Bourbon Pub Parade files class-action lawsuit after insurance company denies coronavirus-related claim

A Bourbon Street nightclub on Monday sued its insurance company for alleged breach of contract after a claim for damages caused by a forced shutdown due to the COVID-19 pandemic was denied.

Bourbon Pub Parade, located at 801 Bourbon St., sued Nautilus Insurance for breach of contract after the company denied to cover a claim for ongoing damages caused by a city order ceasing business operations to prevent coronavirus spread, according to a federal lawsuit filed on May 4.

New Orleans Mayor LaToya Cantrell issued a March 16 proclamation ordering certain businesses, including bars, to close as a measure to prevent the spread of coronavirus. This includes the vast majority of businesses in the French Quarter, which relies heavily on tourism income.

While the actual economic impact from the business closures has yet to be fully quantified, tourists in New Orleans spent $9.1 billion in 2018, with much of it driven by leisure- and work-related travel, according to the city’s Tourism Marketing Corporation.

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“The damages [Bourbon Pub Parade] has sustained were not ’caused by or resulting from’ COVID-19,” the lawsuit states. “Rather, the proximate cause of…losses were the precautionary measures taken by the mayor of New Orleans and the Louisiana governor to prevent spread of COVID-19 in the future.”

The insurance purchased by Bourbon Pub Parade included an “all-risk” policy that provided coverage for all risks, unless the risk was specifically excluded, according to the lawsuit, adding that the policy includes coverage for business interruption, extra expense, civil authority and extended business income.

While the policy doesn’t provide an exclusion for losses stemming from a pandemic, it does exclude losses “caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease,” according to the lawsuit.

Nautilus denied the insurance claim on two grounds: first, that the bar and surrounding property didn’t suffer any physical damage; and second, the policy’s virus and bacteria exclusion.

Bourbon Pub Parade, however, said Nautilus’ reasons are erroneous because of the impact coronavirus is having on physical spaces throughout the world.

Citing coronavirus studies, the bar said contaminated surfaces could serve as a potential source of transmission.

“Based on what is understood about the way COVID-19 is transmitted, it is clear that the insured premises and surrounding areas have sustained direct physical losses within the meaning of the policy,” said Bourbon Pub Parade.

Additionally, the bar said losses aren’t directly attributed to coronavirus, but Cantrell’s order forcing it to close.

In the lawsuit, Bourbon Pub Parade requests a jury trial and class-action certification, which could involve other plaintiffs that are denied similar claims.

Read the lawsuit below: