LJ New Haven LLC v. AmGUARD Insurance Company, 511 F.Supp.3d 145

Plaintiff LJ New Haven LLC (Lenny & Joe’s Fish Tale) operated a Connecticut restaurant that ceased indoor dining after Connecticut Executive Order No. 7D (March 2020) issued to limit spread of COVID‑19.
Plaintiff submitted claims under its commercial Businessowner’s policy for Business Income, Extra Expense, and Civil Authority coverages for losses caused by the Order; defendant AmGUARD denied coverage.
The policy’s insuring clauses require loss from "direct physical loss of or damage to" covered property (or loss caused by a Covered Cause of Loss) and include a Civil Authority extension tied to damage to other property.
The policy contains a broad Virus or Bacteria exclusion: "We will not pay for loss or damage caused directly or indirectly by ... any virus ..." and an anti‑concurrent‑causation clause applying the exclusion "regardless of any other cause or event that contributes concurrently or in any sequence to the loss."
Plaintiff did not allege physical contamination of its premises and disavowed any on‑site virus infestation theory.
Procedural posture: Amended Complaint sought declaratory relief and breach claims; defendant moved to dismiss under Rule 12(b)(6); the court granted the motion on virus‑exclusion grounds (Dec. 21, 2020).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Applicability of the Virus Exclusion	Exclusion applies only when virus contaminates insured property (onsite contamination)	Exclusion bars losses "caused directly or indirectly" by any virus, so orders issued in response to COVID‑19 are excluded	Held: Exclusion applies — COVID‑19 was an indirect (but‑for/intertwined) cause; anti‑concurrent language bars coverage
"Direct physical loss or damage" requirement for Business Income/Extra Expense	Order caused necessary suspension of operations, triggering Business Income/Extra Expense coverage	No direct physical loss/damage to property occurred, so those coverages are not triggered	Not reached on the merits — court dismissed complaint based on virus exclusion
Civil Authority coverage (damage elsewhere required)	Executive Order prohibited access and thus triggers Civil Authority coverage	Civil Authority clause requires damage to other property (and proximity limits), so coverage not met	Not reached on the merits — court dismissed complaint based on virus exclusion
Breach of contract / Declaratory relief	Defendant breached by denying coverage for losses from closure orders	Denial was lawful because virus exclusion precludes coverage	Held: Claims dismissed; no breach because exclusion forecloses coverage

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Rule 12(b)(6) plausibility standard)
Ashcroft v. Iqbal, 556 U.S. 662 (pleading standards for factual allegations)
Chambers v. Time Warner, 282 F.3d 147 (2d Cir.) (consideration of documents integral to complaint)
Staehr v. Hartford Fin. Servs. Grp., 547 F.3d 406 (2d Cir.) (judicial notice on Rule 12(b)(6) motion)
Connecticut Med. Ins. Co. v. Kulikowski, 942 A.2d 334 (Conn. 2008) (insurance‑contract interpretation governed by law, give words ordinary meaning)
Liberty Mut. Ins. Co. v. Lone Star Ind., Inc., 967 A.2d 1 (Conn. 2009) (exclusions strictly construed against insurer but must be clear and unambiguous)
Karas v. Liberty Ins. Corp., 228 A.3d 1012 (Conn. 2019) (court will not "torture words" to create ambiguity)
Travelers Ins. Co. v. 633 Third Assocs., 14 F.3d 114 (2d Cir.) (federal courts predicting state law where necessary)
Sansone v. Nationwide Mut. Fire Ins. Co., 770 A.2d 500 (Conn. Super. Ct.) (discussion of efficient/proximate cause rule)