Sandy Point Dental PC v. The Cincinnati Insurance Company
20f4th327
| N.D. Ill. | 2021Background
- Plaintiff Sandy Point Dental, PC sued Cincinnati Insurance Co., seeking coverage, damages, and fees for business losses from COVID-19 closure orders under its commercial property and business income policy (policy period Oct. 14, 2017–Oct. 14, 2020).
- The policy’s Business Income coverage is triggered only by a necessary suspension of operations caused by direct physical “loss” to covered premises; a Covered Cause of Loss is defined as “RISKS OF DIRECT PHYSICAL LOSS.”
- The district court previously dismissed the complaint, holding COVID-19 and government closure orders did not cause the required direct physical loss or physical damage and civil authority coverage was not triggered.
- Plaintiff moved for reconsideration under Rule 59(e), relying chiefly on an out-of-circuit decision (Blue Springs Dental) and argued a change in law; it also sought leave to file a Second Amended Complaint adding allegations that the virus physically attached to surfaces.
- The court denied reconsideration, finding Blue Springs distinguishable (different policy language and state law) and not a change in law; the court also denied leave to amend as futile because plaintiff did not (and could not) plead tangible physical alteration or alleged presence of virus at the premises sufficient to show direct physical loss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether COVID-19 or closure orders caused a "direct physical loss" under the policy | COVID-19 can physically attach to surfaces and thus caused physical loss to the premises | Policy requires tangible physical alteration/physical damage; pandemic and orders do not satisfy that condition | Court: No; coronavirus/closures do not show direct physical loss or physical alteration to property |
| Whether Blue Springs (W.D. Mo.) created a change in law meriting reconsideration | Blue Springs (a dental-office case) shows virus caused physical attachment/damage and supports reconsideration | Blue Springs relied on different policy language and state law; not controlling and not a change in law | Court: Denied reconsideration; Blue Springs is distinguishable and insufficient to show manifest error |
| Whether leave to file a Second Amended Complaint should be granted | New allegations that virus lands on/attaches to surfaces cure pleading defects | Proposed amendments still lack allegations of virus presence at premises and any tangible physical alteration; amendment would be futile | Court: Denied leave to amend as futile |
Key Cases Cited
- A&C Constr. & Installation, Co. WLL v. Zurich Am. Ins. Co., 963 F.3d 705 (7th Cir. 2020) (Rule 59(e) permits correction of manifest legal or factual errors but is narrowly applied)
- Oto v. Metro. Life Ins. Co., 224 F.3d 601 (7th Cir. 2000) (Rule 59(e) not for reargument of previously considered issues)
- Ahmed v. Ashcroft, 388 F.3d 247 (7th Cir. 2004) (movant must show a reason for the court to change its mind)
- Runnion v. Girl Scouts of Greater Chi., 786 F.3d 510 (7th Cir. 2015) (leave to amend generally favored but amendment is futile when defects cannot be cured)
- Park v. City of Chicago, 297 F.3d 606 (7th Cir. 2002) (Rule 15(a) does not automatically require leave to amend in every case)