Pearl Street Pizzeria, Pure Eatery sue insurer over COVID-19 claim denial

Local restaurants Pearl Street Pizzeria & Pub and Pure Eatery have joined a growing number of companies that have filed suit against Wisconsin-based Society Insurance in disputes over COVID-19-related claims denials.

The suit alleges the insurer rushed to deny the restaurants’ claims for COVID-19-related business losses without properly investigating the claims.

Pearl Street and Pure Eatery have common ownership and are covered by a single insurance policy that renewed on March 15, the suit says. By the time they paid their renewal premium, the restaurants allege, Society had already begun planning to conduct widespread “sham investigations” of anticipated COVID-19 claims for the purpose of denying such claims.

The complaint was originally filed April 13 in Marion Superior Court. The case has since been moved to U.S. District Court in the Southern District of Indiana.

The husband-and-wife team of David and Courtney Andrus own Pearl Street, which has locations on Pearl Street in downtown Indianapolis and in the Geist area. David Andrus and Jason Jacobi own Pure Eatery, which has locations in Fountain Square and Fishers.

Each of the four locations is a separate business entity, and all four are named as plaintiffs in the lawsuit: Pearl Street Entertainment Group LLC, Pearl Street Geist LLC, MMM-HMM Inc. and DRA Inc.

Of the four locations, Pearl Street’s Geist location is the only one that’s open. It is offering curbside carryout on Friday and Saturday evenings.

Pure Eatery had been offering carryout at both of its locations but discontinued it last week.

Fond du Lac, Wisconsin-based Society Insurance is a niche insurer that specializes in restaurant, retail and hospitality coverage. Founded in 1915, the company operates in six Midwestern states and has done business in Indiana since 1997.

In the suit, the plaintiffs allege that their insurance agent, Lafayette-based MBAH Insurance, submitted a COVID-19 claim on their behalf March 16. Society denied the claim in a letter dated March 20, the lawsuit says.

The claim was submitted on the same day that Gov. Eric Holcomb and Indianapolis Mayor Joe Hogsett both issued orders that, among other things, halted dine-in service at restaurants.

“Society’s obvious rush to force the submission of claims so that it could then issue essentially form letters denying the claims was arbitrary and capricious and part of a scheme or plan to avoid its responsibilities and legal duties to its policyholders,” the suit alleges.

The plaintiffs argue that they were covered by an “all-risks” insurance policy that did not have an exclusion for virus-related losses, and therefore its COVID-19-related business losses should be covered.

“Instead, Society collected Plaintiffs’ premiums while the risks associated with COVID-19 were mounting and beginning to cause catastrophic losses to businesses like Plaintiffs, and then tried to protect itself from claims expenses and claim payments by issuing the form denial letter to Plaintiffs claiming that Plaintiffs have not suffered a ‘physical loss’ and, therefore, its losses are not covered under the policy,” the complaint says.

Although the lawsuit does not specifically quantify the amount of the plaintiffs’ losses, it does say that the effect of Society’s action “is likely to be devastating to the business and the livelihoods of all those who work there.”

In another part of the suit, the plaintiff describes the harm to its business as “real, substantial and ongoing. Society’s bad faith actions described above have made a very bad situation very much worse.”

Society Insurance declined to comment on the suit, citing its policy of not commenting on ongoing litigation.

“We look forward to a favorable resolution of this situation in the near future,” a company spokeswoman wrote in an e-mail to IBJ.

Pearl Street and Pure Eatery are among a number of Society Insurance clients who have filed similar claims against the company.

More than a dozen operators of Chicago restaurants, pubs and restaurants, including Big Onion Tavern Group LLC, joined in a COVID-19 lawsuit filed March 27 in U.S. District Court for the Northern District of Illinois. Big Onion’s establishments include Fatpour Tap Works, McCormick Place, Hopsmith, Woodie’s Flat, the Irish Oak, Brunch, and Centre Street Kitchen.

Chicago’s Billy Goat Tavern, which was the subject of a well-known Saturday Night Live skit in 1978, has also filed its own COVID-19 lawsuit against Society Insurance.

Several other Society restaurant customers have also filed similar suits in recent weeks.

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