IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

STYLE LOUNGE SALON, INC., 

 Plaintiff, 

 v. 

WEST BEND MUTUAL INSURANCE 

COMPANY, 

 Defendant. 

No. 20-cv-03721 

Judge John F. Kness 

MEMORANDUM OPINION AND ORDER 

Plaintiff Style Lounge Salon, Inc., is a Chicago-based hair salon. Predictably, 

the onset of the COVID-19 pandemic in early 2020 and the ensuing economic 

disruption tied the salon industry in knots. Those dire financial consequences 

prompted Plaintiff to file a claim with its insurer, Defendant West Bend Mutual 

Insurance Company, for loss of business income under a commercial general liability 

policy. When Defendant denied Plaintiff’s claim, Plaintiff filed this action seeking a 

declaratory judgment that the insurance policy requires coverage. Plaintiff also 

brought assorted claims for breach of contract and statutory bad faith denial of 

insurance. 

Defendant now moves to dismiss the complaint and argues that coverage is not 

required under the plain language of the applicable policy. As explained below, 

because the world-altering events of the COVID-19 pandemic—although 

indisputably damaging—are not covered under the relevant policy, Plaintiff’s 

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complaint fails to state a viable claim. Accordingly, Defendant’s motion to dismiss is 

granted. 

I. BACKGROUND 

Plaintiff operates a hair salon in Chicago committed to going “above and 

beyond” for its clients. (Dkt. 1 ¶¶ 2, 18.) In early 2020, the COVID-19 disease erupted 

in Wuhan, China and quickly spread across the United States. (Id. ¶ 28.) To stem the 

spread of the SARS-CoV-2 virus that causes COVID-19, several states and 

municipalities implemented orders (“Shutdown Orders”) prohibiting and restricting 

access to various businesses and facilities because of the actual or potential physical 

presence of the SARS-CoV-2 virus at those locations. (Id. ¶ 25.) In March 2020, the 

Governor of Illinois ordered the closure of non-essential businesses. (Id. ¶ 29.) 

Chicago’s Mayor issued similar orders soon after. (Id.) Style Lounge—deemed a nonessential business—promptly closed and remained closed when this case was filed. 

(Id. ¶ 30.) 

 At the time of the shutdown, Plaintiff held an insurance policy with Defendant 

bearing an effective period of March 3, 2020 through March 3, 2021 (the “Policy”). (Id. 

¶ 21; Dkt. 1-1 at 43.) The Policy provided coverage for “direct physical loss of or 

damage to Covered Property at the premises described in the Declarations caused by 

or resulting from any Covered Cause of Loss.” (Dkt. 1-1 at 44.) The Policy also 

provided coverage for business interruption losses, including lost earnings and extra 

expenses incurred while access due to a covered cause of loss was denied by order of 

“Civil Authority.” (Id. at 49.) 

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On or about March 21, 2020, Plaintiff timely notified Defendant of a claim 

under the Policy for its losses stemming from the COVID-19 shutdown. (Dkt. 1-1 at 

133.) Asserting that the Policy did not provide coverage for Plaintiff’s losses, 

Defendant denied the claim on April 3, 2020. (Id.) Plaintiff then brought this action 

in June 2020. (Dkt. 1.) Defendant now moves for judgment on the pleadings under 

Rule 12(c) of the Federal Rules of Civil Procedure. 

II. LEGAL STANDARD 

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint 

generally need only include “a short and plain statement of the claim showing that 

the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). This short and plain statement 

must “give the defendant fair notice of what the claim is and the grounds upon which 

it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal punctuation 

omitted). The Seventh Circuit has explained that this rule “reflects a liberal notice 

pleading regime, which is intended to ‘focus litigation on the merits of a claim’ rather 

than on technicalities that might keep plaintiffs out of court.” Brooks v. Ross, 578 

F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 

(2002)). 

Rule 12(c) of the Federal Rules of Civil Procedure permits a party to move for 

judgment after both the plaintiff’s complaint and the defendant’s answer have been 

filed. Fed. R. Civ. P. 12(c). Rule 12(c) motions are reviewed under the same standard 

as Rule 12(b)(6) motions to dismiss. Pisciotta v. Old Nat’l Bancorp, 499 F.3d 629, 633 

(7th Cir. 2007). As with a motion to dismiss, the court must construe the complaint’s 

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allegations liberally in favor of the insured. Berg v. New York Life Ins. Co., 831 F.3d 

426, 430 (7th Cir. 2016). To succeed on a motion for judgment on the pleadings, the 

moving party “must demonstrate that there are no material issues of fact to be 

resolved.” N. Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 

(7th Cir. 1998). This standard is demanding and requires a showing “beyond doubt” 

that the nonmovant cannot prove any facts that support its claim for relief. Id. at 452. 

III. DISCUSSION 

Plaintiff’s declaratory-judgment claim seeks a declaration that Plaintiff’s 

losses are insured under the Policy, that Defendant’s defenses are waived, and that 

Defendant must pay damages. (Dkt. 1 ¶ 84.) Because the declaratory-judgment claim 

essentially asks the court to declare that Defendant has breached the Policy, the 

claims entirely overlap. They turn, therefore, on whether Plaintiff’s theory of liability 

can be sustained under the language of the Policy. 

Plaintiff alleges the Policy constitutes a contract between the Parties and that 

Defendant breached that contract by denying Plaintiff’s insurance claim. (Id.) 

Plaintiff asserts coverage under four of the Policy’s provisions: the “Business Income” 

provision, the “Civil Authority” provision, the “Communicable Disease” provision, and 

the “Extra Expense” provision. (Dkt. 1-1.) Defendant seeks to deny coverage under 

those provisions and argues that its “Virus or Bacteria” exclusion and “Consequential 

Losses” exclusion apply.1 (Dkt. 21 at 2.) 

1 Plaintiff reasonably raises questions about the applicability of the “Virus Exclusion” in 

a policy that includes a purchased “Communicable Disease” provision. (Dkt. 28 at 21.) 

Because the “Communicable Disease” provision does not cover Plaintiff’s alleged loss, 

however, determining the application of the “Virus Exclusion” is unnecessary. So too with 

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Plaintiff’s claims fail as a matter of law.2 As explained below, because the 

Policy is limited to “physical” losses or damages, and because Plaintiff has not alleged 

a physical loss or damage, coverage does not extend to Plaintiff under the 

circumstances as alleged in Plaintiff’s complaint. 

A. Business Income and Extra Expense Provisions 

Many of the Policy’s categories of coverage—including the Business Income 

and Extra Expense Provisions in Defendant’s motion, (Dkt. 21)—require that the 

insured party incurred a “physical” loss or damage. (See, e.g., Dkt. 1-1 at 47 (covering 

“actual loss of Business Income . . . caused by direct physical loss of or damage to 

property at the premises”) (emphasis added); id. at 36 (covering “Extra Expense 

[Plaintiff] incur[s] during the ‘period of restoration’ that [Plaintiff] would not have 

incurred if there had been no direct physical loss or damage to property at the 

described premises”) (emphasis added)). 

Defendant argues that the presence of a virus does not constitute a “physical” 

loss or damage. (Dkt. 24 at 5–12.) Plaintiff, by contrast, argues that the provision 

covers losses that result from “both property loss and damage by impairing the 

determining the applicability of a provision that excludes “Consequential Damages” when 

the Court finds no damages. 

2 Plaintiff also seeks damages under Illinois’s bad faith denial of insurance statute. 

(Dkt.1-1 at 17); see 215 ILCS 5/154.6. But “when an insurer denies the claim of an insured 

because no coverage exists, the insurer has not failed to honor its contractual obligations 

under an insurance policy.” M&E Bakery Holdings, LLC v. Westfield Natl. Ins. Co., 2021 WL 

1837393, at *5 (N.D. Ill. May 7, 2021) (denying statutory damages under the same provision) 

(quoting First Ins. Funding Corp. v. Fed. Ins. Co., 284 F.3d 799, 807 (7th Cir. 2002)); Dental 

Experts, LLC v. Massachusetts Bay Ins. Co., 2021 WL 1722781, at *5 (N.D. Ill. May 1, 2021) 

(dismissing with prejudice under Rule 12(b) an Illinois statutory bad faith for denial of 

coverage claim when the insurer properly denied coverage). 

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function of Plaintiff’s property and dispossessing Plaintiff of its tangible spaces.” 

(Dkt. 28 at 6.) Plaintiff further claims that whether a virus causes a physical loss is 

a scientific question best reserved for the jury. Id. at 10. 

Defendant’s interpretation of “physical loss or damage” is correct. “ ‘[P]hysical 

loss’ refers not to any deprivation, but rather to a deprivation caused by a tangible or 

concrete change in the condition or location of the thing that is lost.” G.O.A.T. Climb 

& Cryo, LLC v. Twin City Fire Ins. Co., No. 20 C 5644, 2021 WL 2853370, at *3 (N.D. 

Ill. July 8, 2021); see Bend Hotel Dev. Co. v. Cincinnati Ins. Co., 515 F. Supp. 3d 854, 

857 (N.D. Ill. 2021) (noting that, at the time it was decided, “every court in this 

district that ha[d] interpreted similar provisions under Illinois law ha[d] concluded 

that the virus does not cause ‘direct physical loss or damage’ to property”). 

Indeed, numerous recent decisions have explained that a plaintiff’s purely 

economic loss does not constitute “physical loss or damage” to property. See Sandy 

Point Dental, PC v. Cincinnati Ins. Co., 488 F. Supp. 3d 690, 693 (N.D. Ill. 2020) (the 

policy language of “direct physical loss” unambiguously requires some form of actual, 

physical damage to the insured’s premises to trigger coverage); Crescent Plaza Hotel 

Owner L.P. v. Zurich Am. Ins. Co., No. 20 C 3463, 2021 WL 633356, at *3 (N.D. Ill. 

Feb. 18, 2021) (same); T&E Chi., LLC v. The Cincinnati Ins. Co., 501 F. Supp. 3d 647, 

652 (N.D. Ill. 2020) (loss of use of property without any physical change to that 

property cannot constitute direct physical loss or damage to the property).3 

3 To be sure, some decisions in this District have interpreted a similar “physical loss” 

provision to cover business income losses caused by government-imposed COVID-19 closure 

orders. See, e.g., Derek Scott Williams PLLC v. The Cincinnati Ins. Co., No. 20 C 2806, 2021 

WL 767617, at *4 (N.D. Ill. Feb. 28, 2021) (term “physical loss” in insurance policy broad 

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These decisions represent a clear consensus that COVID-19 does not cause 

physical loss or damage. For the same reasons provided in those earlier decisions, 

this Court agrees. Plaintiff does not allege there was any physical damage that would 

satisfy the requirement of “physical loss or damage” and thus trigger coverage under 

those provisions of the Policy. Accordingly, because the Business Income and Extra 

Expense coverage at issue in Defendant’s motion requires “physical” loss or damage, 

those categories do not extend to Plaintiff under these circumstances.4

B. Civil Authority Provision 

Plaintiff also alleges that the Policy’s Civil Authority provision requires 

Defendant to cover Plaintiff’s business losses caused by the COVID-19 shutdown. 

(Dkt. 1 ¶ 26.) That provision covers “causes of damage to property other than property 

at the described premises . . . provided that both of the following apply:” (1) access to 

the area is denied as a result of the damaged “but are not more than one mile from 

the damaged property” and, in relevant part, (2) the “action of civil authority is taken 

in response to dangerous physical conditions resulting from the damage.” (Dkt. 1-1 at 

49). 

enough to cover the plaintiff’s deprivation of the use of its business premises following 

imposition of COVID-19 shutdown order); In re Soc’y Ins. Co. Covid-19 Bus. Interruption Prot. 

Ins. Litig., MDL No. 2964 2021 WL 679109 (N.D. Ill. Feb. 22, 2021) (similar). But 

disagreement among courts regarding the interpretation of a policy provision does not, by 

itself, render the provision ambiguous. See Erie Ins. Grp. v. Sear Corp., 102 F.3d 889, 894 

(7th Cir. 1996) (rejecting the argument that an insurance policy term was ambiguous “on the 

basis of conflicting case law” interpreting the term). 

4 Also pending before the Court is Plaintiff’s motion to strike the portions of Defendant’s 

answer. (See Dkt. 9.) Because this Court rules that Plaintiff failed, as a matter of law, to 

allege Plaintiff’s injuries resulted from the COVID-19 pandemic, the motion to strike is 

dismissed as moot. 

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By its plain terms, and for similar reasons to the physical damage claim above, 

the “Civil Authority” provision does not apply. Plaintiff’s argument fails for the same 

reason that its arguments related to the application of the Business Income provision 

fail: Plaintiff has not adequately alleged “direct physical loss of or damage to” to any

property. As explained above, the mere presence of the SARS-CoV-2 virus at any 

given location does not constitute such a physical loss. See Sandy Point Dental, 488 

F. Supp. 3d at 694 (“Just as the coronavirus did not cause direct physical loss to 

plaintiff’s property, the complaint has not (and likely could not) allege that the 

coronavirus caused direct physical loss to other property. By the policy’s own terms, 

the civil authority coverage does not apply”); Chief of Staff LLC, 2021 WL 1208969, 

at *5 (Civil Authority provision did not apply because it “requires that the ‘other 

property’ have suffered ‘damage,’ and the complaint does not allege, nor does [the 

insured] argue, that the closure orders were due to some other property within one 

mile of [the insured’s] premises having been damaged by the coronavirus”); G.O.A.T., 

2021 WL 2853370, at *6 (“Like the Business Income and Extra Expense provisions, 

the Civil Authority provision requires a Covered Cause of Loss, which physical virus 

is not”). 

Even if Plaintiff had adequately alleged there were some physical loss or 

damage to outside property, it does not allege that any Shutdown Order “specifically 

denied” Plaintiff access to its own property. Because Plaintiff does not allege it was 

“specifically denied” access to its covered locations, the Civil Authority provision does 

not apply, and Defendant was not in breach of the Policy when it denied coverage on 

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those grounds. Accord Riverside Dental of Rockford, Ltd. v. Cincinnati Ins. Co., No. 

20 CV 50284, 2021 WL 346423, at *5 (N.D. Ill. Jan. 19, 2021) (“Plaintiff’s Business 

Income loss is not covered under the Civil Authority coverage provisions of the policy 

at issue in this case because the Governor’s Orders did not prohibit access to 

plaintiff’s dental office”). 

C. Communicable Disease Provision 

Plaintiff similarly fails to allege that its losses implicate the Policy’s 

Communicable Disease provision. (Dkt. 1-1 at 12–13, 31). That provision extends the 

Policy to apply to “the actual loss of Business Income or Extra Expense” sustained as 

a result of a government-ordered shutdown of operations “due to an outbreak of a 

‘communicable disease’ or a ‘waterborne pathogen’ at the insured premises as 

described in the Declarations.” (Id.) (emphasis added). Plaintiff argues it sufficiently 

pleaded an outbreak that should trigger coverage at the Style Lounge—because the 

outbreak “is occurring at the steps of Plaintiff’s business, and all across Chicago, the 

State and the country.” (Dkt. 28 at 20.) Although the COVID-19 pandemic is a deadly 

serious matter, Plaintiff does not allege an outbreak—indeed, not one instance of 

infection—at its premises. As a result, under Plaintiff’s own allegations, the plain 

language of the Policy cannot sustain the finding of an outbreak (and a resulting 

government-ordered shutdown). See, e.g., Paradigm Care & Enrichment Ctr., LLC v. 

W. Bend Mut. Ins. Co., 2021 WL 1169565, at *9 (E.D. Wis. Mar. 26, 2021) (applying 

Illinois law to the same coverage provision and finding that “the plain meaning of the 

terms of the Communicable Disease provision” could not support a claim of an 

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outbreak on the premises even when plaintiffs allege one case of COVID-19); see also

Blue Coral, LLC v. W. Bend Mut. Ins. Co., 2021 WL 1395771, at *4 (E.D.N.C. Apr. 13, 

2021) (“Because the Communicable Disease Provision makes clear that covered losses 

must result from a suspension of operations that took place ‘due to an outbreak of 

[e.g., COVID-19] at the insured premises’ . . . Plaintiffs’ failure to plausibly allege the 

presence of COVID-19 at any specific place is fatal to the complaint.”). Accordingly, 

that allegation of breach must also be dismissed.

III. CONCLUSION 

For the reasons provided above, Defendant’s motion for judgment on the 

pleadings is granted. Plaintiff’s motion to strike part of Defendant’s answer (Dkt. 9) 

is dismissed as moot. 

SO ORDERED in No 20-cv-03721. 

Date: September 30, 2021 

 JOHN F. KNESS 

 United States District Judge 

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