Lieff Cabraser Civil Justice Blog
Justice for Restaurants

Flour + Water, Central Kitchen, and Trick Dog File Breach of Contract Lawsuit Against Farmers Group, Inc. and Other Insurers Over Improper Denial of Business Insurance Claims

Lieff Cabraser and the Law Office of Alexandra L. Foote expand their state and federal lawsuits on behalf of world-renowned restaurants against multiple insurers with new case on behalf of Thomas McNaughton’s restaurants and bars for denial of proper business interruption insurance claims

August 26, 2020, San Francisco–(BUSINESSWIRE)–Lieff Cabraser and the Law Office of Alexandra L. Foote announce the filing of a new breach of contract lawsuit in San Francisco Superior Court on behalf of Thomas McNaughton’s celebrated restaurants Flour + Water and Central Kitchen, and the acclaimed bar Trick Dog, against Farmer’s Group Inc., Mid-Century Insurance Company, and Truck Insurance Exchange alleging the improper denial of valid business interruption insurance claims in the wake of Covid-19. The complaint alleges that in the wake of substantial financial losses incurred after government-ordered Coronavirus-driven business shutdowns, the plaintiff restaurants and bar made claims on their business interruption insurance policies and were instantly denied coverage by the defendant insurers.

“This is just the latest in an ongoing series of lawsuits we have filed on behalf of the nation’s greatest chefs who have built their restaurants from the ground up, and who have paid their insurance premiums for years,” notes Lieff Cabraser partner Robert Nelson, who represents the plaintiffs in the litigation. “Now, when these restaurant owners need their insurers to step up and honor their insurance contracts, the insurers have wrongly denied coverage. These lawsuits are aimed at leveling the playing field and recovering the insurance benefits to which these chefs are rightfully entitled.”

Thomas McNaughton is an extremely accomplished and celebrated chef, restaurateur, bar owner, and best-selling cookbook author. McNaughton’s restaurant group Ne Timeas Restaurant Group, Inc. owns the highly acclaimed restaurants Flour + Water and Central Kitchen, and the world renowned cocktail bar Trick Dog (Ne Timeas partnered with the Bon Vivants for Trick Dog). McNaughton was nominated by the James Beard Foundation for the Rising Star Chef award in 2011, 2012 and again in 2013, and his restaurant group was a semifinalist for this year’s Outstanding Restaurateur award.

  • Founded in the Bay Area over 10 years ago, and nominated as Best New Restaurant in 2010 by the James Beard Foundation, Flour + Water serves pasta specialties influenced by regional traditions throughout Italy with Northern Californian inspirations.
  • Central Kitchen offers Northern Californian cuisine with a seasonally driven menu using locally sourced ingredients, and its premiere event space hosts private events and seasonal pasta classes.
  • Trick Dog serves an eclectic variety of “small plate” food offerings and has been named as one of the world’s 50 best bars, with drink menus twice recognized as the “World’s Best Cocktail Menu,” and the bar is a finalist for this year’s James Beard award for Outstanding Bar Program.

“Thomas McNaughton’s restaurants are exceptional, but his breach of contract claims are shared by hundreds, if not thousands of restaurants, as insurer after insurer continues to deny business interruption coverage,” notes Alexandra Foote, who also represents the plaintiff businesses. “Thomas McNaughton continues to ring a clarion call to action, asking other chefs nationwide to join him. The loss of his restaurants and so many other restaurants across the country would be tragic forever, and wholly avoidable, if only the insurance industry would simply honor the basics of its policies.”

As the complaint alleges, more than five months ago all three venues were forced to shut down. This closure was ordered by state and local authorities who required them, their workers, and their customers to “shelter in place” and abide by strict “social distancing” guidelines. This closure caused a near total loss of income, forcing the restaurants to initially lay off their entire workforce. Based largely on government assistance, and other attempts to mitigate their losses, the restaurants have rehired and retained the few employees they can. But with mounting expenses, and uncertain prospects for future income, it is not clear if they will be able to retain current staffing and benefits absent financial support.

To protect their businesses (and employees) from having to make such terrible choices in situations like this one, the McNaughton’s restaurants purchased business interruption insurance from the defendants. The restaurants’ policies expressly provide coverage for “Lost Business Income” and the consequences of actions by “Civil Authority.” Accordingly, the Restaurants understandably believed that these policies would help protect their business in the unlikely event that the government forced them to shutter their businesses. Contrary to the coverage provisions in their policies with defendants, and the obligations defendants undertook in exchange for the restaurants’ insurance premium payments, when plaintiff submitted claims for coverage, the defendants summarily denied the restaurants’ claims. The complaint further alleges that these denials were part of a premeditated strategy by defendants to deny all claims related to the “shelter in place” orders and COVID-19. The complaint states that the denials were untethered to the facts of the claims, which defendants did not adequately investigate, or the specific coverage provided by the restaurants’ policies, and therefore violate California law.

The complaint states claims for breach of contract, breach of the covenant of good faith and fair dealing, and violations of the California Business and Professional Code, and seeks declaratory relief including specific performance of the insurance policies as well as general and compensatory damages.

Source/Contact

Robert J. Nelson
Lieff Cabraser Heimann & Bernstein, LLP
rnelson@lchb.com
415 956-1000

Alexandra L. Foote
Law Office of Alexandra L. Foote
alexandra@afootelaw.com
786 408-8083