UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

AMERICA’S KIDS, LLC, individually and 

on behalf of all others similarly situated, 

 Plaintiff, 

v. 

ZURICH AMERICAN INSURANCE 

COMPANY, 

Defendant. 

) 

) 

) 

) 

) Case No. 1:20-cv-03520 

) 

) Hon. Virginia M. Kendall 

) 

) 

) 

) 

______________________________________________________________________________ 

DEFENDANT ZURICH AMERICAN INSURANCE COMPANY’S NOTICE OF 

SUPPLEMENTAL AUTHORITIES IN SUPPORT OF ITS MOTION TO DISMISS 

PLAINTIFF AMERICA’S KIDS, LLC’S AMENDED COMPLAINT 

______________________________________________________________________________ 

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Defendant Zurich American Insurance Company submits this notice of supplemental 

authorities to bring to the Court’s attention new decisions that support Zurich’s motion to dismiss 

Plaintiff America’s Kids LLC’s Amended Complaint (ECF No. 36). Since Zurich filed its motion 

to dismiss, federal district courts nationwide have nearly unanimously held that claims for business 

losses related to COVID-19 are not covered under property-insurance policies. 

In particular, the “nearly unanimous view” is that “COVID-19 does not cause direct 

physical loss or damage to a property sufficient to trigger coverage under” property-insurance 

policies. Carrot Love, LLC v. Aspen Specialty Ins. Co., 2021 WL 124416, at *2 (S.D. Fla. Jan. 13, 

2021); see also Torgerson Props., Inc. v. Cont’l Cas. Co., 2021 WL 615416, at *1 (D. Minn. Feb. 

17, 2021) (“The weight of authority is nearly unanimous that state orders restricting business 

operations because of the pandemic are not covered under the policy provisions at issue here.”); 

Kahn v. Penn. Nat’l Mut. Cas. Ins. Co., --- F. Supp. 3d ---, 2021 WL 422607, at *7 (M.D. Pa. Feb. 

8, 2021) (“[W]e are persuaded by the unanimity among our colleagues on [the issue of whether 

COVID-19 orders themselves constitute “direct physical loss of or damage to property].”); 

Soundview Cinemas Inc. v. Great Am. Ins. Grp., --- N.Y.S. 3d ---, 2021 WL 561854, at *9 (N.Y. 

Sup. Ct. Feb. 8, 2021) (“Federal courts in New York and throughout the country have almost 

uniformly held that loss of use of premises due to COVID-19 related government orders does not 

trigger business income coverage based on physical loss to property.”). 

Federal courts also have “nearly unanimously determined that [virus] exclusions bar 

coverage” for property-insurance claims based on the COVID-19 virus. Riverwalk Seafood Grill 

Inc. v. Travelers Cas. Ins. Co. of Am., 2021 WL 81659, at *3 (N.D. Ill. Jan. 7, 2021); see also 

Mashallah, Inc. v. West Bend Mut. Ins. Co., 2021 WL 679227, at *2 (N.D. Ill. Feb. 22, 2021) 

(explaining that “courts nationwide are in accord” that the plain language of virus exclusions 

preclude coverage for COVID-19-related business losses); N&S Rest. LLC v. Cumberland Mut. 

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Fire Ins. Co., --- F. Supp. 3d ---, 2020 WL 6501722, at *4 (D.N.J. Nov. 5, 2020) (“[A] survey of 

the case law on this issue reveals that federal courts interpreting virtually identical ‘Virus 

Exclusions’ have nearly unanimously determined that these exclusions bar coverage of similar 

claims.”); Robert E. Levy, D.M.D., LLC v. Hartford Fin. Servs. Grp. Inc., 2021 WL 598818, at *5 

(E.D. Mo. Feb. 16, 2021) (“[T]he decisions of other federal courts . . . have nearly unanimously 

found the plain language of the virus exclusion at issue unambiguous and that losses caused by 

COVID-19 related shutdowns fall within the exclusion.”). 

Courts applying Illinois or New York law are part of the growing consensus, which to date 

has resulted in the dismissal of more than 180 cases as a matter of law. Indeed, as one court 

recently explained with regard to a policy’s requirement of “direct physical loss,” “Illinois law 

provides a straightforward path for interpreting the policy here” because it “unambiguously 

requires some form of tangible loss or damage to the physical dimension of Plaintiff’s property.” 

TJBC, Inc. v. Cincinnati Ins. Co., 2021 WL 243583, at *4-5 (S.D. Ill. Jan. 25, 2021). And so too 

does New York law. Visconti Bus Serv., LLC v. Utica Nat’l Ins. Grp., --- N.Y.S. 3d ---, 2021 WL 

609851, at *10 (N.Y. Sup. Ct. Feb. 12, 2021) (“New York courts, state and federal, applying New 

York law have uniformly held that this policy language [i.e., direct physical loss or damage to 

property] is not ambiguous”). 

Since Zurich filed its reply in support of its motion to dismiss, a federal court in Ohio 

dismissed COVID-19 property-insurance claims that were brought under the same Zurich policy 

as America’s Kids’ policy, namely the Property Portfolio Protection (“PPP”) policy. 

See Brunswick Panini’s, LLC v. Zurich Am. Ins. Co., 2021 WL 663675 (N.D. Ohio Feb. 19, 2021). 

In addition, an additional eight orders applying either Illinois or New York law dismissed 

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COVID-19 property-insurance claims on one or more bases that Zurich raised in its motion to 

dismiss. Three of those dismissals are from this Court.1

Decision on Same Policy As America’s Kid’s Policy 

1. Brunswick Panini’s, LLC v. Zurich Am. Ins. Co., 2021 WL 663675 (N.D. Ohio 

Feb. 19, 2021). Judge Boyko dismissed with prejudice the insureds’ claims for business losses 

based on the same PPP policy under which America’s Kids seeks coverage here. See id. at *8. In 

doing so, Judge Boyko held that “[n]either the COVID-19 virus nor the state government orders”—

the same bases for coverage alleged by America’s Kids—“caused ‘direct physical loss of or 

damage to’” property, as is required to recover under the Business Income, Extra Expense, and 

Civil Authority coverages. Id. He also concluded that the PPP policy’s Microorganism Exclusion 

precludes coverage because “COVID-19 is a virus; and therefore, a microorganism.” Id. at *9. 

Thus, “[l]oss or damage directly or indirectly caused by COVID-19 is not covered,” he reasoned, 

including loss resulting from the COVID-19 government orders, virus, or pandemic. Id.

Bolstering this conclusion, Judge Boyko also noted that the virus exclusion applies because of the 

policy’s anti-concurrent causation language and “the final clause of the Microorganism 

Exclusion,” which excludes from coverage “loss, cost or expense incurred” from the government 

orders that “required Plaintiff Insureds to respond to the effects of the microorganisms.” Id.

1 To assist the Court, Appendix A to this Notice contains an updated compilation of orders 

dismissing COVID-19 property-insurance cases as a matter of law, which includes the 56 that have 

issued since Zurich filed its reply in support of its motion to dismiss on January 15, 2021. As the 

chart shows, the vast majority of dismissals are based on a failure to allege physical property loss 

or damage (Column titled “No Direct Physical Loss or Damage (‘DPLOD’)”), the policy’s virus 

exclusion (Column titled “Virus Exclusion Applies”), or both. Among those dismissals are 88 that 

involved the precise policy language involved here (i.e., “direct physical loss of or damage to 

property”). Courts also have dismissed claims for Civil Authority coverage on the ground that 

COVID-19 government orders did not prohibit access to insured property (Column titled 

“Government Order Does Not Prohibit Access”), were not issued in response to property loss or 

damage within the required vicinity of the insured property (Column titled “Government Order 

Not Issued In Response to DPLOD”), or both. 

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Decisions Applying Illinois Law 

2. Mashallah, Inc. v. West Bend Mut. Ins. Co., 2021 WL 679227 (N.D. Ill. Feb. 22, 

2021). Judge Kocoras dismissed with prejudice insureds’ claims seeking coverage for business 

losses under their policies’ Business Income, Extra Expense, and Civil Authority provisions. Id.

at *1, 7. He concluded that the policies’ virus exclusions, including one that excludes losses 

“directly or indirectly” caused by a virus like the Microorganisms exclusion in America’s Kids’ 

policy, are “clear and free from any ambiguity.” Id. at *2-3. Thus, he concluded, “there is no 

reasonable interpretation that would allow coverage.” Id. at *3. Even if the losses could be 

attributed to the COVID-19 government orders, rather than directly to the virus, the orders 

“[o]bviously” were set in motion by the activity of the virus, meaning that the insureds’ losses 

were caused by the virus. Id. at *4. This conclusion was further underscored by the anticoncurrent causation clause in one of the insureds’ policies. Id.

3. Steve Foley Cadillac, Inc. v. N.Y. Marine & Gen. Ins. Co., No. 2020-L-006774 

(Ill. Cir. Ct. Feb. 19, 2021) (included in Appendix A as Document 174). Judge Esrig dismissed 

with prejudice insureds’ claims seeking coverage for business losses resulting from the COVID19 government orders and virus. Order at 2. Like in this case, the policy in Steve Foley required 

“direct physical loss of or damage to property”; and also like in this case, the insureds in Steve 

Foley alleged that the virus “caused direct physical damage to the air quality, surfaces, personnel, 

services, and interests.” Id. at 2, 4. Relying on the Illinois Supreme Court’s opinion in Travelers 

Insurance Co. v. Eljer Manufacturing, Inc., 197 Ill. 2d 278 (2001), Judge Esrig held that these 

allegations did not trigger coverage because “Illinois law requires actual physical injury to 

property.” Id. at 5. Any contamination by “COVID-19 molecules” is “for a finite period, during 

and after which the surface remains unchanged,” and “[a]s a matter of plain English, such 

temporary contamination does not represent physical loss of or damage to property.” Id. at 4. 

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Judge Esrig further held that coverage is unavailable under the policy’s civil authority provision 

because the insureds did not allege that the government orders resulted from damage to property 

other than at the insured premises. Id. at 8. Finally, Judge Esrig held that coverage was foreclosed 

by the policy’s virus exclusion because the “plain language” precludes coverage for losses caused 

by the presence or harmful effects of a virus, such as the COVID-19 virus, and because the 

government orders “were issued in response to the virus.” Id. at 9.

4. Crescent Plaza Hotel Owner L.P. v. Zurich Am. Ins. Co., 2021 WL 633356 (N.D. 

Ill. Feb. 18, 2021). Judge Gettleman dismissed with prejudice an insured’s action against Zurich 

seeking coverage for losses sustained due to the COVID-19 virus and attendant government orders 

(id. at *1), the identical causes of loss alleged by America’s Kids here (Am. Compl. ¶ 1). Judge 

Gettleman reiterated his holding in an earlier decision that “[t]he critical policy language here—

‘direct physical loss’—unambiguously requires some form of actual, physical damage to the 

insured premises to trigger coverage.” Crescent Plaza, 2021 WL 633356, at *2 (quoting Sandy 

Point Dental PC. v. Cincinnati Ins. Co., --- F.3d ---, 2020 WL 5630465, at *2 (N.D. Ill. Sept. 21, 

2020)). The government orders did not cause the requisite loss, he reasoned, because a plaintiff 

“simply cannot show any such loss as a result of . . . [an] inability to access its own” property. Id.

(quoting Sandy Point Dental, 2020 WL 5630465, at *2). Nor did the virus cause the requisite loss, 

because “[t]he coronavirus does not physically alter the appearance, shape, color, structure, or 

other material dimension of the property.” Id. at *3 (quoting Sandy Point Dental, 2020 WL 

5630465, at *3). In addition, Judge Gettleman expressly disagreed with Studio 417, Inc. v. 

Cincinnati Insurance Co., 478 F. Supp. 3d 794 (W.D. Mo. 2020), on which America’s Kids relies 

to support its contention that the alleged presence of the COVID-19 virus at an insured premises 

suffices to trigger coverage. Id.

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5. The Bend Hotel Dev. Co. v. Cincinnati Ins. Co., 2021 WL 271294 (N.D. Ill. Jan. 

27, 2021). Judge Bucklo concluded that COVID-19-related business losses were not covered. Id.

at *2-3. Judge Bucklo spoke to the very situation America’s Kids alleges here, concluding that 

“every court in this district that has interpreted similar provisions under Illinois law has concluded 

that the virus does not cause ‘direct physical loss or damage’ to property.” Id. at *3. Thus, 

regardless of America’s Kids’ assertion that the COVID-19 virus caused property loss or damage 

(see Am. Compl. ¶¶ 88-90), the law of Illinois is clear—no amount of artful pleading changes the 

fact that the coronavirus does not tangibly alter property as a matter of law. 

6. TJBC, Inc. v. Cincinnati Ins. Co., 2021 WL 243583 (S.D. Ill. Jan. 25, 2021). 

Judge Dugan rejected the insured’s argument that it was entitled to coverage because its business 

“losses resulted from a reduction in the value of [the insured’s] business caused by a tangible and 

material substance (Covid-19) which can attach to its physical property.” Id. at *3. Judge Dugan 

concluded that “direct physical loss under the parties[’] policy unambiguously requires some form 

of tangible loss or damage to the physical dimension of Plaintiff’s property.” Id. at *4. The 

“[m]ere loss of use or diminishment in value of [the insured’s] business without underlying 

tangible damage or loss to the business property or structure is not enough to trigger coverage.” 

Id. In so holding, Judge Dugan concluded that the insured’s interpretation to the contrary would 

be “strained” and render other policy provisions “needlessly convoluted.” He determined that 

“Illinois law provides a straightforward path for interpreting the policy here.” Id. at *4-5. 

Decisions Applying New York Law

7. Visconti Bus Serv., LLC v. Utica Nat’l Ins. Grp., --- N.Y.S. 3d ---, 2021 WL 

609851 (N.Y. Sup. Ct. Feb. 12, 2021). In dismissing the insured’s complaint with prejudice, 

Judge Bartlett held that the phrase “direct physical loss or damage to property” requires “a showing 

of actual, demonstrable physical harm of some form to the insured premises—the forced closure 

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of the premises for reasons exogenous to the premises themselves is insufficient to trigger 

coverage.” Id. at *10. Indeed, as she noted, “New York courts, state and federal, applying New 

York law have uniformly held that this policy language is not ambiguous, and that it 

unambiguously excludes coverage for the mere loss of use or functionality of the covered premises 

in the absence of actual, demonstrable physical harm thereto.” Id. Judge Bartlett also rejected the 

insured’s claim for civil authority coverage because, among other reasons, the contamination of 

neighboring properties by the COVID-19 virus “would not constitute the ‘direct physical loss of 

or damage to’ property that is required to trigger coverage,” and the civil authority orders were 

issued “to limit the risk of spreading the Covid-19 virus,” not as a result of physical loss of or 

damage to property. Id. at *12. 

8. Soundview Cinemas Inc. v. Great Am. Ins. Grp., --- N.Y.S. 3d ---, 2021 WL 

561854 (N.Y. Sup. Ct. Feb. 8, 2021). The policy at issue, like America’s Kids’ policy, required 

“direct physical loss of or damage to property.” Id. In dismissing the insured’s claims with 

prejudice, Judge Driscoll “concur[red] with the majority view that loss of use of the Premises due 

to COVID-19 related government orders does not constitute ‘direct physical loss of or damage to 

the property.’” Id. at *9. Likewise, the government orders were not issued in response to “direct 

physical loss of or damage to neighboring property” and, therefore, did not trigger civil authority 

coverage. Id. Thus, under New York law, America’s Kids’ allegations of loss of use resulting 

from COVID-19 government orders are insufficient to establish coverage. 

9. Michael J. Redenburg, Esq. PC v. Midvale Indem. Co., 2021 WL 276655 

(S.D.N.Y. Jan. 27, 2021). In dismissing the case with prejudice, Judge Engelmayer relied on the 

“[p]lain language” of the policy’s virus exclusion, which excludes from coverage any “loss or 

damage caused directly or indirectly by . . . [a]ny virus, bacterium or other microorganism that 

induces or is capable of inducing physical distress, illness or diseases” “regardless of any other 

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cause or event that contributes concurrently or in any sequence to the loss.” Id. at *7-8. The 

insured’s “claimed loss falls squarely within” this exclusion, Judge Engelmayer concluded, while 

also noting that “[t]his holding aligns with those of other courts around the nation that, in recent 

months, have held insurance claims for business income excluded under similarly worded virusrelated exclusions.” Id. Thus, whether America’s Kids’ alleged losses were caused directly by 

the COVID-19 virus (see, e.g., Am. Compl. ¶¶ 90, 91), or indirectly by government orders issued 

in response to the COVID-19 virus or pandemic (see, e.g., id. ¶¶ 83, 115), they nevertheless result 

from the virus and therefore are excluded. 

Dated: March 1, 2021 By: /s/ Debra Bogo-Ernst 

Debra Bogo-Ernst 

Debra Bogo-Ernst 

Samantha Booth 

MAYER BROWN LLP 

71 South Wacker Drive 

Chicago, IL 60606-4637 

Telephone: (312) 782-0600 

Facsimile: (312) 701-7711 

dernst@mayerbrown.com 

sbooth@mayerbrown.com 

Bronwyn F. Pollock (admitted pro hac vice) 

Douglas A. Smith (admitted pro hac vice) 

MAYER BROWN LLP 

350 South Grand Avenue, 25th Floor 

Los Angeles, California 90071-1503 

Telephone: (213) 229-9500 

Facsimile: (213) 625-0248 

bpollock@mayerbrown.com 

dougsmith@mayerbrown.com 

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Archis A. Parasharami 

Evan M. Tager (admitted pro hac vice) 

MAYER BROWN LLP 

1999 K Street, NW 

Washington, DC 20006-1101 

Telephone: (202) 263-3000 

Facsimile: (202) 263-3300 

aparasharami@mayerbrown.com 

etager@mayerbrown.com 

Attorneys for Defendant Zurich American 

Insurance Company

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