Operators of Qdoba and Culvers restaurants have filed a class action complaint against Society Insurance in Madison County Circuit Court alleging claims for business interruption coverage due to COVID-19 shutdown orders have wrongfully been denied.
Gem City Fresh Mex and Gem City Custard, which operates restaurants in Quincy, Peoria, East Peoria, Moline and Springfield, seek to represent all restaurants and bars in Illinois that have incurred losses and business interruptions due to closure orders and who have been denied, and could be denied coverage, by the Fond Du Lac, Wisc.-based insurer.
Venue in Madison County is proper because Society conducts business here, and causes of action arose in part in Madison County, states the complaint filed by attorneys at TorHoerman in Edwardsville, Wright & Schulte in Vandalia, Ohio, Hilliard Martinez Gonzales in Corpus Christi, Texas and Urban & Taylor in Milwaukee, Wisc.
Filed May 1, the complaint says that had Society wanted to exclude pandemic-related losses in its policy, as many other insurers have done, it easily could have attempted to do so "on the front-end" with an express exclusion.
"Instead, Society Insurance waited until after it collected Plaintiffs' premiums, and after a pandemic and the resulting closure orders caused catastrophic business losses to Plaintiffs, to try to limit its exposure on the back-end through its erroneous assertion that the presence of the coronavirus is not 'physical loss' and therefore is not a covered cause of loss under its policies," the complaint states.
"The fact that the insurance industry has created specific exclusions for pandemic-related losses under similar commercial property policies undermines Society Insurance's assertion that the presence of a virus, like the coronavirus, does not cause 'physical loss or damage' to property. Indeed, if a virus could never result in a 'physical loss' to property, there would be no need for such an exclusion."
Plaintiffs cite Gov. JB Pritzker's closure orders that began March 17 and which have been extended at least through May 30 as basis for their business interruption.
"As a result of the Closure Orders, Plaintiffs have been forced to halt ordinary operations, resulting in substantial lost revenues and forcing Plaintiffs to furlough or lay off the majority of their employees," the complaint states.
The suit seeks unpaid business income and extra expenses with statutory interest.