Restaurants sue insurance firm over COVID-19 losses

Some restaurants in Huntington Beach and Newport Beach are part of a group that is suing Farmers Insurance, alleging the company breached contracts and didn’t compensate them for losses during the COVID-19 pandemic.

A suit filed in L.A. County Superior Court on Jan. 4 includes Black Trumpet Bistro Tapas and Wine Bar and Capone’s Italian Cucina of Huntington Beach, both owned by chef Dino Ferraro. Newport Beach-based Fly N Fish Oyster Bar and Grill, on the Balboa Peninsula, is also part of the suit, as are Starrs Products of Santa Clarita, Centerpark Cafe of San Diego and NJN, a San Diego restaurant property.

The complaint, filed by three San Diego law firms, seeks unspecified damages and demands a jury trial. A follow-up document states the plaintiff anticipates the case will become part of a civil case involving Farmers COVID-19 business cases.

The suit alleges that denials of insurance claims by Farmers Insurance during the pandemic “leave plaintiffs in dire financial straits — precisely the situation they sought to avoid when they obtained coverage for loss of business income.”

“Facing serious financial harm, plaintiffs made claims with Farmers seeking coverage for their business income losses and extra expenses,” the complaint reads. “But, despite collecting premiums for such risks, Farmers swiftly denied each claim with little or no investigation and without due regard for the interests of insureds. In fact, coverage was often denied by a Farmers claim representative over the telephone at the time the claims were reported.”

On April 14, 2020, California Insurance Commissioner Ricardo Lara issued a notice requiring insurance companies and other department licensees to comply with their contractual, statutory, regulatory and other legal obligations and fairly investigate all business interruption claims caused by COVID-19.

Farmers director of media relations Luis Sahagun said in an email that the company generally does not comment on specific litigation. However, he added in a statement that Farmers understands how difficult COVID-19 has been for communities and businesses across the country.