IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

COZZINI BROS., INC., 

 Plaintiff, 

 v. 

THE CINCINNATI INSURANCE 

COMPANY, INC., 

 Defendant. 

No. 20-cv-04274 

Judge John F. Kness 

MEMORANDUM OPINION AND ORDER 

Plaintiff Cozzini Bros, Inc., a commercial knife sharpener, generates most of 

its business from sharpening knives for restaurants. Predictably, the onset of the 

COVID-19 pandemic in early 2020 and the ensuing restaurant shutdown severely 

blunted Plaintiff’s business; after all, shuttered restaurants do not need any knives, 

sharp or dull. These dire financial consequences prompted Plaintiff to file a claim 

with its insurer, Defendant The Cincinnati Insurance Company, Inc., for loss of 

business income under a commercial general liability policy. When Defendant denied 

Plaintiff’s claim, Plaintiff sued for breach of contract. Defendant now moves to 

dismiss the complaint and argues that coverage is not required under the plain 

language of the 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 complaint fails to state a viable claim. Accordingly, 

Defendant’s motion to dismiss is granted. 

Case: 1:20-cv-04274 Document #: 49 Filed: 08/04/21 Page 1 of 10 PageID #:1388
 2

I. BACKGROUND 

Plaintiff operates a cutlery service business that rents and sharpens knives for 

restaurants, grocery stores, supermarkets, and commercial kitchens. (Complaint 

(“Compl.”), Dkt. 1 ¶ 2.) In early 2020, the COVID-19 disease erupted into a worldwide 

pandemic and quickly spread across the United States. (Id. ¶ 9.) 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. ¶ 10.) 

As a result of the physical presence of the virus at its facilities and its 

customers’ facilities, Plaintiff incurred costs to slow and prevent the spread of the 

virus, including the cost of personal protective equipment and disinfecting its 

property. (Id. ¶ 14.) In addition, because of (1) the physical presence of the virus at 

these facilities and at Plaintiff’s customers’ places of business, (2) the pandemic’s 

spread throughout the United States, or (3) the implementation of Shutdown Orders, 

a significant portion of Plaintiff’s customers cancelled, suspended, or decreased the 

frequency of their knife rental and sharpening services, which in turn slashed 

millions of dollars of revenue from Plaintiff’s books. (Id. ¶ 15.) 

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

bearing an effective period of May 1, 2019 through May 1, 2020 (“the Policy”). (Id. ¶ 

17, Exh. A at 2.) The Policy provided coverage for “direct physical loss or damage to 

covered property at ‘covered locations’ caused by a covered peril.” (Id., Exh. A at 80.) 

Case: 1:20-cv-04274 Document #: 49 Filed: 08/04/21 Page 2 of 10 PageID #:1389
 3

The Policy also provided coverage for business interruption losses, including lost 

earnings and extra expenses incurred while access to “Covered Locations” was denied 

by order of “Civil Authority.” (Id. at 158-59.) 

On or about April 14, 2020, Plaintiff timely notified Defendant of a claim under 

the Policy for its losses stemming from the COVID-19 shutdown. (Compl. ¶ 43.) 

Asserting that the Policy did not provide coverage for Plaintiff’s losses, Defendant 

denied the Claim on June 23, 2020. (Id. ¶ 47.) Plaintiff then brought this action in 

July 2020 for breach of contract. (Dkt. 1.) Defendant now moves to dismiss Plaintiff’s 

complaint in its entirety under Rule 12(b)(6) 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)). 

A motion under Rule 12(b)(6) “challenges the sufficiency of the complaint to 

state a claim upon which relief may be granted.” Hallinan v. Fraternal Order of Police 

Case: 1:20-cv-04274 Document #: 49 Filed: 08/04/21 Page 3 of 10 PageID #:1390
 4

of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). Each complaint “must 

contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is 

plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 

550 U.S. at 570). These allegations “must be enough to raise a right to relief above 

the speculative level.” Twombly, 550 U.S. at 555. Although legal conclusions are not 

entitled to the assumption of truth, Iqbal, 556 U.S. at 678-79, the Court, in evaluating 

a motion to dismiss, must accept as true the complaint’s factual allegations and draw 

reasonable inferences in the plaintiff’s favor. See Ashcroft v. al-Kidd, 562 U.S. 731, 

742 (2011) 

III. ANALYSIS 

Plaintiff’s complaint contains a single claim for breach of contract. (Compl. 

¶¶ 49-53.) 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 two of the Policy’s provisions: the “Business Income” 

provision and the “Civil Authority” provision. (Dkt. 13 at 1.) Defendant argues that 

neither of those provisions apply and that it was within its contractual rights to deny 

Plaintiff’s insurance claim. (Dkt. 21 at 1-2.)1 

A. Business Income Provision

1. Physical Loss or Damage 

The Policy’s Business Income provision provides: 

1 Plaintiff also contends that the lack of virus exclusion in the Policy means that there 

must be coverage. (Dkt. 21 at 10-11.) But because none of Plaintiff’s asserted coverage 

provisions applies, the Court need not address the lack of virus exclusion. 

Case: 1:20-cv-04274 Document #: 49 Filed: 08/04/21 Page 4 of 10 PageID #:1391
 5

Income Coverages 

We provide [coverage for earnings and extra expense] . . . when 

your business is necessarily totally or partially interrupted. This 

“interruption” must be caused by direct physical loss or damage 

from a covered peril to a building or business personal property 

at “covered locations”. . . . 

 (Dkt. 1-1 at 158) (emphasis added). A “covered location” is “any location or premises 

where [Plaintiff has] buildings, structures, or business personal property.” (Id. at 78.) 

The Parties dispute the meaning of “direct physical loss or damage” and 

whether the presence of the SARS-CoV-2 virus at Plaintiff’s facilities can be 

considered a “physical loss.” Defendant argues that Plaintiff fails to state a claim 

because it does not allege any “distinct, demonstrable, physical alteration of 

property.” (Dkt. 13 at 7.) The mere presence of a virus, it contends, does not constitute 

a “direct physical loss to property” that would have triggered coverage. (Id.) And to 

the extent the virus was present at Plaintiff’s insured facilities, the use of disinfectant 

products could have easily removed it and restored the property to its original, 

contagion-free state. (Id. at 10-11.) 

Plaintiff, on the other hand, argues that it suffered “direct physical loss” 

because it was “deprived of the use of its physical property.” (Dkt. 21 at 4.) It reads 

the term “loss” to include the “dangerous physical condition at [Plaintiff’s] facility” 

and the corresponding “extra expenses” it incurred “to mitigate that danger through 

disinfection and preventative measures,” as well as the loss of use of its property that 

resulted in “lost earnings for [Plaintiff].” (Id. at 5.) 

Case: 1:20-cv-04274 Document #: 49 Filed: 08/04/21 Page 5 of 10 PageID #:1392
 6

Defendant’s interpretation of “physical loss or damage” is the better reading. 

Although the noun “loss,” standing alone, can refer to “depriv[ation] of . . . a 

possession,” see LOSS, Oxford English Dictionary (2d ed. 1989) (def. 2a), the noun 

“loss” in the Business Income provision is modified by the adjective “physical,” which, 

in this context, means “tangible, concrete.” PHYSICAL, Oxford English Dictionary

(3d ed. updated Mar. 2006) (def. 6); PHYSICAL, Webster’s Third New International 

Dictionary (1961) (def. 2b) (“of or relating to natural or material things as opposed to 

things mental, moral, spiritual, or imaginary”). Accordingly, “ ‘physical 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). 

Plaintiff does not allege there was any physical change, alteration, or damage 

to its covered property that would satisfy the requirement of “direct physical loss or 

damage” and thus trigger coverage under the Policy. As several judges in this District 

have held, Plaintiff’s purely economic loss does not constitute direct physical loss or 

damage to property. See Sandy Point Dental, PC v. The Cincinnati Ins. Co., 488 F. 

Supp. 3d 690, 693 (N.D. Ill. Sept. 21, 2020) (the policy language of “direct physical 

loss” unambiguously requires some form of actual, physical damage to the insured’s 

premises to trigger coverage); T&E Chicago, LLC v. The Cincinnati Ins. Co., No. 20 

C 4001, 2020 WL 6801845, at *5 (N.D. Ill. Nov. 19, 2020) (loss of use of property 

without any physical change to that property cannot constitute direct physical loss or 

Case: 1:20-cv-04274 Document #: 49 Filed: 08/04/21 Page 6 of 10 PageID #:1393
 7

damage to the property). Because Plaintiff did not suffer direct physical loss or 

damage to its premises, Defendant did not owe coverage. 

To be sure, at least one other decision in this District has interpreted a similar 

“physical loss” provision to cover business income losses caused by governmentimposed 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 enough to cover the plaintiff’s 

deprivation of the use of its business premises following imposition of COVID-19 

shutdown order). 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). This view is in accordance with the many other federal courts 

around the country that have held that an insurance policy’s “Business Income 

provision does not apply where . . . a government closure prohibits access to a 

business’s premises for reasons unconnected to any change in physical condition of 

those premises.” Chief of Staff LLC v. Hiscox Ins. Co., Inc., No. 20-cv-03169, — F. 

Supp. 3d —, 2021 WL 1208969, at *4 (N.D. Ill. Mar. 31, 2021) (collecting cases). 

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. 

(Compl. ¶ 26.) That provision states: 

Case: 1:20-cv-04274 Document #: 49 Filed: 08/04/21 Page 7 of 10 PageID #:1394
 8

Interruption by Civil Authority 

We extend your coverage for earnings and extra expense to 

include loss while access to “covered locations” is specifically 

denied by an order of civil authority. This order must be an [sic] 

result of loss or damage to property other than at “covered 

locations” and caused by a covered peril. 

(Dkt. 1-1 at 160.) By its plain terms, this provision applies only when (1) there is “loss 

or damage to property” somewhere other than the “covered locations” (that is to say, 

somewhere other than Plaintiff’s insured premises), and (2) that “loss or damage to 

property” at some external location results in a government order that prohibits 

access to Plaintiff’s premises. (Id.) 

 Plaintiff argues that the spread of SARS-CoV-2 in the United States rendered 

many business properties around the country “unfit for their intended use,” and that 

this loss of use constitutes a “loss or damage to property” other than at the “covered 

locations,” thus triggering coverage under the Civil Authority provision. (Dkt. 21 at 

11.) But 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 “loss or damage” to any property. As explained above, the mere presence of 

the SARS-CoV-2 at any given location does not constitute a “physical loss or damage” 

to that premises. 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 

Case: 1:20-cv-04274 Document #: 49 Filed: 08/04/21 Page 8 of 10 PageID #:1395
 9

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 

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”). 

III. CONCLUSION 

 For the reasons discussed above, Defendant’s motion to dismiss is GRANTED 

and Plaintiff’s complaint is dismissed without prejudice. If Plaintiff believes it can 

remedy the deficiencies identified in this order, it is given leave to amend its 

complaint on or before August 27, 2021. If no amended complaint is filed by that date, 

this dismissal will automatically convert to a dismissal with prejudice. 

Case: 1:20-cv-04274 Document #: 49 Filed: 08/04/21 Page 9 of 10 PageID #:1396
 10

SO ORDERED in No 20-cv-04274. 

Date: August 4, 2021 

 JOHN F. KNESS 

 United States District Judge 

Case: 1:20-cv-04274 Document #: 49 Filed: 08/04/21 Page 10 of 10 PageID #:1397