Mattress Co. Loses Bid For COVID-19 Shutdown Coverage

By Lauraann Wood
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Law360 (November 25, 2020, 5:51 PM EST) -- An Illinois federal judge on Wednesday tossed out a mattress company's lawsuit seeking coverage for losses it incurred through statewide COVID-19 shutdown orders but said the company can have another bite at the apple and replead its case.

Dismissing AFM Mattress Co.'s declaratory judgment suit without prejudice, U.S. District Judge Manish Shah said the "straightforward" text of its insurance policy with Motorists Commercial Mutual Insurance Co. excludes coverage for damages or losses "resulting from any virus."

Motorists' policy covers AFM when certain causes of loss damage its property and trigger a civil authority to prohibit store access. But "damage from a virus was not a covered cause of loss — the policy explicitly excluded coverage for virus-related loss," Judge Shah said.

"And the virus exclusion itself made clear that the exclusion applied to civil authority coverage," he found. "The policy contemplated that a government entity might take some action in response to a virus and specifically excluded coverage in that scenario."

However, Judge Shah gave AFM three weeks to file an amended complaint after the company said in an earlier pleading it believes Motorists misrepresented the reasons it asked for permission to put the virus exclusion in its policy to begin with.

The judge had rejected AFM's request to include those claims in further response to the insurance company's dismissal bid but said it "is not obviously futile" to let the company present a different theory for why Motorists should cover its losses.

AFM's attorney, Glenn Udell of Brown Udell Pomerantz & Delrahim Ltd., told Law360 on Wednesday his client intends to file an amended complaint in the case because "we don't feel the judge's decision, at the end of the day, is dispositive of the lawsuit we filed."

"We believe the exclusion was granted by the Illinois Department of Insurance based on false pretenses to clarify existing coverage, as opposed to a change and removal of existing coverage," he said.

Representatives for the insurance company declined to comment Wednesday.

AFM, which has 52 stores across Illinois and Indiana, launched its lawsuit in June claiming Motorists had wrongfully cited its virus exclusion to deny coverage for losses it incurred after Illinois Gov. J.B. Pritzker and Indiana Gov. Eric Holcomb entered emergency orders that caused nonessential businesses to close in light of the novel coronavirus pandemic.

The mattress company argued Motorists incorrectly pointed to the exclusion because its losses were caused by the governors' shutdown orders, not the virus itself. But that argument failed to persuade Judge Shah, who noted that AFM's own complaint undermined its claim.

"[T]he complaint alleges that [AFM's] losses were due to both the virus and the shutdown orders that followed," he said. "Moreover, civil authority coverage does not exist in a vacuum — there is always some underlying cause of loss that triggers the government action, and the policy must cover that underlying cause for civil authority coverage to apply."

Judge Shah also rejected AFM's argument that the virus exclusion doesn't apply to COVID-19 since the virus didn't exist at the time it entered its insurance contract. Reading Motorists' policy in context, its exclusion for "any virus" applies to "all viruses that induce or are capable of inducing illness or disease," he said.

"There's no temporal limitation in the policy on when a given virus must have come into existence to be included in the virus exclusion, and nothing in the text suggests that the parties intended the exclusion to apply only to viruses that existed at the time they entered into the policy," the judge said.

AFM is represented by Glenn Udell, Michael Pomerantz and Bryan King of Brown, Udell & Pomerantz Ltd.

Motorists is represented by Patrick Hofer of Clyde & Co. US LLP and Timothy Reed of Molzahn Reed & Rouse LLC.

The case is AFM Mattress Company LLC v. Motorists Commercial Mutual Insurance Company, case number 1:20-cv-03556, in the U.S. District Court for the Northern District of Illinois.

--Editing by Janice Carter Brown.

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Case Information

Case Title

AFM Mattress Company, LLC v. Motorists Commercial Mutual Insurance Company

Case Number



Illinois Northern

Nature of Suit

110(Contract: Insurance)


Honorable Manish S. Shah

Date Filed

June 18, 2020

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