Tressler Secures Dismissal of COVID-19 Business Interruption Coverage Case

On June 11, 2021, Tressler secured dismissal of a lawsuit seeking COVID-19-related losses under first party business income and civil authority coverage. The case, Image Dental v. Citizens Insurance Company of America, 20-cv-02759, was brought by a collection of Illinois dental offices for losses sustained during the COVID-19 pandemic. The Plaintiff claimed that the executive orders issued by Governor Pritzker deprived them of use of their dental offices and the resulting financial losses were covered under their commercial property policy issued by Citizens.

Citizens moved to dismiss the complaint on the basis that the alleged losses did not constitute a direct physical loss of or damage to property, as required by the policy. Tressler further argued that the Ordinance and Law and Virus exclusions applied to bar Plaintiff’s claims entirely.

The court sided with Citizens, finding the Plaintiff had not alleged a direct physical loss of or damage to property, and that the Ordinance and Law and Virus exclusions would apply to bar coverage in any event. The court noted that, under Illinois law, “the policy covered business losses in limited circumstances, and those circumstances do not include a loss of business without a physical harm.” The court further found that the requirement of a physical loss meant the loss must be caused by “tangible or concrete change.” Accordingly, the court ruled that Plaintiff’s claimed losses amounted only to loss of use, which per the plain terms of the policy were not covered.

Moreover, the court addressed the two relevant exclusions at play: the Ordinance or Law exclusion and the Virus exclusion. First, the court ruled that Plaintiff’s claims, based upon the Governor’s orders, were squarely excluded by the Ordinance or Law exclusion because the orders were a “legal directive regulating the use” of Plaintiff’s property, which is excluded under the Ordinance or Law exclusion. Second, the court found the Virus exclusion applicable because the orders were “directly or indirectly” caused by a virus.

Tressler attorneys Todd Schenk, Jennifer Smith and Zach Greening appeared on behalf of Citizens.