Uncork and Create LLC v. The Cincinnati Insurance Company, 498 F.Supp.3d 878

Plaintiff Uncork and Create LLC (creative events company) sued Cincinnati Insurance and related entities after COVID-19 restrictions forced temporary/partial closures of its locations. The case was before the Southern District of West Virginia on defendants’ Rule 12(b)(6) motion.
Plaintiff held an "all-risk" commercial property policy (Dec. 7, 2017–Dec. 7, 2020) defining "loss" as "accidental physical loss or accidental physical damage" and providing business‑income coverage when suspension is caused by a direct physical loss to insured premises.
West Virginia’s governor issued emergency and closure orders in March 2020; Charleston location reopened June 11, 2020, Barboursville location closed permanently April 24, 2020; plaintiff alleges lost business income and extra expenses.
Cincinnati denied coverage, asserting no direct physical loss or damage to property and invoking a pollution exclusion; plaintiff contends the closure order and/or viral contamination made the premises unusable and thus triggered coverage.
The court considered federal and West Virginia precedent and recent COVID‑19 coverage decisions and concluded that the pandemic and closure orders caused economic loss but not the kind of direct physical loss or damage required by the policy.
Outcome: the defendants’ motion to dismiss was GRANTED and the complaint DISMISSED for failure to plead covered physical loss or damage.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether COVID‑19 or the Governor’s closure order constitutes "direct physical loss or physical damage" to insured property	Closure order and/or viral contamination made premises unsafe/unusable for intended purpose and thus is a covered physical loss	COVID‑19 affects people, not structures; no tangible/structural alteration; any contamination is removable by cleaning; losses are purely economic	Court: No. Pandemic and closure orders caused economic loss only; no direct physical loss/damage under the policy; dismissal affirmed
Whether allegations of viral presence or dispossession suffice to trigger coverage	Presence of virus on surfaces/air or dispossession by order can render property unusable and meet "physical loss" requirement	Alleged presence is insufficient because virus does not alter property materially and is removable; dispossession by order recognizes human‑health risk, not property damage	Court: Alleged presence or government orders are not determinative; even alleged contamination would not cause the permanent physical alteration needed for coverage

Ashcroft v. Iqbal, 556 U.S. 662 (pleading‑standard framework for plausibility)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must state a plausible claim)
Francis v. Giacomelli, 588 F.3d 186 (Rule 12(b)(6) legal‑sufficiency standard in 4th Cir.)
Erickson v. Pardus, 551 U.S. 89 (court accepts complaint allegations as true at pleading stage)
Murray v. State Farm Fire & Cas. Co., 509 S.E.2d 1 (W. Va. 1998) (physical loss can exist without structural alteration when property is rendered unsafe)
Cherrington v. Erie Ins. Prop. & Cas. Co., 745 S.E.2d 508 (W. Va. 2013) (policy language construed according to plain meaning; exclusions strictly construed against insurer)