Salvatore's Italian Gardens and two affiliated hotel operations have taken a hit during the Covid-19 pandemic.
Salvatore's expected to receive financial relief through an insurance policy, covering business interruption, that it has with the Hartford Fire Insurance Co. But the insurance company said the policy does not cover economic damage stemming from the pandemic.
Now the two sides are headed to court. It's a dispute playing out around the country between some businesses and their insurance providers, who are at odds over whether insurance policies should cover losses stemming from Covid-19.
Salvatore's filed suit in federal court in Buffalo this week against the Connecticut-based insurance company. John E. Richmond, a lawyer with Richmond Vona who is representing Salvatore's, said the restaurant and hotel operations have suffered "significant" losses, but he declined to provide a dollar amount.
"We're asking a federal judge here in the Western District of New York to render a ruling as to whether or not Hartford should be responsible for paying for their losses due to the government shutdowns under Covid-19," he said.
The suit involves operations at three businesses: Salvatore's Italian Gardens, the Garden Place Hotel, and the Delavan Hotel. Documents detail the impact Covid-19 has had on the three properties, all of which are in Depew:
•Salvatore's, a spacious restaurant and banquet hall, closed March 13 and furloughed 222 employees. The restaurant plans to reopen June 15 at 25% capacity, with no banquets or groups of more than 10 people at any one time.
•The Garden Place Hotel closed March 16 and transferred any guests and contracts to the Delavan. The Garden Place furloughed 78 workers at the time of the shutdown. The hotel is preparing to reopen on Monday and intends to bring back about 30 staff members, depending on the amount of business.
•The Delavan Hotel has not closed, but its operations have been "significantly restricted" to comply with the state's orders, the suit said.
In late March, an adjuster for Hartford sent Salvatore's a denial-of-coverage letter, explaining the company's position.
The adjuster, John Perry, said the insurance company determined "no direct physical loss or damage has occurred" to the three properties.
"We have carefully reviewed your policy, and unfortunately, there is no coverage available for this loss," Perry said in the letter.
In the suit, Salvatore's challenges Hartford's stance, arguing that three businesses were financially harmed as a direct consequence of restrictions imposed by the state, and that its insurance policy should cover losses under those circumstances.
The suit further argues that Covid-19 does cause physical damage to properties, in the form of surfaces that become infected for an extended period and the difficulty and expense involved in cleaning up the virus.
The dispute over business interruption insurance during the pandemic is gaining attention around the country.
Some restaurant chains, including In-N-Out Burger, are suing their insurance providers over denied claims. And some states are considering legislation that would require insurance companies to pay insurance claims related to Covid-19.
Sean Kevelighan, CEO of the Insurance Information Institute, has said global pandemic risks are "uninsurable by private insurers, and only the federal government has the financial resources to cover them."
Kevelighan also argued that retroactive business interruption policy payouts "would bankrupt insurers, costing the industry nationwide at least $250 billion a month."
Meanwhile, Salvatore's is eager to resume its operations, Richmond said.
"Our clients want nothing more than to get back to business and serve the people of Western New York," he said.