Kentucky officials named in Louisville restaurant lawsuit over COVID-19 closure order

LOUISVILLE, Ky. — A Louisville restaurant is suing its insurance provider for denying coverage over its lost business while being forced to close to in-person traffic by Kentucky Gov. Andy Beshear's administration during the coronavirus pandemic.

The lawsuit also names Kentucky Public Health Commissioner Dr. Steven Stack, Cabinet for Health & Family Services Secretary Eric Friedlander and Public Protection Cabinet Secretary Kerry Harvey as defendants. 

In a lawsuit filed Friday in Jefferson Circuit Court, Varanese, at 2106 Frankfort Ave., alleges that Pennsylvania-based Erie Insurance Exchange wrongfully denied coverage for loss of business incomes.

Erie wrote in a statement to Varanese that "Civil Authority coverage does not apply because a Civil Authority did not order that the business be closed due to damage to property within one mile of the premises," according to the lawsuit.

Varanese argues in the lawsuit that the presence of coronavirus "in the air and on surfaces may constitute property damage" and that "there was evidence of a widespread presence of the virus throughout the Commonwealth of Kentucky and in Louisville, Kentucky," including within one mile of the restaurant.

According to the lawsuit, the Kentucky health officials are named in the lawsuit because "the legal affect and the legal interpretation of their order is sought in this action."

"If the Kentucky defendants had any evidence that there was not COVID-19 virus within one mile of the plaintiff’s restaurant then the restaurant likely would have been excluded from the Kentucky defendants’ order," the lawsuit alleges.

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Varanese is asking a judge to make a declaratory judgement on whether the Beshear administration's order for restaurants to close to in-person traffic on March 16 is a "valid and enforceable order of a civil authority" and whether the presence of the coronavirus in the air and on surfaces can constitute property damage.

According to the lawsuit, if a judge rules in favor of Varanese, the restaurant is not asking the judge to determine damages at the time. Rather, Varanese will "first seek to negotiate, in good faith, with the insurance company in an effort to arrive at a mutually acceptable figure for the loss of business income."

"If such good faith negotiation does not produce a result then the Plaintiff will invoke the appraisal process to get a damage determination," the lawsuit states.

As part of his "Healthy at Work" plan, Beshear allowed restaurants to reopen on May 22 33% capacity indoors and unlimited capacity outdoors, so long as they enforced social distancing rules.

Varanese appeared to have reopened on May 22 and to offer takeout for guests before that, according to its Facebook page.

Editor's note: A previous version of this story misstated some of Varanese's claims and the challenge of the closure order.

Contact Ben Tobin at bjtobin@gannett.com and 502-582-4181 or follow on Twitter @TobinBen. Support strong local journalism by subscribing today: subscribe.courier-journal.com.