E. Coast Entm't of Durham, LLC v. Houston Cas. Co.

E. Coast Entm't of Durham, LLC v. Houston Cas. Co.

Opinion

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.

I. Background

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).

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