Cajun Conti LLC v. Certain Underwriters at Lloyd's
| Decision Date | 15 June 2022 |
| Docket Number | 2021-CA-0343 |
| Parties | CAJUN CONTI LLC, CAJUN CUISINE 1 LLC, AND CAJUN CUISINE LLC D/B/A OCEANA GRILL v. CERTAIN UNDERWRITERS AT LLOYD'S, LONDON AND GOVERNOR JOHN B. EDWARDS IN HIS OFFICIAL CAPACITY AS GOVERNOR OF THE STATE OF LOUISIANA, AND THE STATE OF LOUISIANA |
| Court | Court of Appeal of Louisiana — District of US |
CAJUN CONTI LLC, CAJUN CUISINE 1 LLC, AND CAJUN CUISINE LLC D/B/A OCEANA GRILL
v.
CERTAIN UNDERWRITERS AT LLOYD'S, LONDON AND GOVERNOR JOHN B. EDWARDS IN HIS OFFICIAL CAPACITY AS GOVERNOR OF THE STATE OF LOUISIANA, AND THE STATE OF LOUISIANA
No. 2021-CA-0343
Court of Appeals of Louisiana, Fourth Circuit
June 15, 2022
ON APPLICATION FOR REHEARING
APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2020-02558, DIVISION "M" Honorable Paulette R. Irons, Judge.
John W. Houghtaling, II GAUTHIER, HOUGHTALING & WILLIAMS, L.L.C.
Jennifer Perez GAUTHIER MURPHY & HOUGHTALING, L.L.C.
Daniel Ernest Davillier DAVILLIER LAW GROUP
Roderick Rico Alvendia ALVENDIA KELLY & DEMAREST, L.L.C.
Jennifer L. Kuechmann ALVENDIA, KELLY & DEMAREST, L.L.C.
James M. Williams CHEHARDY SHERMAN WILLIAMS MURRAY RECILE STAKELUM & HAYES, LLP
Phillip J. Laborde CHEHARDY, SHERMAN, WILLIAMS
Matthew A. Sherman CHEHARDY SHERMAN WILLIAMS MURRAY RECILE STAKELUM & HAYES, L.L.P.
Bernard Louis Charbonnet, Jr. LAW OFFICES OF BERNARD L. CHARBONNET, JR.
Desiree Mary Charbonnet Law Office Desiree M. Charbonnet LLC
Anthony David Irpino IRPINO LAW FIRM
Richard P. Lewis REED SMITH, LLP Three Logan Square
John N. Ellison REED SMITH, LLP COUNSEL FOR PLAINTIFF/APPELLANT
Kyle D. Schonekas SCHONEKAS EVANS McGOEY & McEACHIN, L.L.C.
Joelle Flannigan Evans SCHONEKAS EVANS McGOEY & McEACHIN, L.L.C.
Heather S. Duplantis PHELPS DUNBAR LLP
Thomas H. Peyton PHELPS DUNBAR, LLP
Allen C. Miller, Sr. PHELPS DUNBAR LLP
Virginia Y. Dodd PHELPS DUNBAR LLP
Kevin W. Welsh PHELPS DUNBAR LLP
Martin A. Stern ADAMS AND REESE LLP
Ann Schell ADAMS AND REESE LLP
Sara C. Valentine ADAMS AND REESE LLP
Alexandra Roselli Lamb ADAMS AND REESE, LLP
COUNSEL FOR DEFENDANT/APPELLEE
Court composed of Chief Judge Terri F. Love, Judge Roland L. Belsome, Judge Joy Cossich Lobrano, Judge Sandra Cabrina Jenkins, Judge Pro Tempore James F. McKay, III.
BELSOME, J. DISSENTS
LOBRANO, J., CONCURS AND ASSIGNS REASONS JENKINS, J., CONCURS IN THE RESULT MCKAY, J., PRO TEMPORE, CONCURS IN RESULT
Terri F. Love, Chief Judge
Cajun Conti LLC, Cajun Cuisine I LLC, and Cajun Cuisine LLC d/b/a Oceana Grill (hereinafter collectively "Oceana") filed a petition for declaratory judgment regarding an all-risks insurance policy they purchased from Certain Underwriters at Lloyd's, London (Lloyd's). In their petition, the appellants sought a declaration that the insurance policy provided coverage for any loss or damage caused by direct physical loss of or damage to their insured premises as a result of continuous contamination by COVID-19. Lloyd's argued that contamination due to COVID-19 did not constitute "direct physical loss or damage" and filed a motion for summary judgment, which the trial court denied. After a bench trial, the trial court denied Oceana's petition for declaratory judgment. Oceana subsequently appealed this judgment.
Upon review, we conclude that the insurance policy is ambiguous and capable of more than one reasonable interpretation in regards to the coverage of lost business income. Due to the existing ambiguity in the relevant policy
language, the contract should be interpreted in favor of the appellants. Therefore, we reverse the trial court's judgment.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Oceana is the owner and operator of Oceana Grill in the French Quarter of New Orleans. Prior to the onset of the COVID-19 pandemic, Oceana Grill employed 200 staff members and could accommodate up to 500 guests at a time. After the emergence of the COVID-19 pandemic, on March 16, 2020, the mayor of New Orleans prohibited non-emergency public and private social gatherings and limited restaurant operations to take-out and delivery services via an emergency proclamation. As time passed, the mayor issued other proclamations facilitating the return of in-person dining at different occupancy levels. Additionally, the Centers for Disease Control ("CDC") issued guidelines and procedures for restaurants and bars to abate the spread of the contagious virus on their properties.
Oceana closed the Oceana Grill dining rooms on March 16, 2020, in compliance with the mayor's proclamation, and reopened on May 16, 2020, in keeping with updated mayoral guidelines. The guidelines envisioned a phased reopening plan based on the prevalence of COVID-19 in the city. The May reopening of Oceana Grill was undertaken with a 75% diminishment of the property's normal capacity. Capacity increased on June 13, 2020 and on October 3, 2020, but the property still operated at 40%-45% under capacity due to the spread of COVID-19 in the city. To mitigate the spread of COVID-19 particles within its property, Oceana modified seating arrangements, decreased the number
of tables and floor area available for patrons, and implemented measures to sanitize surfaces.
On March 16, 2020, Oceana filed a petition for declaratory judgment seeking a declaration from the district court that a policy issued to it by Lloyd's covered certain losses related to the pandemic. The policy in question is an all-risks commercial insurance policy with a $91,000 premium. The policy covers losses due to "direct physical loss of or damage to" the insured property. Lost business income and extra expenses are covered for losses sustained due to necessary suspensions of the property's operations during the "period of restoration." The "period of restoration" is defined as commencing seventy-two hours after the physical loss or damage occurs and continuing until the date when the property is "repaired, rebuilt, or replaced with reasonable speed and similar quality" or when business is "resumed at a new permanent location."
Oceana's initial petition sought a declaration that the policy contained coverage "for any future civil authority shutdowns of restaurants in the New Orleans area due to physical loss from Coronavirus contamination and that the policy provides business income coverage in the event that the coronavirus has contaminated the insured premises." In subsequent amendments, Oceana sought a declaration that the policy provided coverage for any loss or damage caused by "direct physical loss of or damage to" their insured premises as a result of continuous contamination by COVID-19.
In response, Lloyd's filed a motion for summary judgment arguing that the claims are not covered because contamination due to coronavirus did not constitute "direct physical loss of or damage to" property. Lloyd's contended that the petition lacked any genuine issues of material fact and that it was entitled to summary judgment as matter of law. The trial court denied Lloyd's motion for summary judgment and held a bench trial. Following the trial, the trial court rendered judgment denying Oceana's petition for declaratory judgment. Oceana filed the present appeal.
DISCUSSION
Standard of Review
Trial courts possess great discretion in considering petitions for declaratory relief. Deep South Center for Envtl. Justice v. Council of City of New Orleans, 19-0774, p. 17 (La.App. 4 Cir. 2/12/20), 292 So.3d 973, 984 (citing Delta Admin. Servs., L.L.C. v. Limousine Livery, Ltd., 15-0110, p. 6 (La.App. 4 Cir. 6/17/15), 216 So.3d 906, 910). Appellate courts review these decisions under an abuse of discretion standard. Id. The Louisiana Code of Civil Procedure Article 1872 authorizes the use of declaratory judgment proceedings in construing contracts.
Legal questions of contractual interpretation are subject to de novo review by appellate courts. Armstrong Airport Concessions v. K-Squared Restaurant, LLC, 15-0375, p. 9 (La.App. 4 Cir. 10/28/15), 178 So.3d 1094, 1101 (citing Subervielle v. State Farm Mut. Auto. Ins. Co., 08-0491, p. 2 (La.App. 4 Cir. 1/7/09), 32 So.3d 811, 812). "Appellate courts apply the 'manifest error' or
'clearly wrong' standard when reviewing a trial court's findings of fact." Greenblatt v. Sewerage & Water Board of New Orleans, 19-0694, p. 3, (La.App. 4 Cir. 12/20/19), 287 So.3d 763, 766 (citing Rosell v. ESCO, 549 So.2d 840, 844 (La. 1989) (citations omitted)).
"Thus, applying these precepts to the case sub judice, this Court must determine whether the district court abused its discretion in granting the declaratory judgment and whether the district court's review and analysis of the contract was legally correct." Brady v. Pirner, 18-0556, p. 11 (La.App. 4 Cir. 12/5/18), 261 So.3d 867, 874-75.
Insurance policies should be interpreted under ordinary rules of contract interpretation. Sumner v. Mathes, 10-0438, p. 5 (La.App. 4 Cir. 11/24/10), 52 So.3d 931, 934 (citing Peterson v. Schimek, 98-1712, pp. 4-5 (La. 3/2/99), 729 So.2d 1024, 1028-29). The rules of contractual interpretation are laid out in the Louisiana Civil Code. Pursuant to La. C.C. art 2047, the "words of a contract are given their generally prevailing meaning", while "[w]ords of art and technical terms must be given their technical meaning when the contract involves a technical matter." The words used in insurance policies are to be interpreted "in their plain, ordinary and popular sense." Central Louisiana Elec. Co., Inc. v. Westinghouse Elec. Corp., 579 So.2d 981, 986 (La. 1991) (citing Muse v. Metropolitan Life Ins. Co., 193 La. 605, 192 So. 72 (La. 1939)).
"Words susceptible of different meanings must be interpreted as having the meaning that best conforms to the object of the contract." La. C.C. art 2048. "A
doubtful provision must be interpreted in light of the nature of the contract, equity, usages, the conduct of the parties before and after the formation of the contract, and of other contracts of a like nature between the same parties." La. C.C. art. 2053.
If a contractual provision is susceptible of different meanings, it "must be interpreted with a meaning that renders it effective and not with one that renders it ineffective."...
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