Risk Management

Illinois appeals court rules for insurer in COVID BI case

Judy Greenwald

March 22, 2022 Reprints

Catastrophes Coronavirus Coverage Disputes Emerging Risks P/C Insurers Property More + Less -

An Illinois appeals court has ruled against an Evanston restaurant in putative class-action COVID-19 business interruption litigation, in the second such ruling within a week.

Jaewook Lee, owner of the Evanston Grill, filed suit against State Farm Fire & Casualty Co. for its refusal to pay its COVID-19-related business interruption claim, according to Friday’s ruling by the Illinois Court of Appeals for the first district in Chicago in Jaewook Lee, d/b/a Evanston Grill et al. v. State Farm Fire and Casualty Co.

A lower court ruled in the insurer’s favor, and was affirmed by a three- judge appeals panel. The court cited a September 2020 ruling in the insurer’s favor by the U.S. District Court in Chicago in Sandy Point Dental P.C. v. The Cincinnati Insurance Co.

“While not binding on this court, we are persuaded by and agree with the conclusions reached” in that case, “which interpreted the same policy language of ‘direct physical loss’” to covered property, the ruling said.

“Moreover, Evanston Grill’s declaratory judgment action was also properly dismissed” under its policy’s virus exclusion, the ruling said. Its “plain and ordinary language” excludes coverage, it said.

Policyholder attorney Alexander N. Loftus, of Loftus & Eisenberg Ltd. in Chicago, cited pro-insurer policyholder rulings issued by the 7th U.S. Circuit Court of Appeals in December.

“The writing was on the wall for this months ago when the 7th Circuit issued its trifecta of rulings. The First District followed the trend on these issues and didn’t make any waves with this ruling,” he said.

Insurer attorneys did not respond to requests for comment.

Another Illinois appeals court ruled against a café in a similar case last week.