San Francisco’s historic Cliff House restaurant made headlines last week when it announced that after hustling to serve takeout and delivery meals during the pandemic, financial pressures had forced its temporary closure. Now its operators are suing their insurance company after it denied its business interruption claim...even though its business has been clearly and unequivocally denied.
The 162-year-old Cliff House, which is perched just down the street from recently shuttered Louis’ Restaurant, is merely the latest restaurant to file suit against its insurance company during the coronavirus crisis. Iconic Berkeley restaurant Chez Panisse filed a similar suit earlier this month, Union Square classic spot John’s Grill sued in April, and celebrity chef Thomas Keller didn’t even wait for his insurance company to turn down his claims when he sued on behalf of Yountville’s the French Laundry and Bouchon Bistro.
In all these cases, as well as those elsewhere in the U.S., restaurateurs say that the business interruption insurance they’d paid for — which promises to cover lost revenues if their restaurants are closed by a catastrophe — should cover the ransacking of their business by the coronavirus crisis. Their insurance carriers disagree: Some argue that an Ebola-era addendum provides a coverage loophole for plagues and viruses, while others say that since the restaurants themselves are not physically damaged, the claims must be denied.
The issue has spurred local legislators to turn the heat up on state insurance regulators, with San Francisco’s Board of Supervisors approving a non-binding resolution that tells insurance companies that they must honor those claims. The active word, here, is “non-binding”: The board doesn’t have the power to make that happen. What it hopes, SF Supervisor Gordon Mar tells Eater SF, is that the move will pressure California Insurance Commissioner Ricardo Lara — who has the power to regulate how insurance companies operate in the state — to consider the denials a “material misrepresentation” of coverage, and to force the insurance companies to pay out the claims.
That resolution was approved in early April, but so far, there’s been no visible action from Sacramento regarding these claims. That’s what makes litigation appealing, one local restaurateur tells Eater SF. “If we all sue our insurance company, maybe someone will finally listen to us,” they said.
In the case of the Cliff House, Mary Hountalas, who with her husband Dan has run the venue’s bars and restaurants for the last 47 years, says that they “had to close our doors and let nearly all of our 185 employees go” during the crisis, and that they’d expected their insurance claim to cover at least some of the losses they face.
This isn’t the first time the Cliff House has faced a major challenge, Hountalas says, as since its opening in 1858, it’s “survived earthquakes, fires, and flooding.” Those prior disasters (the 1906 quake and a huge 1907 blaze, for example) meant that the restaurant “paid exorbitant premiums for decades,” attorney Brian Danitz says. He’s one of the lawyers representing the Hountalas family in their suit against insurance company Allianz, which he says “refused payment, raising a host of baseless excuses to deny the claims.”
According to Danitz, the motivation behind this and the multiple other lawsuits out there is “to end this dishonest and egregious practice,” of pandemic claim denial and to, he hopes, “provide relief to businesses suffering in this pandemic.”
In the meantime, the Cliff House will stay dark, its takeout and delivery service suspended as, “due to economic pressure during this unprecedented situation, we have concluded that it would be best to preserve our remaining resources to ensure a continuance of future operations,” the Hountlas family said in a message posted to Facebook.
The hope, says Mary Hountalas, is that when indoor dining eventually resumes, the high ceilings and ample space in the Cliff House’s dining rooms will make it a great place for socially distanced indoor meals. After all, it’s made it through so much already, she says, and “we will survive this as well.”