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United States Court of Appeals for the Seventh Circuit
September 10, 2021, Argued; December 9, 2021, Decided
No. 21-1186, No. 21-1559, No. 21-1203
[*329] WOOD, Circuit Judge. No one doubts that the COVID-19 pandemic has inflicted enormous [**3] losses on businesses, large and small, throughout the country. It is therefore not surprising that an avalanche of insurance claims has followed in the wake of the pandemic, as the suffering businesses look for assistance in absorbing those losses. We resolve three such claims in this opinion—those brought by plaintiffs Sandy Point Dental, P.C. ("Sandy Point"), the Bend Hotel Development Company ("Bend Hotel"), and TJBC, Inc. ("TJBC"). We refer to the plaintiffs collectively as the Businesses unless the context requires otherwise.
Each Business was required to close or dramatically scale back its operations in response to a series of executive orders issued by Illinois Governor J. B. Pritzker in an effort to curb the spread of the virus in the state. The Businesses held materially identical commercial-property insurance policies, sold by the same insurer, the Cincinnati Insurance Company ("Cincinnati"). In brief, these policies provided coverage for income losses sustained on account of a suspension of operations caused by "direct physical loss" to covered property. The policies also provided coverage for income losses sustained as a result of an action of civil authority prohibiting [**4] access to covered property, when such action was taken in response to "direct physical loss" suffered by other property.
Each Business filed claims for coverage under its policy, and each time, Cincinnati denied the claim and litigation ensued. In all three cases, the responsible district court granted Cincinnati's motion to dismiss for failure to state a claim upon which relief could be granted. See FED. R. CIV. P. 12(b)(6). Each court reasoned that the Business before it did not adequately allege that either the virus that causes COVID-19, SARS-CoV-2, or the resulting closure orders caused "direct physical loss" to property. All three Businesses appealed; we resolve those appeals in this consolidated opinion.
Our review is de novo, but we find little to criticize in the district courts' resolutions of these cases, and so we affirm the judgments of dismissal. In doing so, we join the four circuits that so far have addressed the central question [*330] before us: whether loss of use, unaccompanied by any physical alteration to property, may constitute "direct physical loss" under the relevant insurance policies. See Santo's Italian Café LLC v. Acuity Ins. Co., 15 F.4th 398 (6th Cir. 2021); Oral Surgeons, P.C. v. Cincinnati Ins. Co., 2 F.4th 1141 (8th Cir. 2021); Mudpie, Inc. v. Travelers Cas. Ins. Co., 15 F.4th 885 (9th Cir. 2021); Gilreath Family & Cosmetic Dentistry, Inc. v. Cincinnati Ins. Co., --- Fed. Appx. ---, 2021 U.S. App. LEXIS 26196, 2021 WL 3870697 (11th Cir. Aug. 31, 2021).
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
20 F.4th 327 *; 2021 U.S. App. LEXIS 36399 **; 111 Fed. R. Serv. 3d (Callaghan) 967
SANDY POINT DENTAL, P.C., Plaintiff-Appellant, v. THE CINCINNATI INSURANCE COMPANY, Defendant-Appellee.THE BEND HOTEL DEVELOPMENT COMPANY, LLC, Plaintiff-Appellant, v. THE CINCINNATI INSURANCE COMPANY, Defendant-Appellee.TJBC, INC., Plaintiff-Appellant, v. THE CINCINNATI INSURANCE COMPANY, Defendant-Appellee.
Subsequent History: Rehearing denied by, En banc, Rehearing denied by Tjbc, Inc. v. Cincinnati Ins. Co., 2022 U.S. App. LEXIS 1087 (7th Cir. Ill., Jan. 13, 2022)
Prior History: [**1] Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 20 CV 2160 — Robert W. Gettleman, Judge.
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 20 CV 4636 — Elaine E. Bucklo, Judge.
Appeal from the United States District Court for the Southern District of Illinois. No. 3:20-cv-00815-DWD — David W. Dugan, Judge.
TJBC, Inc. v. Cincinnati Ins. Co., 2021 U.S. Dist. LEXIS 13007, 2021 WL 243583 (S.D. Ill., Jan. 25, 2021)Dental v. Cincinnati Ins. Co., 2021 U.S. Dist. LEXIS 4299, 2021 WL 83758 (N.D. Ill., Jan. 10, 2021)Bend Hotel Dev. Co., LLC v. Cincinnati Ins. Co., 515 F. Supp. 3d 854, 2021 U.S. Dist. LEXIS 15303, 2021 WL 271294 (N.D. Ill., Jan. 27, 2021)Sandy Point Dental, PC v. Cincinnati Ins. Co., 488 F. Supp. 3d 690, 2020 U.S. Dist. LEXIS 171979 (N.D. Ill., Sept. 21, 2020)
physical loss, alteration, premises, Hotel, virus, cases, closure order, dispossession, allegations, coverage, losses, loss of use, policyholders, asbestos, policies, orders, physical injury, delivery, courts, air, amended complaint, district court, reconsideration, restaurants, suspension, radiation
Insurance Law, Claim, Contract & Practice Issues, Policy Interpretation, Entire Contract, Ordinary & Usual Meanings, Ambiguous Terms, Unambiguous Terms, Plain Language, Civil Procedure, Appeals, Standards of Review, Abuse of Discretion, De Novo Review, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Pleadings, Amendment of Pleadings, Leave of Court, Judgments, Relief From Judgments, Altering & Amending Judgments, Motions to Reargue