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United States Court of Appeals for the Seventh Circuit
March 29, 2022, Argued; April 12, 2022, Decided
ST. EVE, Circuit Judge. East Coast Entertainment of Durham, LLC ("ECE") owns and operates movie theaters in North Carolina. Like many businesses, ECE lost money after the Governor of North Carolina imposed statewide closures in response to COVID-19. ECE submitted a claim for coverage under its insurance policy with Houston Casualty Company ("HCC"). HCC and American Claims Management ("ACM"), its claims administrator, denied the claim, and ECE brought this suit for declaratory relief and damages in Illinois state court. Defendants removed the [*2] case to federal court under diversity jurisdiction,1 and the district court granted their motion to dismiss, concluding that ECE failed to allege a physical alteration of its property. Because our recent decision in Sandy Point Dental, P.C. v. Cincinnati Insurance Co., 20 F.4th 327 (7th Cir. 2021), squarely governs this suit, we affirm.
ECE's insurance policy with HCC includes the following "Business Income" coverage provision:
We will pay 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 physical loss of or damage to property at premises that are described in the Declarations and for which a Business Income Limit of Insurance is shown in the Declarations. The loss or damages must be caused by or result from a Covered Cause of Loss.
(Emphasis added). ] The "period of restoration" is the period between "the date of direct physical loss or damage to the property" and either "[t]he date when the property should be repaired, rebuilt or replaced with reasonable speed and similar quality" or "when business is resumed at a new permanent location," whichever occurs first.
] A "Civil Authority" provision similarly covers "the actual loss of [*3] Business Income you sustain and necessary Extra Expense caused by action of civil authority that prohibits access to the described premises due to direct physical loss of or damage to property, other than at the described premises, caused by or resulting from any Covered Cause of Loss." (Emphasis added).
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
2022 U.S. App. LEXIS 9722 *; __ F.4th __; 2022 WL 1086377
EAST COAST ENTERTAINMENT OF DURHAM, LLC, Plaintiff-Appellant, v. HOUSTON CASUALTY COMPANY and AMERICAN CLAIMS MANAGEMENT, INC., Defendants-Appellees.
Prior History: [*1] Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:20-cv-06551 — Joan B. Gottschall, Judge.
East Coast Entm't of Durham, LLC v. Houston Cas. Co., 2021 U.S. Dist. LEXIS 187610, 2021 WL 4437818 (N.D. Ill., Sept. 23, 2021)
coverage, physical loss, premises, alteration, virus, district court
Torts, Types of Damages, Property Damages, Measurements, Insurance Law, Property Insurance, Coverage, Property Damage, Civil Procedure, Appeals, Standards of Review, De Novo Review, Evidence, Burdens of Proof, Allocation, Preliminary Considerations, Federal & State Interrelationships, Erie Doctrine, Choice of Law, Forum & Place, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Contracts Law, Contract Interpretation, Intent, Claim, Contract & Practice Issues, Policy Interpretation, Ordinary & Usual Meanings, Ambiguous Terms, Unambiguous Terms, Reasonable Expectations, Reasonable Person, Plain Language, Business Insurance, Commercial General Liability Insurance, Property Claims, Construction Against Insurers