On October 25th, in a policyholder win, Judge Raymond Mitchell of Cook County denied Continental Casualty Company's motion for reconsideration of an earlier August 12 ruling denying a motion to dismiss a business interruption lawsuit filed by JDS Construction Group.
The case, as we reported on in August, involves the important issue of whether the COVID-19 virus causes "physical loss or physical damage." In the motion for reconsideration, Continental Casualty cited several decisions from New York and Illinois asserting that courts in both jurisdictions overwhelmingly found that the presence of the virus does not trigger coverage under a policy requiring "direct physical loss or damage to property."
Judge Mitchell noted in denying the motion that the reconsideration motion failed to note any part of the Plaintiffs' complaint which alleged that the virus was present on the insured premises and virus droplets were conveyed to solid surfaces and into the air and HVAC system, causing structural damage to the property which required alteration to remedy.
Defense counsel argues that it didn't matter what Plaintiffs alleged their complaint because a virus such as COVID can never trigger coverage since it can just be wiped off. The judge noted that there is far from universal agreement on how the virus attaches to surfaces and the effectiveness of cleaning efforts.
The judge notes that there seems to be a suggestion that the August 12, order must be wrong because so many other courts have reached a contrary conclusion. Judge Mitchell said he will not quarrel with contrary decisions, but "those decisions are not helpful in determining whether the facts alleged in th[e] complaint satisfy the legal standard which Defendant now concedes was correctly articulated."
In conclusion, Judge Mitchell stated that he was "more convinced now more than ever as to the correctness of the original decision."
Robin Cohen, chair of the boutique insurance law firm Cohen Ziffer Frenchman & McKenna, and Jillian Raines, a partner at the firm and former corporate insurance attorney for Apple, represent JDS in this litigation.
Cohen made the following comment about the case. "We are thrilled with Judge Mitchell's well-reasoned order affirming his denial of Continental's motion to dismiss and are appreciative that the Court disregarded the carrier's bid for herd dismissal based on differently plead cases lacking precedential value and/or resolving – at the pleadings stage – disputed facts about an evolving and novel coronavirus."
Read the original coverage of this case here.