EAST ST. LOUIS – Badger Mutual Insurance doesn’t have to cover lockdown losses at Aviston Family Restaurant, U.S. District Judge David Dugan ruled on March 23.
He had entered a similar order in Badger Mutual’s favor a day earlier, in a suit Big Daddy’s Disco Diner of Belleville filed.
The policy for both businesses stated that Badger Mutual would pay for loss of income due to necessary suspension of operations in a period of restoration.
“The suspension must be caused by direct physical loss of or damage to property at the described premises,” the policy stated.
Attorney Angie Zinzilieta of Edwardsville filed Aviston Family Restaurant’s complaint in September, at Clinton County circuit court.
She claimed Badger Mutual’s failure to provide coverage caused tremendous financial losses and that unreasonable denial of coverage violated Illinois insurance code.
She claimed Badger Mutual made a false statement that coverage wasn’t available in violation of Illinois consumer fraud law.
Badger Mutual counsel Scott Helfand of Chicago removed the suit to district court in October, on the basis of diverse citizenship as a Wisconsin corporation.
He moved to dismiss it in November, claiming the allegations didn’t establish an initial grant of coverage.
Zinzilieta opposed the motion in December, writing that nothing in the words ‘direct physical loss’ required structural alteration.
“Absent from any meaning of direct is the notion that direct loss or damage requires structural alteration to the covered property,” she wrote.
She wrote that physical describes something having material existence or perceptible especially through the senses.
“An event or condition which prevents persons from inhabiting or operating a room in their home or business is no less physical of a loss under these definitions than an event that destroys the room,” she wrote.
She wrote that definitions of loss include destruction, ruin, and deprivation.
She wrote that synonyms for damage include contamination, impairment, deprivation, and detriment.
In January, Helfand replied that the policy didn’t provide a guarantee of income.
Dugan found the restaurant’s arguments didn’t differ from those of Big Daddy’s to a degree that inclined him to reverse his decision.
He dismissed the claim under insurance code, finding refusal to cover the loss couldn’t be unreasonable where there was a good faith dispute.
He dismissed the consumer fraud claim, finding the statement that coverage wasn’t available wasn’t false.
He concluded that the absence of coverage wasn’t a pleading deficiency that an amended complaint could correct.
“As such, plaintiff’s entire complaint will be dismissed with prejudice and without leave to amend,” he wrote.
Dugan issued his first order in a lockdown suit in January, finding Cincinnati Insurance didn’t have to cover 4202 West Main Brewing Company in Belleville.
The brewing company petitioned Seventh Circuit judges to review the decision.