Ceres Enterprises, LLC v. Travelers Insurance Company, 520 F.Supp.3d 949

Plaintiff Ceres Enterprises, LLC owns and operates hotels in Ohio, Indiana, and Minnesota and filed claims for COVID-19–related business-income losses under a commercial policy issued by Travelers.
The policy covers "direct physical loss of or damage to property" and includes Business Income/Extra Expense and Civil Authority coverages, but also contains a broad virus exclusion and other exclusions (ordinance/law, governmental action, loss of use).
Ceres alleges loss from the pandemic and state "stay-at-home" orders, and that SARS‑CoV‑2 was likely present at or near its properties, causing them to be unusable for intended purposes.
Travelers denied coverage and moved to dismiss, arguing (1) no covered "direct physical loss or damage" occurred, (2) Civil Authority coverage is inapplicable, and (3) exclusions—including the virus exclusion—bar recovery.
The district court applied Ohio law, concluded the policy language unambiguously requires tangible/material physical harm (not mere loss of use), found Civil Authority conditions unmet, held the virus exclusion applied, and granted Travelers' motion to dismiss all claims.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Meaning of "direct physical loss of or damage to" property	"Physical loss" includes loss of use or being rendered unfit for intended use by virus/government orders	Requires tangible, material, perceptible destruction or harm to property	Court: phrase unambiguous; requires material/tangible physical loss or damage; loss of use alone is not covered
Civil Authority coverage trigger	Shutdown orders that barred normal operations trigger Civil Authority coverage	Coverage requires damage to "property other than the described premises" and prohibition of access to area due to physical damage	Court: not triggered—no alleged damage to other property and access was not completely prohibited as required
Application of virus exclusion	Pandemic-related economic losses are not barred because exclusion ambiguous or COVID-19 is distinct from governmental responses	Policy expressly excludes loss caused directly or indirectly by any virus	Court: exclusion unambiguous; SARS‑CoV‑2 is a virus that induces disease; exclusion bars coverage, including indirect losses
Viability of claims (declaratory, breach, bad faith)	Policy ambiguity and factual disputes preclude dismissal	No covered loss; denial reasonable; no bad faith	Court: all claims dismissed as a matter of law—no covered loss and denial was reasonable

Ashcroft v. Iqbal, 556 U.S. 662 (establishes pleading standard for plausibility)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must state a plausible claim)
In re Fifth Third Early Access Cash Advance Litig., 925 F.3d 265 (contract interpretation principles under Ohio law)
Perry v. Allstate Indemn. Co., 953 F.3d 417 (apply Ohio substantive law in diversity cases)
Mastellone v. Lightning Rod Mut. Ins. Co., 884 N.E.2d 1130 (Ohio appellate discussion that "physical injury" requires harm affecting structural integrity)
Universal Image Prods. v. Federal Ins. Co., [citation="475 F. App'x 569"] (6th Cir. discussion distinguishing tangible physical loss from economic loss)
Sharonville v. American Employers Ins. Co., 846 N.E.2d 833 (insurance-policy interpretation is a matter of law)