A federal judge in Kansas City has cleared a restaurant group’s COVID-related business interruption claim for jury trial, holding that an 8th Circuit Court decision that found no coverage was owed in a separate case does not apply to a lawsuit that alleges SARS-CoV-2 was physically present.

On Tuesday, U.S. District Judge Stephen R. Bough on Tuesday granted summary judgment dismissing claims against Cincinnati Insurance Co. for civil authority and ingress and egress coverages, but allowed K.C. Hopps’ claim that coverage was owed because the virus was physically present at its bars and restaurants to proceed to trial.

“Whether the virus was present on plaintiff’s premises, whether it actually caused a physical loss or physical damage to plaintiff’s premises, and the extent of plaintiff’s damages due to that ‘loss’ is a question of fact best left for a jury to decide,” Bough wrote in his order.

Bough is among a small minority of federal judges who have denied insurer motions to dismiss lawsuits seeking coverage for income lost because of the COVID-19 pandemic. In fact, the Barack Obama appointee issued three of the 22 orders by federal judges that rejected insurer motions to dismiss such claims.

K.C. Hopps owns nine restaurants, bars, catering services and event spaces in the Kansas City metropolitan area, which spans both Missouri and Kansas. The company filed suit after Cincinnati denied its claim to recoup income lost after it was forced to curtail operations because of the coronavirus pandemic.

Most federal and state judges have dismissed similar lawsuits. What’s more, the 8th Circuit—whose jurisdiction includes Missouri—on July 2 affirmed a ruling that a dental surgery practice could not recover income lost because of government orders that forced it to restrict operations because of the coronavirus. (Related article: “Are Reserve Releases Ahead? Appellate Ct. Ruling Seen Slowing COVID Suits”)

Bough’s order, however, notes that the 8th Circuit did not address whether the physical presence of the virus on properties could cause a direct physical loss that is covered by an insurance policy. Oral Surgeons alleged in its lawsuit against Cincinnati Insurance that it lost income because of civil authority orders that restricted its practice to emergency care.

“However, the 8th Circuit did not determine that SARS-CoV-2 can never cause ‘physical loss’ or ‘physical damage,'” Bough’s order says.

Bough also rejected Cincinnati’s argument that no coverage would be owed even if there had been a physical loss because the restaurant group received more in forgiven Paycheck Protection Loans than its alleged losses. The judge said the PPP program was intended to ensure that employees continued to receive paychecks, not to reimburse business owners for lost income.

On the other hand, Bough granted Cincinnati’s motion to dismiss K.C. Hopps’ claims for coverage under civil authority and ingress and egress coverages because the government orders did not restrict the owners’ access to their properties.

Back in July, insurance defense attorney Roy A. Mura said that the 8th Circuit ruling would have limited impact because the appellate panel did not address the question of whether the physical presence of a virus can cause a physical loss or damage. On Tuesday, he posted a brief analysis of Bough’s opinion on his LinkedIn page.

“To my knowledge, this is the first reported decision addressing the PPP loan argument,” he wrote. “Judge Bough’s sidestepping of the 8th Circuit’s decision in Oral Surgeons is also interesting.”

Bough also allowed Studio 417 Inc. to proceed with a separate lawsuit against Cincinnati Insurance. That case has been consolidated with a lawsuit filed by another group of business owners who are pursuing coverage from Cincinnati Insurance for COVID-related income losses. The plaintiffs are seeking class action status.

(This article was originally published on our sister site, Claims Journal. Reporter Jim Sams in the editor of Claims Journal)