Bouley Settles Ground Zero Food Fight

by Ronald Drenger

Restaurateur David Bouley last month settled a bitter legal battle with his insurer, Admiral Indemnity Company, which charged that the celebrity chef had fraudulently sought more than $2.2 million for business losses after the Sept. 11 terrorist attack.

Bouley had not disclosed in his claim that he had earned $5.8 million from a Red Cross contract to prepare meals at Bouley Bakery for Ground Zero workers during the time that the restaurant was closed. The restaurant, at 120 West Broadway, later reopened as Bouley.
A few days after Sept. 11, 2001, restaurateur David Bouley stands beside a police van in which he took hot meals to Ground Zero workers. Bouley volunteered his services for three weeks before signing a Red Cross contract that paid him $5.8 million. Photo: Carl Glassman

Both sides declined to discuss terms of the settlement, which came a couple of days after a federal judge issued a preliminary ruling in the case and told lawyers that trial would begin on Nov. 17.

Judge Harold Baer of the U.S. District Court in Manhattan wrote that Bouley’s “failure to refer to the contract with the Red Cross in its claim is very troubling,” but that a jury would have to decide whether the restaurant mogul had intentionally deceived Admiral, as the insurer had “failed to show fraud by clear and convincing evidence.”

During the first three weeks after the terrorist attack, Bouley, with a team of employees and volunteer workers, prepared meals and served them to Ground Zero workers and he donated food from his two Tribeca restaurants. He wasn’t paid for the effort.

Then Bouley signed a contract with the Red Cross that paid him $4.50 per meal for the first 10,000 meals each day and $3.50 for

each additional meal. Volunteers participated in the 24-hour operation.

Although Bouley’s other restaurant, Danube, at 30 Hudson St., reopened on Sept. 28, Bouley Bakery, where the meals were prepared, remained closed until Feb. 9, 2002.

Bouley’s insurance claim, submitted in May 2002, included lost income during the period when Bouley Bakery was being used for the Red Cross operation.

Admiral rejected the claim in October 2002 and sued Bouley the following month, saying that the Red Cross revenue dwarfed his losses and that his coverage was nullified because he had hidden the income. Admiral also demanded that Bouley return $350,000 it had advanced him from September through November 2001. In court documents, Admiral called Bouley’s actions “positively gluttonous.”

Bouley claimed that his catering company, Bouley Consulting, was providing the Red Cross meals and was totally separate from his restaurant business.

But Bouley’s accountant said in a deposition that 75 percent of the $5.8 million from the Red Cross was allocated to Bouley International Holdings, which owns Danube and Bouley Bakery. Bouley owns a 50 percent stake in the company.

Judge Baer, in his ruling, said that Bouley could not claim lost income for the period after the Red Cross contract started, narrowing the dispute to his September losses and whether he had lost rights to coverage because of the alleged fraud.

In a statement released after the settlement, Bouley said that the fraud charge was “manufactured by my insurance company to lower my restaurants’ insurance claim.” His publicist, Allan Ripp, said that Bouley’s insurance claim was justified despite the Red Cross contract.

“The fact that he had a catering business,” Ripp said, “doesn’t take away from the fact that his restaurant was out of business for that time.”