EAST ST. LOUIS – Cincinnati Insurance moved to dismiss a suit of East Alton video game shop Maverick’s Slots for coverage of lockdown losses on Oct. 9.
“Because direct physical loss is a fundamental prerequisite to coverage under the policy, plaintiff’s attempt to create coverage from whole cloth should not be permitted,” wrote Cincinnati counsel Brian Reid of Chicago.
He quoted from the policy that Cincinnati would pay for loss of income due to necessary suspension of operations during a period of restoration.
“Loss means accidental physical loss or accidental physical damage,” Reid wrote.
Former Third Circuit chief judge Ann Callis and St. Louis associates Eric Holland and Seth Crompton filed the suit in Madison County circuit court in August.
They claimed the policy covered necessary suspension of business.
Reid removed the suit to district court in September.
In his motion to dismiss he wrote that Maverick’s didn’t allege that the presence of the virus resulted in direct physical loss to property.
“Plaintiff only speculates that the premises likely have been infected with Covid-19, allegedly causing plaintiff to suffer direct physical loss to the property in some undescribed manner,” Reid wrote.
He wrote that if the virus was present on the premises, “it naturally disappears and can be removed by cleaning.”
He wrote that it dies naturally in days or can be wiped away.
Reid quoted a media release of Centers for Disease Control stating that surfaces are not thought to be the main way the virus spreads.
He cited a string of district court decisions, two for Cincinnati:
On Aug. 13, in a State Farm case, the Western Texas court found a loss needed to be a distinct and demonstrable physical alteration of a property.
On Aug. 18, in a Sparta Insurance case, the Eleventh Circuit appellate court in Atlanta held that there must be an actual change in the property.
On Sept. 2, in a Travelers case, California’s Central District found a business couldn’t plead temporary impairment to use as physical loss or damage. He wrote that the court found restrictions might interfere with property use but a business couldn’t allege that restrictions caused direct physical loss or damage.
On Sept. 21, a Northern District of Illinois judge held that a business suing Cincinnati for lost income failed to state a claim. He wrote that the judge found the policy unambiguously required some form of actual physical damage to the premises.
On Sept. 29, in a Cincinnati case, Iowa’s Northern District found the virus and government orders caused the losses, not physical loss or damage.
He brought forth an Illinois state court case, writing that a DuPage County judge ruled in State Farm’s favor on Sept. 29. The judge found a plaintiff couldn’t show any loss from lack of access, physical alteration, or structural degradation.
Hospitals, nursing homes, and grocery stores have remained open, “because those properties themselves are undamaged,” he wrote.