Windy City Limousine Company , LLC v. Cincinnati Financial Corporation

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued April 20, 2022
Decided June 6, 2022
Before
DIANE P. WOOD, Circuit Judge
DAVID F. HAMILTON, Circuit Judge
THOMAS L. KIRSCH II, Circuit Judge
No. 21-3296
WINDY C ITY LIMOUSINE C OMPANY , LLC,
Plaintiff-Appellant,
v.
C INCINNATI F INANCIAL C ORPORATION , et
al.,
Defendants-Appellees.
Appeal from the United States District
Court for the Northern District of
Illinois, Eastern Division.
No. 1:20-cv-04901
Andrea R. Wood,
Judge.
O R D E R
The Windy City Limousine Company owns and operates a private for-hire
transportation business in Chicago, Illinois. During the COVID-19 pandemic, Windy
City was forced to suspend its operations for a time because its premises were exposed
to persons who tested positive for COVID-19. Windy City sought indemnification for its
losses under the policy it maintained with various related insurance companies
(collectively, “Cincinnati”). The policy covered losses resulting from the suspension of
business operations on account of “direct physical loss” to property. Cincinnati denied
Windy City’s claim, and Windy City sued Cincinnati in Illinois state court. The action
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1

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No. 21-3296 Page 2
was removed to federal court. Cincinnati filed a Rule 12(b)(6) motion to dismiss, which
the district court granted. Windy City has now appealed.
This case is resolved by our decisions in Sandy Point Dental, P.C. v. Cincinnati Ins.
Co., 20 F.4th 327 (7th Cir. 2021), and East Coast Entm’t of Durham, LLC v. Houston Cas. Co.
& Am. Claims Mgmt., Inc., 31 F.4th 547 (7th Cir. 2022). In those cases, this court
considered policies materially indistinguishable from Windy City’s. We held that,
under Illinois law, “direct physical loss” requires a “physical alteration” to property.
See Sandy Point, 20 F.4th at 333–34; East Coast Entm’t, 31 F.4th at 550–51. Because the
plaintiffs in those cases could not plead that the COVID-19 virus (or the resulting
lockdowns) physically altered property, we affirmed the dismissals of their complaints
for failure to state a claim. Sandy Point, 20 F.4th at 334–37; East Coast Entm’t, 31 F.4th at
551. For the same reasons, we affirm the dismissal of Windy City’s complaint.
Windy City attempts to distinguish its case from these earlier rulings, but its
attempts are unavailing. First, Windy City argues that, unlike the plaintiffs in Sandy
Point, it pleaded the known, actual presence of the virus on its premises. But we have
already held that this is insufficient. See Sandy Point, 20 F.4th at 335; East Coast Entm’t,
31 F.4th at 551. More importantly, the Illinois Appellate Court recently said the same
thing. See ABW Dev., LLC v. Continental Cas. Co., No. 1-21-0930, 2022 WL 951388, at *7
(Ill. App. Ct. 1st Dist. March 30, 2022) (“[T]he mere presence of the COVID-19 virus
does not constitute physical loss or damage.”).
Second, Windy City notes that under Sandy Point a party may plead “direct
physical loss” by alleging either a “physical alteration” or, in rare cases, “an access- or
use-deprivation so substantial as to constitute a physical dispossession.” Sandy Point, 20
F.4th at 337. By alleging that the presence of the virus rendered its business “effectively
inoperable,” Windy City claims it has pleaded physical dispossession. But we explained
in the earlier cases why that is not so. Windy City’s intended operations may have been
rendered untenable for a time, but its premises were not rendered uninhabitable or
unsuitable for all other conceivable uses. See id. at 334.
Third, Windy City contends that its status as an “essential” business dictates a
different outcome, but it offers no clear explanation as to why. We agree with
Cincinnati that this is a distinction without a difference. The virus and lockdown orders
do not physically alter “essential” property any more than they alter “non-essential”
property.

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No. 21-3296 Page 3
Finally, Windy City urges us to look to the commercial general liability part of its
policy, where the term “property damage” is defined to include the “loss of use of
tangible property that is not physically injured.” We agree with Cincinnati that “[t]his is
an analytically unsound method of interpreting insurance policies.” There is a
difference between a policy’s third-party liability coverage and its property coverage.
Windy City cannot simply import contractual language from one policy section to
another.
We AFFIRM the judgment of the district court.

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