Daniel Boulud and Vongerichten started an advocacy organization called the Business Interruption Group to help restaurants of all sizes get coverage through their business-interruption insurance.

• The Ugly Legal Battle Over Restaurant Insurance Has Begun [Eater]

• Why Are Insurance Companies Denying Restaurant Claims in Wake of Pandemic? [Eater]

• How Coronavirus Is Affecting Las Vegas Food and Restaurants [ELV]