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Uncork & Create LLC v. Cincinnati Ins. Co.

Uncork & Create LLC v. Cincinnati Ins. Co.

United States Court of Appeals for the Fourth Circuit

December 8, 2021, Argued; March 7, 2022, Decided

No. 21-1311

Opinion

 [*928]  BARBARA MILANO KEENAN, Senior Circuit Judge:

In this insurance coverage dispute, an insured seeks coverage for lost business income and other expenses resulting from the [**2]  Covid-19 virus and a related, state-government order temporarily halting non-essential business activities. Upon our review, we hold that, under West Virginia law, the policy language requiring a "physical loss" or "physical damage" unambiguously covers only losses caused by, or relating to, material destruction or material harm to the covered property. Because the insured did not suffer such a physical loss or damage resulting from the pandemic or the government order, we affirm the district court's judgment dismissing the case.

In March 2020, Uncork and Create LLC (Uncork) operated a "creative events" business at two art studio locations, in Barboursville, West Virginia and in  [*929]  Charleston, West Virginia.1 On March 16, 2020, the Governor of West Virginia, Jim Justice, declared a state of emergency based on the Covid-19 pandemic. One week later, the Governor issued an executive order requiring that non-essential businesses in West Virginia "temporarily cease operations" (the closure order). The closure order permitted businesses to continue efforts to maintain inventory, "preserve the condition of the business's physical plant and equipment," ensure security, process payroll and employee [**3]  benefits, and facilitate employees' ability to "work remotely from their residences." Included in the closure order was an exception for businesses "that do not invite in the general public" and had five or fewer employees "in the office." The closure order took effect at 8:00 p.m. on March 24, 2020.

In compliance with the closure order, Uncork closed its two art studios. These closures caused Uncork to suffer "a substantial loss of business income" and other unspecified financial losses. When permitted to do so, Uncork re-opened its Charleston studio on June 11, 2020. However, Uncork permanently closed its Barboursville studio on April 24, 2020.

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27 F.4th 926 *; 2022 U.S. App. LEXIS 5935 **

UNCORK AND CREATE LLC, Plaintiff — Appellant, v. THE CINCINNATI INSURANCE COMPANY; THE CINCINNATI CASUALTY COMPANY; THE CINCINNATI INDEMNITY COMPANY, Defendants — Appellees.AMERICAN PROPERTY CASUALTY INSURANCE ASSOCIATION; NATIONAL ASSOCIATION OF MUTUAL INSURANCE COMPANIES, Amici Supporting Appellees.

Prior History:  [**1] Appeal from the United States District Court for the Southern District of West Virginia, at Charleston. (2:20-cv-00401). Irene C. Berger, District Judge.

Disposition: AFFIRMED.

CORE TERMS

physical loss, closure order, coverage, physical damage, business income, policy language, destruction, studio, virus, accidental, losses, terms, cause of loss, unambiguous, expenses, insured, restoration, suspension, permanent

Civil Procedure, Appeals, Standards of Review, De Novo Review, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Insurance Law, Claim, Contract & Practice Issues, Policy Interpretation, Entire Contract, Preliminary Considerations, Federal & State Interrelationships, Erie Doctrine, Ambiguous Terms, Construction Against Insurers, Unambiguous Terms, Coverage Favored, Ambiguous Terms, Reasonable Expectations, Reasonable Person, Plain Language