BENTON – Another suit for coverage of lockdown losses failed on Dec. 14, when U.S. District Judge Staci Yandle found West Bend Mutual properly denied a claim from River Hills Development of Grafton.
Yandle adopted the position of Seventh Circuit appellate judges who ruled in favor of Cincinnati Insurance in three cases at once on Dec. 9.
The Seventh Circuit found that policies covering direct physical loss or damage didn’t apply to the lockdown.
Attorney Matthew Young of Belleville filed suit for River Hills in March, in Jersey County.
He claimed River Hills never had a reported case of the virus on its premises or in its employees.
He claimed River Hills was prepared to cooperate in West Bend’s investigation.
“However, defendant did no investigation but rather flat out denied the claim within days of receiving the claim,” he wrote.
He claimed West Bend’s grounds were unreasonable and unjustified.
“This is clearly not how insurance claims are supposed to be handled in this state,” he wrote.
He sought judgment for $148,000 as the average income of three previous years plus attorney fees, costs and other just and proper relief.
West Bend counsel Daniel Cunningham of Chicago removed the complaint to district court in May, asserting diversity jurisdiction as a citizen of Wisconsin.
He moved to dismiss the complaint, claiming it didn’t allege an address or anything about the nature of the business.
He claimed the name suggested real estate.
He claimed River Hills didn’t allege that any physical condition of the property caused a suspension of operations.
Young responded in June, claiming West Bend’s focus on physical alteration ignored the coverage for physical loss.
“There was a direct physical loss of the premises, not to the premises,” he wrote.
He claimed the virus didn’t cause a loss.
“The loss was caused by the government shutdown,” he wrote.
Seventh Circuit judges simplified the matter by holding that “direct physical loss or damage” didn’t apply to loss of use without physical alteration.
Yandle cited them in ruling that River Hills didn’t adequately allege direct physical loss or damage at any property.
She found that the policy required restoration.
She found the restoration period ends when a property should be repaired, rebuilt, or replaced, or when a business resumes at another permanent location.
She found West Bend argued that the requirement of a period of restoration confirmed that the damage or loss must be of a nature that the property can be repaired, rebuilt, or replaced.”
She agreed and dismissed the complaint with prejudice.