IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

DEREK SCOTT WILLIAMS PLLC and )

DEREK SCOTT WILLIAMS REAL )

ESTATE LLC, on behalf of themselves )

and all others similarly situated, )

 )

Plaintiffs, )

 )

vs. ) Case No. 20 C 2806

 )

THE CINCINNATI INSURANCE CO., )

 )

Defendants. )

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

Derek Scott Williams PLLC operates a dental practice in Lufkin, Texas; Derek 

Scott Williams Real Estate LLC owns the property where the dental practice operates. 

The Court will refer to them collectively as Williams. Williams purchased a commercial 

property insurance policy from Cincinnati Insurance Co. for the period from July 14, 

2019 through July 14, 2020. As relevant here, the insurance policy provided coverage 

for actual loss of business income under circumstances described in the policy.

As is widely known, as a result of the coronavirus pandemic, state and local 

governments nationwide have, at various intervals, issued orders suspending or limiting 

operations of non-essential businesses that interact with the public. On March 22, 

2020, the governor of Texas issued an order postponing all elective surgeries and nonemergency medical and dental procedures. Williams complied with the order and did 

not resume normal business operations until May 4, 2020. This resulted in a loss of 

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business income.

Williams alleges that it made inquiry regarding to the insurance broker through 

which it purchased the Cincinnati policy. The broker advised that Williams should not 

file a claim. Williams further alleges that insurers, including Cincinnati, have made it 

clear that they do not intend to provide coverage for business interruption arising from 

the coronavirus pandemic. Williams has filed this lawsuit seeking a declaratory 

judgment that it is entitled to coverage under its policy.

1 It has sued on behalf of a 

putative class.

Williams contends that its losses are covered by both two provisions of its 

insurance policy: the business income provision, and the civil authority provision. 

Cincinnati has moved to dismiss Williams's claims for failure to state a claim, arguing 

that under the plain language of these provisions, neither of them covers Williams's

losses. For the reasons stated below, the Court dismisses Williams's claim under the 

civil authority provision but declines to dismiss its claims under the business income

provision.

Factual background

As indicated, Williams's insurance policy covers the period from July 14, 2019

through July 14, 2020. During that period. an outbreak of novel coronavirus infection 

that began in China spread worldwide, including to the United States. To date, over 

500,000 Americans have died from the coronavirus disease, and a total of at least 

28,000,000 in this country have been infected with the virus—a figure that likely is 

 1 Cincinnati does not dispute that it is routinely denying coverage for claims like the one 

made by Williams and does not contend that an "actual controversy" under the 

Declaratory Judgment Act is lacking. 

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significantly understated due to the absence of universal testing. 

In its complaint, filed in May 2020, Williams alleges, citing World Health 

Organization reports, that the virus "is primarily transmitted from symptomatic people to 

others who are in close contact through respiratory droplets, by direct contact with 

infected persons, or by contact with contaminated objects and surfaces." Compl. ¶ 20. 

Williams further alleges that transmission can occur from persons who are infected with 

the disease who are pre-symptomatic or asymptomatic. Id. ¶¶ 21-22. Williams also 

alleges, citing reports in scientific journals, that coronaviruses can remain infectious on 

inanimate surfaces at room temperature for up to nine days and that "contamination of 

frequently touched surfaces is a potential source of virus transmission." Id. ¶ 23. The 

Court cites these allegations not to adopt their accuracy or completeness, but simply to 

describe the allegations in Williams's complaint.

Williams alleges that the pandemic and containment efforts led civil authorities to 

issue orders closing non-essential business establishments and mandating social 

distancing. It alleges that state governmental authorities have also issued orders 

"prohibiting the performance of non-urgent or non-emergency elective procedures and 

surgeries, which has forced the suspension of procedures at many medical, surgical, 

therapeutic, and dental practices." Id. ¶ 26. In Texas, as noted earlier, Williams alleges

that the state's governor issued an order on March 22, 2020 that postponed "all elective 

surgeries and non-emergency medical and dental procedures." Id. ¶ 27. Williams says 

that this prevented it from conducting normal business operations through May 4.

Williams contends that it is entitled to coverage under two separate provisions of 

the Cincinnati policy: the business income provision, and the civil authority provision.

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The business income coverage provision under DSW's insurance policy reads 

as follows:

We will pay for the actual loss of "Business Income" you sustain due to the 

necessary "suspension" of your "operations" during the "period of 

restoration". The "suspension" must be caused by direct "loss" to property 

at "premises" which are described in the Declaration and for which a 

"Business Income" Limit of Insurance is shown in the Declarations. The 

"loss" must be caused by or resulting from a Covered Cause of Loss. . . .

Dkt. no. 33-1, p. 47 of 55.2 The term "loss" is defined as follows: "Loss means 

accidental physical loss or accidental physical damage." Dkt. no. 33-1, p. 55 of 55. (In 

other words, the term "loss" is used to define itself.) The term "period of restoration" is 

defined as follows:

"Period of restoration" means the period of time that:

a. Begins at the time of "direct loss".

b. Ends on the earlier of:

(1) The date when the property at the "premises" should be 

repaired, rebuilt or replaced with reasonable speed and similar quality; or

(2) The date when business is resumed at a new permanent 

location.

...

Dkt. no. 33-1, p. 55 of 55.

The "civil authority" coverage provision reads as follows:

When a Covered Cause of Loss causes direct damage to property other 

than Covered Property at a "premises", we will pay for the actual loss of 

"Business Income and necessary Extra Expense you sustain caused by 

action of civil authority that prohibits access to the "premises", provided 

that both of the following apply:

 2 The term "Covered Causes of Loss" is defined to mean "direct 'loss' unless the 'loss' is 

excluded or limited in this Coverage Part." Dkt. no. 33-1, p. 11 of 55.

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(1) Access to the area immediately surrounding the damaged property 

is prohibited by civil authority as a result of the damage; and 

(2) The action of civil authority is taken in response to dangerous 

physical conditions resulting from the damage or continuation of the 

Covered Cause of Loss that caused the damage, or the action is taken to 

enable a civil authority to have unimpeded access to the damaged 

property.

Civil Authority coverage for "Business Income" will begin immediately after 

the time of the first action of civil authority that prohibits access to the 

"premises" and will apply for a period of up to 30 consecutive days from 

the date on which such coverage began.

Civil Authority coverage for Extra Expense will begin immediately after the 

time of the first action of civil authority that prohibits access to the 

"premises" and will end 30 consecutive days after the date of that action; 

or when your Civil Authority coverage for [sic] "Business Income" 

coverage ends, whichever is later.

Dkt. no. 33-1, p. 48 of 55.

Cincinnati contends there is no coverage under either provision. Its principal 

argument regarding the business income coverage is that physical alteration to the 

property is required, and there is none. Contamination via coronavirus, Cincinnati 

contends, does not constitute damage to an insured's property because it can be 

removed by cleaning. Cincinnati's principal argument regarding the civil authority 

coverage is that access to Williams's property has not been prohibited but rather has 

been limited, which Cincinnati contends is insufficient to trigger coverage.

Discussion

On a motion to dismiss for failure to state a claim, the Court takes the plaintiff's 

factual allegations as true, draws reasonable inferences in the plaintiff's favor, and 

assesses whether the plaintiff has asserted a plausible basis for relief. See, e.g., 

Firestone Fin. Corp. v. Meyer, 796 F.3d 822, 826 (7th Cir. 2015) (citing Ashcroft v. Iqbal, 

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556 U.S. 662, 679 (2009)).

The first question involves the applicable law. Because this case is in federal 

court by way of diversity jurisdiction, the Court applies the choice-of-law rules of the 

forum state, Illinois. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 478, 496 (1941). 

Under Illinois law, construction of an insurance policy is typically governed by the 

location of the subject matter; the place of delivery of the contract; the domicile of the 

insured or the insurer; the place of the last act giving rise to the contract; the place of 

performance; or other places having a rational relationship to the contract. LaphamHickey Steel Corp. v. Protection Mut. Ins. Co., 166 Ill. 2d 520, 526-27, 655 N.E.2d 842, 

845 (1995). In this case the insured property is in Texas; the insurance policy was 

delivered to Williams there; Williams is a Texas entity, whereas Cincinnati is an Ohio 

corporation. Cincinnati argues that Texas law applies, and Williams does not dispute 

this.

The Court will therefore apply Texas law to the parties' contract interpretation 

dispute. That said, in their briefs and arguments both sides have freely cited cases 

applying other states' law, likely because there does not appear to be an appreciable 

difference between the law of Texas and that of other states on the key contract 

interpretation principles involved. In addition, there is no controlling Texas authority on 

the particular policy points that the parties dispute here.

The Court will discuss the business income coverage term first and the civil 

authority term second.3 

 3 This case, of course, does not stand alone in assessing an insurer's coverage 

obligations for business interruption related to the coronavirus pandemic. Each side 

has cited numerous cases supporting its position on the points at issue. These cases

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1. Business income coverage

Cincinnati's primary argument on the business income provisions is that there is 

no coverage because Williams has alleged no facts indicating that its DSW's property 

was physically altered. Cincinnati contends that the term "direct loss" requires a

physical loss, which it contends means a physical alteration of the insured's property. 

Nothing like this is alleged, Cincinnati argues, and as a result Williams is not entitled to 

coverage.

Insurance contracts are interpreted according to the same principles that govern 

contract interpretation generally. See Utica Nat'l. Ins. Co. v. Am. Indem. Co., 47 Tex. 

Sup. Ct. J. 845, 141 S.W.3d 198, 202 (Tex. 2004). The primary goal is to give effect to 

the parties' written expression of their intent. Balandran v. Safeco Ins. Co. of Am., 41 

Tex. Sup. Ct. J. 1153, 972 S.W.2d 738, 741 (Tex. 1998). A court "must read all parts of 

the contract together, striving to give meaning to every sentence, clause, and word to 

avoid rendering any portion inoperative." Id. (citation omitted); see also, e.g., Lynd Co. 

v. RSUI Indem. Co., 399 S.W.3d 197, 199 (Tex. App. 2012).

If, after applying these rules, a contract is subject to two or more reasonable

interpretations, it is ambiguous. See, e.g., Balandran, 972 S.W.2d at 741. With an 

insurance contract, the interpretation of an ambiguous provision that favors the insured, 

if reasonable, is adopted, "even if the construction urged by the insurer appers to be 

more reasonable or a more accurate reflection of the parties' intent." Id. (quoting Nat'l 

Union Fire Ins. Co. v. Hudson Energy Co., 811 S.W.2d 552, 555 (Tex. 1991).

 

go both ways, with more favoring insurers than insureds. But none of them are 

controlling here. The Court has considered all of the cited cases, but it will not stringcite them, either as supporting or contrary authority.

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Cincinnati's contention that the term direct loss requires physical damage to the 

insured's property runs afoul of these principles of construction. Specifically, even 

though the term loss is defined in the policy to mean either physical loss or physical 

damage, Cincinnati contends that it requires physical damage. This interpretation 

writes the term "loss" out of the definition, which contradicts the basic principle that 

"each word [in a contract] has some significance and meaning." Gates v. Asher, 154 

Tex. 538, 531, 280 S.W.2d 247, 249 (1955); see also, Choice! Power, L.P. v. Feeley, 

501 S.W.3d 199, 206 (Tex. App. 2016). More specifically, a court presumes that when

different words are used together, they have different meanings, in other words, that 

they are not redundant. Gulf Metals Indus., Inc. v. Chicago Ins. Co., 993 S.W.2d 800, 

805 (Tex. App. 1999). In short, "loss"—as used in the policy definition that "Loss means 

accidental physical loss or accidental physical damage"—cannot simply mean 

"damage." 

It is, perhaps, easier to say what loss does not mean than what it does mean. 

One problem is that the policy uses the term "loss" to define the term "loss." But the 

Court is persuaded that a reasonable factfinder could find that the term "physical loss" is 

broad enough to cover, as Williams argues, a deprivation of the use of its business 

premises. That's the common meaning of loss, see "Loss," Merriam-Webster.com 

Dictionary, https://www.merriam-webster.com/dictionary/loss (last viewed Feb. 28,

2021), and there is no basis to believe that the Cincinnati policy uses the term any 

differently. In this regard, the Court agrees with its colleague Judge Edmond Chang, 

who recently concluded exactly this in assessing very similar insurance policy language. 

See In re: Society Ins. Co. COVID-19 Bus. Interruption Protection Ins. Litig., MDL No. 

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2964, Case No. 20 C 5965, 2021 WL 679109, at *9 (N.D. Ill. Feb. 22, 2021).4

Cincinnati makes two additional arguments to the contrary. The first, found in its 

brief, involves the business income coverage's reference to the "period of restoration." 

As quoted earlier, business income coverage extends through the "period of 

restoration," defined as the date when the insured's property "should be repaired, rebuilt 

or replaced," or the date "when business is resumed at a new permanent location," 

whichever is earlier. Cincinnati argues that the text of these references makes it clear 

that "loss" requires a physical alteration—otherwise why the reference to repairing or 

replacing? "Repair," however, is not inherently physical; one need only consider 

common references to repairing a relationship or repairing one's health. See "Repair,"

Merriam-Webster.com Dictionary, https://www.merriam-webster.com/dictionary/repair

(last viewed Feb. 28, 2021). In a situation like the one at issue here, the "loss" would be 

"repaired" if and when orders by governmental authorities permitted full use of the 

property. See In re Society Ins. Co., 2021 WL 679109, at *9 (concluding that "[t]here is 

nothing inherent in the meanings of [the] words [repair or replace] that would be 

inconsistent with charactering the Plaintiffs' loss of their space due to the shutdown 

orders as a physical loss.")

Cincinnati's final point on this issue is not made in its brief but was made at oral 

argument. The Court sets aside the question of forfeiture and will deal with the point on 

its merits. Cincinnati seems to contend that "loss to" property means something 

different from "loss of" property (the Court notes, in this regard, that the Society 

 4 Also like Judge Chang, given the Court's reading of the policy's "loss" term, it need not 

determine whether, as Williams contends, it has also adequately alleged physical 

"damage" to its property. See In re Society Ins. Co., 2021 WL 679109, at *8 n.5.

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Insurance policy language assessed by Judge Chang uses the phrase "loss of"). The 

Court acknowledges that the words are different, but this begs the question of what 

"loss to" property means. At best for Cincinnati, it's poor English that makes the term 

ambiguous—which does not help Cincinnati in the present situation, given the principle 

that ambiguities in insurance policies are typically construed against the insurer. That 

aside, Cincinnati cites nothing authoritative or persuasive that would indicate that "loss 

to" an insured's property includes only physical damage that deprives the insured of the

use of the property. And finally, Cincinnati's reading is simply another way of attempting 

to read the terms "loss" and "damage" as meaning the same thing, which they plainly do 

not under the terms of this policy, which expressly defines the term "loss" as including 

both.

For these reasons, the Court concludes that Williams's claims regarding the 

business income coverage state viable claims upon which relief may be granted.

2. Civil authority coverage

The Court reaches a different conclusion regarding Williams's claim under the 

civil authority coverage term. Cincinnati makes multiple arguments against coverage, 

but the Court need only deal with one: the contention that Williams has not alleged that 

"[a]ccess to the area immediately surrounding the damaged property is prohibited by 

civil authority . . . ." Dkt. no. 33-1, p. 48 of 55 (emphasis added).

Here the dispute involves the meaning of the term "prohibited." The common 

meaning is to forbid or prevent. See "Prohibit," Merriam-Webster.com Dictionary,

https://www.merriam-webster.com/dictionary/prohibit (last viewed Feb. 28, 2021). 

Williams's complaint concedes that did not happen in its case: it alleges it was 

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precluded only from conducting elective and non-emergency dental procedures, not 

from non-elective, emergency procedures. Thus there was no "prohibit[ion]." Williams 

argues that the restriction still constitutes a partial prohibition, but that's essentially an 

oxymoron. In this regard, the Court (again) agrees with Judge Chang in the In re 

Society Insurance case, in which he concluded that similar claims by restaurant owners 

had to be dismissed given their concession that access to their property by employees 

and others was permitted for limited ongoing operations—in that case, take-out sales 

and limited in-person dining. In re Society Ins. Co., 2021 WL 679109, at *10.

Conclusion

For the reasons stated above, the Court dismisses count 3 of plaintiff's complaint 

(concerning the "civil authority" coverage term) but otherwise denies defendant's motion 

to dismiss [dkt. no. 32]. Defendant is directed to answer the remaining claims by no 

later than March 22, 2021. The case is set for a telephonic status hearing on March 5, 

2021 at 9:05 a.m. to set (or reset) a schedule for further proceedings. The following 

call-in number will be used for the hearing: 888-684-8852, conference code 746-1053. 

Counsel should wait for the case to be called before announcing themselves. The 

parties are directed to confer and are to file a status report on March 4, 2021 proposing 

a schedule for entry by the Court.

Date: February 28, 2021

________________________________

MATTHEW F. KENNELLY

 United States District Judge

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