ASHEVILLE — A Greek restaurant closed following the COVID-19 pandemic will not receive insurance money for losses it says were caused by government mandates, after a North Carolina appeals court ruled in favor of the restaurant’s insurer.
A three-judge panel ruled on July 5 that the Golden Fleece and 15 other North Carolina restaurants owned by two chefs will not be reimbursed for losses incurred in connection with mandatory pandemic closures in 2020.
The ruling came after the restaurants had already won a case in Durham County High Court in which a judge ruled they were entitled to collect.
“We believe this decision was made incorrectly,” said the restaurants’ attorney, Stuart Payne. “We are just exploring our options for further review.”
The beginning and end of the Golden Fleece:
The Golden Fleece, part of the Giorgios Hospitality Group, opened in 2016 at 11 Grovewood Road and was “such a magical place run by the extremely talented chef George Delidimos,” according to group owner Giorgios Bakatsias, who mourned the restaurant’s closure in August 2020 News Release
Along with chef Matt Kelly, Bacatsias owned and operated all 16 restaurants, according to the original complaint in the case, which included 17 restaurants — one dropped during the proceedings.
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Months before the Golden Fleece and the other restaurants closed, Paynter Law filed a lawsuit May 18 in the North Carolina Supreme Court against the restaurants’ insurer, The Cincinnati Insurance Company.
The lawsuit was filed on behalf of GHC and the other restaurants in an attempt to force the insurance company to honor “business interruption” insurance the group purchased years ago.
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Attorneys for the insurance company did not immediately respond to a message left by the Citizen Times.
As cited in the opinion, part of the policy states that it will pay for business interruption income losses under certain circumstances.
“We will pay for the actual loss of ‘business income’… that you sustain due to the necessary ‘suspension’ of your ‘operations’ during the ‘recovery period.’ The “suspension” must be caused by a direct “loss” of property on “‘premises’ caused by or resulting from a covered cause of loss,” the policy states.
When North Carolina Governor Roy Cooper’s executive order at the start of the pandemic limited restaurants to take-out/carry-out and delivery operations, all 16 plaintiff restaurants closed by May 2020.
But when the owners sought coverage for losses, the insurance company didn’t pay, according to the original case in Durham County Superior Court.
Other NC court decisions affecting Buncombe County:
The opinion notes that “loss” in the insurance policy language refers to “accidental physical loss or accidental physical damage.”
The Cincinnati insurance company argued in the Court of Appeals that “the trial court erred in concluding that the government orders temporarily limiting the scope of their restaurant operations constituted direct physical loss or damage to property. We agree,” the statement said.
It also notes that there is legal precedent regarding “business interruption” clauses in insurance policies. The restaurants argued that they should be able to receive insurance money due to “business interruption,” but the court said there was no physical property lost or damaged, so that rule did not apply.
“Furthermore, recent cases from the Fourth Circuit have agreed that similar or identical policy provisions do not provide coverage for business interruption losses due to government COVID-19 orders because there is no direct physical loss or damage to the insured property,” it said. states in the opinion.
Plaintiffs wanted to effectively equate physical loss with “loss of use” when pandemic orders shut down businesses. This was incorrect, the opinion decided.
“Under the plain language of the Policies, only direct, accidental, physical loss or damage to property is covered,” it states.
The decision of the Superior Court of Durham County was reversed and the judges of the Court of Appeals ruled in favor of The Cincinnati Insurance Company.
Andrew Jones is the Buncombe County government and health reporter for the Asheville Citizen Times, part of the USA TODAY Network. Reach him at @arjonesreports on Facebook and Twitter, 828-226-6203 or [email protected] Please help support this type of journalism by subscribing to Citizen Times.