Coffee Shop Chain Sues Insurers Over Business Losses From Pandemic

LOS ANGELES (CNS) - The parent company of Coffee Bean & Tea Leaf is suing an insurance company and its subsidiary for allegedly breaching a contract to compensate the coffee shop chain for business income losses suffered during the coronavirus pandemic.

International Coffee & Tea LLC brought the complaint Friday in Los Angeles Superior Court against CNA Financial Corp. and its subsidiary, Continental Casualty Co., seeking unspecified compensatory and punitive damages as well as a judicial declaration of the rights and duties of the parties under the policy.

“Like other retailers and restaurants, which depend upon high-volume foot traffic and a welcoming, enticing environment to attract in-store visits, Coffee Bean & Tea Leaf shops suffered enormous losses and a catastrophic drop-off in sales as a result of the COVID-19 pandemic and the resulting inability to conduct normal business beginning in or about March 2020,'' the suit states.

Representatives for the insurers could not be immediately reached.

The plaintiff obtained a single policy through both insurers that was effective from Aug. 1, 2019, through Aug. 1, 2020, and covered business interruption losses, the suit states.

In selling the policy to the plaintiff, the insurers “did nothing to limit liability for virus-or pandemic-associated risks,'' according to the suit.

Last April, the plaintiff submitted a claim to CAN, advising the insurers that Coffee Bean & Tea Leaf locations had experienced a 20% closure of stores due to the pandemic, the suit states.

The remaining locations were limited to takeout and delivery service, resulting in a $10 million loss in income as well as additional expenses for cleaning and operating, according to the suit.

The insurers were obligated to conduct a thorough investigation of the plaintiff's claim, but instead sent two letters last July denying coverage and to date the defendants “persist in their erroneous coverage positions,'' the suit states.

Photo: Getty Images

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