Black Rock Restaurants, LLC v. Society Insurance

2022 IL App (1st) 211215-U

FIFTH DIVISION
August 19, 2022

No. 1-21-1215

NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent
by any party except in the limited circumstances allowed under Rule 23(e)(1).

IN THE
APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT

BLACK ROCK RESTAURANTS, LLC, d/b/a THE ) Appeal from the Circuit Court of
MARQ, ) Cook County.
)
Plaintiff-Appellant, )
)
v. ) No. 20 CH 5111
)
SOCIETY INSURANCE, A MUTUAL COMPANY, ) Honorable
) Moshe Jacobius,
Defendant-Appellee. ) Judge Presiding.

PRESIDING JUSTICE DELORT delivered the judgment of the court.
Justices Hoffman and Connors concurred in the judgment.

ORDER

¶1 Held: Because the plaintiff’s insurance policy did not provide coverage for losses caused
by governmental COVID-related mitigation orders, the circuit court did not err in
granting the defendant insurance company’s motion to dismiss. Affirmed.

¶2 Plaintiff Black Rock Restaurants, LLC, d/b/a The Marq (The Marq) filed a declaratory

judgment action against defendant Society Insurance (Society) seeking insurance coverage for

alleged business interruption losses caused by the governor’s executive orders, which were

instituted to limit the operations of restaurants during the height of the COVID-19 pandemic.

Defendant filed a motion to dismiss pursuant to section 2-615(a) of the Illinois Code of Civil
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Procedure (Code) (735 ILCS 5/2-615(a) (West 2020)), which the circuit court granted. Plaintiff

appeals, contending that the court erred in denying its claims for declaratory judgment, breach of

contract, and statutory bad faith denial of coverage. We affirm.

¶3 BACKGROUND

¶4 Plaintiff owns and operates a restaurant and bar in Chicago, and it obtained a

“Businessowners Policy” (the policy) from Society. The policy included a “Businessowners

Special Property Coverage Form” (the Special Coverage Form). The operative portions of the

policy at issue here are identical to the operative portions of the policies at issue in a case we

recently decided. See State & 9 Street Corp. v. Society Insurance, 2022 IL App (1st)

211222-U, ¶¶ 6-13. These portions include the following: section (A)(3) (entitled “Covered

Causes Of Loss”) of the Special Coverage Form; subsection (g) (entitled “Business Income”),

subsection (h) (entitled “Extra Expense”), subsection (k) (entitled “Civil Authority”), and

subsection (m) (entitled “Contamination”) of section (A)(5) (entitled “Additional Coverages”) of

the Special Coverage Form; subsection (a) (entitled “Ordinance Or Law”) of section (B)(1)

(entitled “Exclusions”) of the Special Coverage Form; and section (H) (entitled “Property

Definitions”) of the Special Coverage Form. For the sake of brevity, we do not repeat them here,

but we incorporate these portions herein by reference.

¶5 On March 16, 2020, pursuant to the emergency powers granted him under section 7 of the

Illinois Emergency Management Agency Act (20 ILCS 3305/7 (West 2020)), Governor JB

Pritzker entered several executive orders in response to the COVID-19 pandemic. See, e.g., Exec.

Order No. 2020-07, 44 Ill. Reg. 5536 (Mar. 16, 2020) (ordering the suspension of on-premises

consumption of food and beverages but allowing off-premises consumption), https://

www2.illinois.gov/Documents/ExecOrders/2020/ExecutiveOrder-2020-07.pdf; Exec. Order No.

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2020-10, 44 Ill. Reg. 5857 (Mar. 20, 2020) (designating restaurants serving food for off-premises

consumption to be “essential” businesses), https://www2.illinois.gov/Documents/ExecOrders/

2020/ExecutiveOrder-2020-10.pdf; Exec. Order No. 2021-10, 45 Ill. Reg. 22 (May 17, 2021)

(modifying the parameters related to on-premises dining), https://coronavirus.illinois.gov/

resources/executive-orders/display.executive-order-number-10.2021.html. None of the orders

prevented restaurant or tavern operators from selling food for carry-out or delivery.

¶6 On May 8, 2020, plaintiff filed its complaint for declaratory relief, breach of contract, and

bad faith denial of insurance coverage. Plaintiff sought, inter alia, a declaration of rights pursuant

to the Society policy. Society filed its answer and affirmative defenses, as well as a

countercomplaint against plaintiff for declaratory judgment. On October 20, 2020, Society moved

for judgment on the pleadings under section 2-615(e) of the Code (735 ILCS 5/2-615(e) (West

2020)). After briefing and oral argument, the circuit court entered an order granting Society’s

motion for judgment on the pleadings on August 24, 2021. This appeal followed.

¶7 ANALYSIS

¶8 Plaintiff argues that the circuit court erred when it held that the pleadings failed to establish

the existence of “direct physical loss of or damage to” its property under the Business Income and

Extra Expense coverages of the policy. Plaintiff also contends that the court erred in finding that

its pleadings failed to establish the existence of coverage under the contamination and civil

authority coverages of the policy. Finally, plaintiff argues that it properly pleaded a claim for bad

faith denial of coverage.

¶9 We note that in the circuit court, this case was designated as related to multiple other cases

where restaurants and/or taverns sued regarding coverage under a Society Insurance

businessowners policy. The cases were all assigned to the same judge, proceeded on the same

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track, and were terminated through identical orders dismissing each case for essentially the same

reasons. Many of the plaintiffs have appealed to this court, and, in this court, the appeals have

been designated as related and assigned to the same author and panel.

¶ 10 In one of those appeals, this court recently issued a decision rejecting the same arguments

plaintiff raises here. See State & 9 Street, 2022 IL App (1st) 211222-U. In that case, the plaintiffs

also sought insurance coverage for Covid-related shutdowns and procured businessowners policies

from the same defendant as in this case. Id. ¶¶ 2, 6. As noted above, the relevant portions of the

plaintiffs’ insurance policies were verbatim copies of the relevant portions of the policy at issue

here. Id. ¶¶ 6-13. Society filed a motion to dismiss, which the circuit court granted, and the

plaintiffs appealed. Id. ¶ 14.

¶ 11 We initially noted that the policies at issue were not “all risk” policies that would also cover

business interruption losses; rather, they were policies that only covered property losses, which

requires “physical loss of or damage to property.” Id. ¶ 25.

¶ 12 The plaintiffs there contended that they sufficiently alleged the existence of a direct loss of

or damage to their property and that the circuit court erred in finding that coverage is unavailable

if the loss could not “ ‘be seen with the naked eye.’ ” Id. ¶ 27. There, as here, the plaintiffs sought

coverage under the “Business Income,” “Extra Expense,” and “Civil Authority” provisions, 1

claiming that they suffered “direct physical loss of or damage to” property at their premises. Id.

We noted that the policies defined “Covered Causes of Loss” as “Direct Physical Loss unless the

loss is excluded or limited under this coverage form.” Id. ¶ 28.

1
Plaintiff in this case provides a single sentence—with no additional analysis—in its
opening brief in support of its claim of coverage pursuant to the “Civil Authority” provision. It
repeats that same sentence (indeed, the entire paragraph) in its reply brief. This argument is
undeveloped and thus forfeited. See Ill. S. Ct. R. 341(h)(7) (eff. Oct. 1, 2020).

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¶ 13 We began with a discussion of a recent second district case—which involved precisely the

same policy language—and a well-established decision from our supreme court. Id. ¶¶ 29-33

(citing Sweet Berry Café, Inc. v. Society Insurance, Inc., 2022 IL App (2d) 210088; and Travelers

Insurance Co. v. Eljer Manufacturing, Inc., 197 Ill. 2d 278, 292-93 (2001)). We quoted Sweet

Berry’s holding that the policy “ ‘unambiguously’ ” required a physical alteration or substantial

dispossession, not merely loss of use. Id. ¶ 32. We also noted both Sweet Berry’s statement that

“physical injury to tangible property” was unambiguous and also our supreme court’s holding that

a physical injury must alter the property either in appearance, shape, color, or some other “material

dimension.” (Internal quotation marks removed.) Id. ¶ 33 (quoting Sweet Berry, 2022 IL App

(2d) 210088, ¶ 41 (quoting Eljer, 197 Ill. 2d at 301)). We thus rejected the plaintiffs’ contention

and held that the plaintiffs’ claim resulting from the various COVID-19 orders constituted an

economic loss and not a physical loss that would trigger coverage under the policies. Id. ¶ 36.

¶ 14 We further rejected the plaintiffs’ reliance upon a “handful” of federal trial court decisions

because those courts failed to consider our supreme court’s interpretation of the term “physical”

in Eljer. Id. ¶¶ 38-39 (distinguishing In re Society Insurance Co. COVID-19 Business Interruption

Protection Insurance Litigation, 521 F. Supp. 3d 729 (N.D. Ill. 2021); and Studio 417, Inc. v.

Cincinnati Insurance Co., 478 F. Supp. 3d 794 (W.D. Mo. 2020)). We thus elected to follow

Illinois courts and the Seventh Circuit (interpreting Illinois law) because those decisions were both

directly on point and controlling on the question presented. Id. ¶ 39 (citing Sweet Berry, 2022 IL

App (2d) 210088, ¶ 43; Lee v. State Farm Fire and Casualty Co., 2022 IL App (1st) 210105, ¶ 19;

Sandy Point Dental, P.C. v. Cincinnati Insurance Co., 20 F. 4th 327, 335 (7th Cir. 2021)).

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¶ 15 Finally, we affirmed the dismissal of the plaintiffs’ bad faith claim against Society.

Id. ¶¶ 51-52. We stated that, since no coverage was owed, plaintiffs’ sole argument that the court

erred in finding that they failed to allege coverage under the policies necessarily failed. Id.

¶ 16 In this case, plaintiff makes precisely the same arguments that the plaintiffs made (and

which we rejected) in State & 9 Street. Plaintiff’s contentions that (1) it successfully alleged policy

coverage under the “Business Income” or “Extra Expense” provisions and (2) we should rely upon

the federal trial decision in In re Society Insurance necessarily fail because it has not provided

anything to convince us to set aside our reasoning in State & 9 Street.

¶ 17 Plaintiff argues, nonetheless, that the absence of a virus exclusion in the policy warrants

coverage, and it cites Village of Rosemont v. Lentin Lumber Co., 144 Ill. App. 3d 651 (1986), in

support. Plaintiff’s reliance, however, is misplaced because that case involved an all-risk policy.

See id. at 657. Here, by contrast, the policy at issue covers “physical loss of or damage to property”

(Emphasis added.) See State & 9 Street, 2022 IL App (1st) 211222-U, ¶ 25. Moreover, since we

have held that there was no policy coverage, the absence of an exclusion does not create coverage.

See Sweet Berry, 2022 IL App (2nd) 210088, ¶ 47. Plaintiff’s argument is thus meritless.

¶ 18 Finally, plaintiff’s argument that the circuit court erred in failing to apply the doctrine of

contra proferentem (i.e., to construe ambiguous provisions in the insurance policy against the

drafter—here, Society) is without merit. At the outset, we agree with the holding in Sweet Berry

that the insurance policy was unambiguous. Sweet Berry, 2022 IL App (2nd) 210088, ¶¶ 39-41;

accord State & 9 Street, 2022 IL App (1st) 211222-U, ¶ 25, 32. Moreover, plaintiff’s argument

hinges upon its characterization of the policy as an all-risk policy, and is thus doomed: We have

already held that the policy is not an all-risk policy but rather one that only covered property losses,

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which requires “physical loss of or damage to property.” Id. ¶ 25; see also supra ¶ 17. Plaintiff’s

claims of error are thus unavailing.

¶ 19 CONCLUSION

¶ 20 The circuit court did not err in granting defendant’s motion to dismiss. Plaintiff’s

contentions of error here are nearly identical to the plaintiffs’ contentions that we rejected in State

& 9 Street, and plaintiff here provides no persuasive reason for us to decline to follow the holding

of that case. Accordingly, we affirm the judgment of the circuit court of Cook County.

¶ 21 Affirmed.

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