Law360 (April 7, 2021, 11:31 PM EDT) -- A number of Chicago restaurants, including The Angry Crab, Tommy Gun's Garage, City Rock Korean Kitchen and Perilla Korean BBQ, sued Society Insurance Inc. on Wednesday in Illinois federal court in a bid to seek coverage for losses stemming from the coronavirus pandemic.
The restaurants insist that the presence of the coronavirus on, or near, their premises created dangerous conditions that rendered the spaces "unsafe and unfit for its intended use," and that such a loss qualifies them for coverage under their policies with Society, according to the suit.
But instead, their insurer has issued "blanket denials" for their loss claims that stem from the COVID-19 closures, the eateries said. The insurer didn't conduct any investigations, instead shutting them down by saying that the virus itself and the related shutdowns don't constitute a physical loss as required by the policies, according to the suit.
"As a result of defendant's wrongful denial of coverage, plaintiff files this action for a declaratory judgment establishing that it is entitled to receive the benefit of the insurance coverage it purchased, for indemnification of the business losses they have sustained, for breach of contract, and for bad faith claims handling," the restaurants say in their suits.
The restaurants pointed out that the insurance policies sold by Society do not include a virus exclusion that precludes coverage for losses caused by a virus.
If Society intended to exclude pandemic-related losses under the policies it offered, it could have done so just as many other insurers have done in their own policies, the complaints say.
The restaurants took aim at their insurers' argument that a virus's presence does not cause physical loss or damage to a property. If this were true, the restaurants argue, then "there would be no need for such an exclusion."
"The presence of a substance like COVID-19 does in fact legally result in property damage," the restaurants argue in their near-identical complaints. "Illinois courts have consistently held that the presence of a dangerous substance in a property constitutes 'physical loss or damage.'"
The question of whether businesses are incurring physical damage from the pandemic worthy of loss coverage has fueled litigation, as business owners face off with insurers in court over pandemic-related loss claims.
In the Western District of Missouri, a judge ruled in August that the presence of the virus made a property unusable and, therefore, triggered a physical loss. But in Georgia federal court, a judge ruled that shutdowns alone don't warrant such coverage.
And last week, an Illinois federal judge tossed a proposed class action from a Chicago train station's food court vendor seeking pandemic loss coverage from a unit of The Hartford, finding the policy's virus exclusion does not apply to state closure orders.
Brian LaCien, an attorney representing the restaurants, told Law360 that after accepting premiums from each of the restaurants every month, it "should not be allowed to turn its back on them in their time of need."
Representatives for the insurer did not immediately respond to requests for comment on Wednesday.
The restaurants are represented by Brian LaCien and Andrew W. Mason of Smith LaCien LLP.
Counsel for the insurer could not be ascertained on Wednesday.
The cases are Angry Crab Corp. v. Society Insurance Inc., case number 1:21-cv-01859, Angry Ventures LLC v. Society Insurance Inc., case number 1:21-cv-01860, Sansoo Ventures LLC v. Society Insurance Inc., case number 1:21-cv-01861, City Rock LLC v. Society Insurance Inc., case number 1:21-cv-01864 and Tommy Gun's Garage Inc. v. Society Insurance Inc., case number 1:21-cv-01863, all in the U.S. District Court for the Northern District of Illinois.
--Additional reporting by Jeff Sistrunk, Daphne Zhang and Shawn Rice. Editing by Jay Jackson Jr.
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