342 So.3d 697
Fla. Dist. Ct. App.2022Background
- Lloyd’s issued GreenStreet an all-risk commercial property policy (2/15/20–2/15/21) that covers business income only when suspension of operations is "caused by direct physical loss of or damage to property."
- The Policy’s Business Income form defines "period of restoration" to begin 72 hours after the time of direct physical loss or damage and end when the property "should be repaired, rebuilt or replaced" or business resumes elsewhere.
- COVID-19 emergency orders from the City of Miami and Miami‑Dade County limited or prohibited on‑premises dining; GreenStreet suspended in‑person service but continued takeout/delivery.
- GreenStreet submitted a claim for lost business income and extra cleaning expenses; Lloyd’s did not pay, and GreenStreet sued for declaratory relief and damages.
- The trial court dismissed GreenStreet’s petition with prejudice; the Third District affirmed, holding the policy’s "direct physical loss of or damage to property" requires tangible/alterative physical harm to property, which was not alleged.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "direct physical loss of or damage to property" includes loss of intended use absent tangible alteration | GreenStreet: Loss includes deprivation of use; dictionary definitions allow "loss" without structural damage | Lloyd’s: "Physical" requires tangible, material alteration; loss of use from government orders is not physical damage | Court: No — phrase requires actual, tangible alteration to property |
| Whether plain‑meaning/dictionaries favor GreenStreet’s reading | GreenStreet: Ordinary definitions (e.g., "deprivation") show coverage where property is unusable | Lloyd’s: "Physical" means tangible/material; dictionary support does not override context and other policy terms | Court: Dictionaries do not change that "physical" imposes tangible‑alteration requirement |
| Whether Azalea controls and supports coverage for loss of use | GreenStreet: Azalea (First DCA) held loss of function can be physical loss without permanent structural alteration | Lloyd’s: Azalea involved tangible contaminant adhering to structure and destruction of integral bacterial colony — it involved physical damage | Court: Azalea is distinguishable; it involved actual, adherent contamination that destroyed a structural component, so it does not support GreenStreet |
| Whether the Policy’s "period of restoration" language supports non‑physical loss coverage | GreenStreet: "Period of restoration" only addresses timing for resumption of use | Lloyd’s: That definition contemplates repair/rebuild/replace, implying physical alteration is required | Court: The restoration clause assumes physical repair/replacement, supporting requirement of tangible damage |
Key Cases Cited
- Homeowners Choice Prop. & Cas. v. Maspons, 211 So. 3d 1067 (Fla. 3d DCA 2017) (interpreting "direct physical loss" to require actual, tangible damage)
- Vazquez v. Citizens Prop. Ins. Corp., 304 So. 3d 1280 (Fla. 3d DCA 2020) (affirming that "direct physical loss" means property actually damaged)
- Azalea, Ltd. v. Am. States Ins. Co., 656 So. 2d 600 (Fla. 1st DCA 1995) (coverage where contaminant adhered to structure and destroyed integral bacterial colony)
- Santo’s Italian Café, LLC v. Acuity Ins. Co., 15 F.4th 398 (6th Cir. 2021) (concluding deprivation of use from COVID orders did not constitute tangible destruction or physical loss)
- Mudpie, Inc. v. Travelers Cas. Ins. Co. of Am., 15 F.4th 885 (9th Cir. 2021) (holding policy language, incl. "period of restoration," supports requirement of physical damage)