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SA Palm Beach, LLC v. Certain Underwriters at Lloyd's London

SA Palm Beach, LLC v. Certain Underwriters at Lloyd's London

United States Court of Appeals for the Eleventh Circuit

May 5, 2022, Filed

No. 20-14812, No. 21-10190, No. 21-10490, No. 21-10672

Opinion

JORDAN, Circuit Judge:

These cases—which we've consolidated for decision following oral argument—present a common question of insurance coverage prompted by the COVID-19 pandemic. The question is whether, under Florida law, all-risk commercial insurance policies providing coverage for "direct physical loss of or damage to" property or "direct physical loss or damage to" property insure against losses and expenses incurred by businesses as a result of COVID-19.

The Florida [*3]  Supreme Court has not addressed the matter. Nor have the Florida intermediate appellate courts. So our analytic endeavor, though informed, is necessarily predictive. Sitting, "in effect, . . . as a state court[,]" Comm'r v. Estate of Bosch, 387 U.S. 456, 465, 87 S. Ct. 1776, 18 L. Ed. 2d 886 (1967), we follow the majority view and hold that under Florida law there is no coverage because COVID-19 did not cause a tangible alteration of the insured properties.

In March of 2020, in response to the public health crisis caused by the spread of COVID-19, Florida's Governor issued a series of executive orders restricting on-premises operations of non-essential businesses, including restaurants, bars, and retail stores. Several counties in Florida issued their own emergency stay-at-home or shelter-in-place orders, echoing the restrictions implemented by the Governor. These orders immediately impacted businesses throughout the state; many were forced to close their doors, and some never reopened.

All over the country, affected businesses submitted claims under their all-risk insurance policies with the hope of recovering some of the losses and expenses caused by the COVID-19 pandemic. When the majority of these claims were rejected, a wave of lawsuits ensued in the state and [*4]  federal courts. The insureds here—SA Palm Beach, LLC, Emerald Coast Restaurants, Inc., Rococo Steak, LLC, and R.T.G. Furniture, Corporation—are among the Florida businesses denied coverage.

Each of the insureds seeks coverage under an all-risk insurance policy that provides compensation for losses and expenses incurred in connection with "direct physical loss of or damage to" the covered property or "direct physical loss or damage to" the covered property. Before getting to the merits of the appeals, we set out the particulars of the underlying actions and the coverage provisions at issue on appeal.1

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2022 U.S. App. LEXIS 12210 *; 32 F.4th 1347

SA PALM BEACH, LLC, on behalf of itself and all others similarly situated, Plaintiff-Appellant, versus CERTAIN UNDERWRITERS AT LLOYD'S LONDON, UNDERWRITERS AT LLOYDSLONDON KNOWN AS SYNDICATES CNP 4444, AFB 2623, AFB 623, BRT, 2987, BRT 2988, NEO 2468, SAM 727, AXS1686, XIS H4202, QBE 1886, DUW 1729, WBC 5886, CHN 2015, HDU 382, MSP 318, AGR, Defendants-Appellees.EMERALD COAST RESTAURANTS, INC., Plaintiff-Appellant, versus ASPEN SPECIALTY INSURANCE COMPANY, Defendant-Appellee.R.T.G. FURNITURE CORP., Plaintiff-Appellant, versus ASPEN SPECIALTY INSURANCE COMPANY, CRUM & FORSTER SPECIALTY INSURANCE COMPANY, EVANSTON INSURANCE COMPANY, EVEREST INDEMNITY INSURANCE COMPANY, HALLMARK SPECIALTY INSURANCE COMPANY, et al., Defendants-Appellees.ROCOCO STEAK, LLC, d.b.a. Rococo Steak, Plaintiff-Appellant, versus ASPEN SPECIALTY INSURANCE COMPANY, Defendant-Appellee.

Prior History:  [*1] Appeal from the United States District Court for the Southern District of Florida. D.C. Docket No. 9:20-cv-80677-UU. Appeal from the United States District Court for the Northern District of Florida. D.C. Docket No. 3:20-cv-05898-TKW-HTC. Appeal from the United States District Court for the Middle District of Florida. D.C. Docket No. 8:20-cv-02323-JSM-AEP. Appeal from the United States District Court for the Middle District of Florida. D.C. Docket No. 8:20-cv-02481-VMC-SPF.

R.T.G. Furniture Corp. v. Hallmark Speciality Ins. Co., 2021 U.S. Dist. LEXIS 35854, 2021 WL 686864 (M.D. Fla., Jan. 22, 2021)Rococo Steak, LLC v. Aspen Specialty Ins. Co., 515 F. Supp. 3d 1218, 2021 U.S. Dist. LEXIS 15191, 2021 WL 268478 (M.D. Fla., Jan. 27, 2021)Emerald Coast Rests., Inc. v. Aspen Specialty Ins. Co., 2020 U.S. Dist. LEXIS 246518 (N.D. Fla., Dec. 18, 2020)SA Palm Beach LLC v. Certain Underwriters at Lloyd's, 506 F. Supp. 3d 1248, 2020 U.S. Dist. LEXIS 251178, 2020 WL 7251643 (S.D. Fla., Dec. 9, 2020)

CORE TERMS

physical loss, coverage, insured, business income, provisions, closure order, expenses, alteration, tangible, losses, restoration, properties, suspension, premises, pandemic, cleaned, repair, motion to dismiss, physical damage, restaurant, policies, insured premises, district court, cause of loss, all-risk, insurance policy, provide coverage, particles, replaced, business interruption

Civil Procedure, Appeals, Standards of Review, De Novo Review, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Pleadings, Complaints, Requirements for Complaint, Insurance Law, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, Claim, Contract & Practice Issues, Entire Contract, Coverage Favored, Unambiguous Terms, Evidence, Burdens of Proof, Allocation, Marine & Inland Marine Insurance, Coverage, All Risk, Property Insurance, All Risks, Procedure, Evidence & Trial, Burdens of Proof, Preliminary Considerations, Federal & State Interrelationships, Erie Doctrine, Governments, Courts, Judicial Precedent, Dicta, Judicial Precedent, Business Insurance, Commercial General Liability Insurance, Property Claims, Property Damage