499 F.Supp.3d 1178
S.D. Fla.2020Background
- Plaintiffs operate a dental practice insured under Hartford Policy No. 21SBA VJ7288 and sued Hartford after Hartford denied a business-interruption claim following COVID-19–related government orders.
- Plaintiffs allege business income, extra expense, and civil-authority coverage for losses caused by government suspension orders issued to curb COVID‑19; they seek breach of contract and declaratory relief.
- Hartford removed the suit to federal court and moved to dismiss, arguing (1) a virus exclusion bars coverage, (2) Plaintiffs allege only economic loss and no "direct physical loss or physical damage," and (3) civil-authority coverage does not apply.
- The policy’s insuring clause covers "direct physical loss of or physical damage to Covered Property," and contains an anti-concurrent virus/fungi/bacteria exclusion endorsing that loss caused "directly or indirectly" by a virus is excluded.
- The Complaint admits it does not allege coronavirus was present on the insured premises and alleges losses resulted from government orders responding to the pandemic.
- The Court granted Hartford’s motion, dismissing the Complaint with prejudice: (1) Plaintiffs failed to plead the required direct physical loss/damage; (2) even assuming coverage, the virus exclusion would bar recovery; (3) declaratory relief was duplicative of the dismissed breach claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether policy covers losses absent "direct physical loss or physical damage" | Plaintiffs: economic losses from government orders qualify as direct physical loss/damage | Hartford: policy requires tangible physical loss/damage to covered property; economic loss alone insufficient | Court: No coverage — Complaint alleges only pure economic loss and admits no physical harm |
| Whether the virus exclusion bars coverage | Plaintiffs: losses stem from government orders, not from virus presence, so exclusion doesn't apply | Hartford: COVID‑19 is part of the causal chain and the exclusion bars loss caused "directly or indirectly" by a virus | Court: Exclusion applies because government orders were issued to address COVID‑19, making virus part of causal chain |
| Whether Civil Authority coverage applies | Plaintiffs: government suspension orders triggered civil-authority coverage | Hartford: civil-authority provision requires access be "specifically prohibited" due to physical loss to nearby property | Court: No civil-authority coverage — orders did not prohibit access or allege physical loss to property in the immediate area |
| Whether declaratory relief is actionable independent of breach claim | Plaintiffs: seek declaratory judgment that coverage exists going forward | Hartford: declaratory claim duplicates contract claim | Court: Declaratory count dismissed as duplicative/academic after breach claim dismissal |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard requires more than labels and conclusions)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (courts need not accept legal conclusions as true)
- State Farm Fire & Cas. Co. v. Steinberg, 393 F.3d 1226 (11th Cir. 2004) (policy language controls and must be given plain meaning)
- State Farm Mut. Auto. Ins. Co. v. Roach, 945 So. 2d 1160 (Fla. 2006) (Florida law governs insurance contract interpretation)
- U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871 (Fla. 2007) (read pertinent policy provisions in pari materia)
- Garcia v. Federal Ins. Co., 473 F.3d 1131 (11th Cir. 2006) (insurance contracts construed by plain meaning; unambiguous terms control)
- U.S. Concrete Pipe Co. v. Bould, 437 So. 2d 1061 (Fla. 1983) (insurer bears burden to show exclusion applies)