U.S. District Judge Robert Gettleman on Sunday maintained the legal soundness of an earlier finding that Sandy Point Dental PC hasn't suffered a physical loss that would trigger Cincinnati's policy duty to cover any of its shutdown-related losses, and said the clinic can't cure pleading deficiencies in its complaint.
The clinic had urged Judge Gettleman to reconsider dismissing its lawsuit after a Missouri federal judge found the COVID-19 virus causes physical loss or damage after physically attaching itself to property.
But Judge Gettleman said the out-of-district decision adds "nothing new" to the pandemic-related insurance coverage discussion, and he had already distinguished Sandy Point's policy language from the type of language at issue in the Missouri case.
"Further, the majority of courts to address this issue have agreed with this court, finding that COVID-19 and corresponding closure orders do not cause physical damage or physical loss to insured property," Judge Gettleman said.
The judge also said allowing the dental office to file an amended complaint in the case would be futile because its proposed filing wouldn't cure the defects he identified when he initially tossed the suit.
Sandy Point's proposed complaint amendment contains eight new paragraphs alleging the novel coronavirus spreads through particles that physically attach to physical premises, according to Judge Gettleman's order. But there are no allegations that COVID-19 was ever present in Sandy Pont's facility, and "no allegations of tangible physical damage," he ruled.
Even if the dental office could establish the virus' existence in its pleading, it wouldn't be enough to trigger Cincinnati's coverage obligations, Judge Gettleman said, citing his earlier finding that the coronavirus "does not physical alter the appearance, shape, color, structure or other material dimension of the property."
"The second amended complaint does not change this fact and does not cure this defect," he said.
Sandy Point Dental PC, which was forced to pause most of its business in March, sued Cincinnati in April over its refusal to pay out on its policy. The office claimed that its shutdown-related losses should be covered under its policy, but that its insurer was more interested in shielding itself from economic fallout than in living up to its contractual duties.
Sandy Point had urged Judge Gettleman to reject Cincinnati's bid to escape its suit, arguing it shouldn't be forced to show the novel coronavirus was present on its properties. But the judge said Cincinnati's policy plainly stated "demonstrable, physical alteration to the property" is required to trigger coverage, and that the dental office had failed to show that.
He also rejected the office's claim that coverage applied under the policy's civil authority coverage, saying the office couldn't show that access was ever forbidden by government orders. Statewide pandemic-related closure orders may have limited its business operations, but "no order issued in Illinois prohibits access to plaintiff's premises," Judge Gettleman said in September.
Counsel for Sandy Point told Law360 in an email on Monday that he and his client wished the judge's decision "had gone the other way," and that they intend to appeal his order.
Representatives for Cincinnati Insurance told Law360 in a written statement Monday that the company appreciates the judge reaffirming his decision.
"We have been, and continue to be, committed to doing our part to support the families and businesses in our agents' communities, including helping them to proactively manage risks and promptly paying covered claims," the statement continued.
Sandy Point is represented by Charles Silverman of Charles Aaron Silverman PC and Roberta Becker of Becker & Becker.
Cincinnati Insurance is represented by Brian Reid and Michael Baniak of Litchfield Cavo LLP.
The case is Sandy Point Dental PC v. The Cincinnati Insurance Company et al., case number 1:20-cv-02160, in the U.S. District Court for the Northern District of Illinois.
--Additional reporting by Daphne Zhang and Mike Curley. Editing by Philip Shea.
Update: This article has been updated with comments from counsel.
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