LA Bone & Joint v. Transportation Ins, 21-30300

Plaintiff Louisiana Bone & Joint Clinic (LBJC) operated a pain-management clinic in Lafayette and held a commercial-property policy from Transportation Insurance Co. effective Nov 15, 2019–Nov 15, 2020.
The policy included Business Income and Extra Expense (BI/EE) coverage that indemnifies actual business-income loss caused by a “suspension” of operations resulting from a “direct physical loss of or damage to property,” and a Civil Authority extension triggered when a civil-authority order prohibits access to the premises "due to direct physical loss of or damage to property" elsewhere.
In March 2020 Louisiana issued COVID-19 orders closing nonessential businesses and suspending nonessential medical procedures; LBJC closed and claimed lost business income.
Transportation denied coverage; LBJC sued for breach of contract and declaratory relief. The district court dismissed for failure to state a claim, finding no “direct physical loss or damage” and no Civil Authority trigger.
The Fifth Circuit affirmed: it held the BI/EE language unambiguously requires a tangible physical alteration, loss of use is not covered, and the Civil Authority provision did not apply because the orders were issued to mitigate viral spread, not because of nearby property damage.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether BI/EE coverage is triggered by COVID-19–related closure	Phrase "direct physical loss of or damage to property" is ambiguous and can cover loss of use or loss of use for intended purposes	Phrase requires tangible, physical alteration or damage; closures without physical change are excluded	Phrase unambiguous; requires tangible alteration/injury/deprivation; loss-of-use from shutdown not covered
Whether Civil Authority coverage applies	Governor’s orders prohibited public access and thus triggered civil-authority coverage	Orders were issued to prevent virus spread, not "due to" physical loss/damage to property near LBJC; orders did not have the required nexus	Civil Authority not triggered—orders were to mitigate COVID-19, not issued because of nearby property damage
Whether contract ambiguity warrants Louisiana Supreme Court certification or further briefing	Ambiguity exists, so court should certify or await other appellate decisions	Language is unambiguous under Louisiana law; certification and supplemental briefing unnecessary	Court denied certification and supplemental-briefing requests; found no ambiguity

Singleton v. Elephant Ins. Co., 953 F.3d 334 (5th Cir. 2020) (standard of review for Rule 12(b)(6) dismissals and policy interpretation)
Lubbock Cnty. Hosp. Dist. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 143 F.3d 239 (5th Cir. 1998) (insurance-policy interpretation is a question of law)
Anco Insulations, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 787 F.3d 276 (5th Cir. 2015) (policies construed under state contract-law principles)
IberiaBank Corp. v. Ill. Union Ins. Co., 953 F.3d 339 (5th Cir. 2020) (dismissal proper when policy precludes recovery as a matter of law)
Cadwallader v. Allstate Ins. Co., 848 So. 2d 577 (La. 2003) (contract ambiguity and rule of strict construction in favor of insured)
Dickie Brennan & Co. v. Lexington Ins. Co., 636 F.3d 683 (5th Cir. 2011) (civil-authority coverage requires nexus to property damage near insured premises)
Terry Black’s Barbecue, L.L.C. v. State Auto. Mut. Ins. Co., 22 F.4th 450 (5th Cir. 2022) (COVID-19 orders do not necessarily trigger property-loss coverage)