The owners of dozens of Illinois bars and restaurants tried their hand at the ongoing litigation battle between policyholders and insurers over business interruption claims related to COVID-19, to no avail.

The Circuit Court of Cook County tossed 17 separate lawsuits in one day filed by policyholders against Wisconsin-based insurer Society Insurance, Inc. for losses they say stem from COVID-19 restrictions.

Similar to other COVID-related business interruption cases playing out in state and federal courts across the nation, the main disagreement between the parties was whether a “direct physical loss of or damage to covered property” or a “Covered Cause of Loss” occurred, as defined by the policies.

Chancery Division Presiding Judge Moshe Jacobius held Aug. 24 that Society Insurance has no duty to provide coverage under the policies in these claims.

In similar opinions issued in the 17 suits — some of them filed by multiple plaintiffs — Jacobius found the policies provide no coverage for the income the businesses lost or the extra expenses they incurred as a result of contamination and product spoilage during COVID shutdown restrictions. He also rejected all claims of bad faith.

Jacobius wrote that most litigation in the U.S. District Court for the Northern District of Illinois as well as other cases in the Circuit Court of Cook County found no coverage under the insurance policy because the “plaintiff has not pled any facts showing physical alteration or structural degradation of the property,” citing multiple cases including Sandy Point Dental, PC, 488 F. Supp. 3d at 693.

The various bar and restaurant owners claim that Gov. J.B. Pritzker’s stay-at-home executive order issued in March 2020 caused significant loss of business income as well as substantial disruption to normal operations.

Society Insurance contended the stay-at-home order did not prohibit access to these businesses, a requirement to trigger coverage under the civil authority provision.

The insurance company argued that the businesses could still be accessed for carryout and delivery. Jacobius agreed because the businesses did not allege any damage outside their premises forcing the civil authority to prohibit access.

The plaintiffs also argued that because SARS-CoV-2 particles, which cause COVID-19, are easily transmittable among people, surfaces and properties, that it is “highly probable” these particles are present at their businesses. A similar argument alleging the virus was present on the property was proven successful in moving the case JDS Construction Group, LLC and 9 Dekalb Fee Owner LLC v. Continental Casualty Company, 2020 CH 5678 to trial. That case was brought before Cook County Circuit Court Judge Raymond W. Mitchell.

The bar and restaurant owners had originally made their claims for damages to property based on this argument. When Society denied the claims, they filed a complaint for declaratory judgment, asking the court to declare its losses are covered under the business income, extra expense and civil authority provisions of their insurance coverage policy.

Society Insurance filed a “mirror image” counterclaim to the plaintiffs’ claims, declaring there is no coverage for COVID-related losses in its policy. Jacobius ruled in favor of the counterclaim.

Society Insurance argued that “physical” loss requires tangible loss, and that intangible damages, such as reduction in economic value, are not a “physical” loss. Jacobius ruled that there must be a physical manifestation as a result of the occurrence triggering insurance coverage.

“Loss and loss of use do not mean the same thing. By way of illustration, the loss of a car does not mean the same thing as the loss of use of a car. Ask any grounded teenager. … Under the policy in question, a physical loss is a sine qua non of coverage. A loss of use without physical loss doesn’t count,” Jacobius wrote, citing Image Dental, LLC v. Citizens Insurance Co. of America, No. 20 C 2759 (N.D. Ill. June 11, 2021).

Jacobius said it is not reasonable for the policy to cover a microscopic particle when it can be easily removed from the covered premises under the policy with everyday cleaning products, citing the U.S. Centers for Disease Control and Prevention guidance on disinfecting facilities.

Society Insurance was represented by Michael D. Sanders, Michelle A. Miner and Amy E. Frantz of Purcell & Wardrope Chtd.

“While these times are undeniably challenging for many of Society’s policyholders, and all businesses impacted by the pandemic, the present circumstances do not alter the terms of Society’s insurance contracts or create insurance coverage for losses that fall outside those contracts’ terms,” Sanders said.

David Neiman of Romanucci & Blandin LLC was one of the attorneys for plaintiffs Maillard Tavern, LLC, Pussytails, Inc. and Masa Uno, Inc.

“We disagree with Judge Jacobius’ ruling and plan on appealing,” he said, citing Judge Edmund Chang’s ruling in favor of policyholders and against Society Insurance in In Re: Society Insurance Co. Business Interruption Protection Insurance Litigation, MDL number 2964.

The central arguments seen in these cases can also be seen in a majority of these types of cases playing out across the country, according to the National Law Review’s report “State of the Law for Business Interruption Insurance for COVID-19 Claims.”

“The percentage of cases ruling in favor of insureds is not what controls,” the National Law Review wrote. “Rather, the fact that there are numerous decisions that interpret ‘direct physical loss’ as encompassing governmental shut down or stay-home orders, as well as closures due to the presence of the coronavirus and COVID-19, shows that there is more than one reasonable way to interpret ‘direct physical loss’ … Under certain states’ insurance coverage law, when courts interpret insurance policy language differently, that is evidence of ambiguity.”