U.S. District Judge David W. Dugan got it right when he ruled that government shutdown orders to curb the spread of the coronavirus did not cause any physical alteration to TJBC Inc.'s restaurant, 4204 Main Street Brewing Co., Cincinnati argued in its Wednesday appellee brief.
Rather, these orders restricted the congregation of people but didn't cause any physical loss or damage triggering coverage, the insurer said.
"Substantial majority of Illinois coronavirus coverage cases hold that loss of use without actual physical injury to property is insufficient to establish coverage," the insurer said, noting this principle has been used in over 100 virus-related coverage decisions in state and federal courts.
Cincinnati said the minority of rulings denying dismissal don't apply this principle and incorrectly conclude direct physical loss can be the temporary loss of use of a business's property or operations. Those decisions disregard that coverage only applies during a period of restoration, the insurer argued.
TJBC appealed to the Seventh Circuit the dismissal of its suit over pandemic-related losses. In a January ruling, Judge Dugan held COVID-19 didn't cause a physical loss or damage to the Belleville, Illinois, restaurant as there wasn't any physical alteration to its property.
Last month, TJBC argued to the Seventh Circuit that its inability to use the restaurant as intended is a covered loss. The Illinois government's order declared the community "a disaster area," and COVID-19 resulted in the "widespread and severe damage, injury, and loss of life," according to the owner.
In Wednesday's brief, Cincinnati argued that there isn't any physical loss or damage under the business income or civil authority coverages. The government orders didn't bar access to the steakhouse and brewery but rather encouraged preparation of food and beverages for takeout deliveries, according to the insurer.
"The insurance policy that TJBC purchased from Cincinnati is a commercial property policy," Cincinnati said. "It protects TJBC from physical loss or damage to its property, as in the event of a fire or a storm. It does not insure against economic loss in the absence of physical loss or damage."
Even if the coronavirus was present at the steakhouse and brewery, Cincinnati argued the science that TJBC touts in its arguments shows the virus naturally disappears and can be cleaned off. And the presence of the coronavirus doesn't physically alter insured property, according to the insurer.
Finally, Cincinnati said its policy's lack of a virus exclusion isn't relevant to the coverage issue.
Representatives for Cincinnati declined to comment on pending litigation, and representatives of TJBC did not respond to requests for comment Thursday.
TJBC is represented by Jason Barnes, Ted Gianaris and Eric S. Johnson of Simmons Hanly Conroy.
Cincinnati is represented by Daniel G. Litchfield, Alan I. Becker and Brian M. Reid of Litchfield Cavo LLP.
The case is TJBC Inc. v. The Cincinnati Insurance Co., case number 21-1203, in the U.S. Court of Appeals for the Seventh Circuit.
--Editing by Abbie Sarfo.
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