Commodore, Inc. v. Certain Underwriters At Lloyd's London

• Decision Date: 11 May 2022
• Docket Number: 3D21-0671
• Citation: 342 So.3d 697
• Parties: COMMODORE, INC. d/b/a GreenStreet Café, Inc., Appellant, v. CERTAIN UNDERWRITERS AT LLOYD'S LONDON, etc., et al., Appellees.
• Court: Florida District Court of Appeals

342 So.3d 697

COMMODORE, INC. d/b/a GreenStreet Café, Inc., Appellant,

v.CERTAIN UNDERWRITERS AT LLOYD'S LONDON, etc., et al., Appellees.

No. 3D21-0671

District Court of Appeal of Florida, Third District.

Opinion filed May 11, 2022

Reed Smith LLP and R. Hugh Lumpkin and Christopher T. Kuleba, for appellant.

White & Case LLP and Raoul G. Cantero and Zachary B. Dickens, for appellees.

Angelo I. Amador (Washington, DC); Jenner & Block LLP and Gabriel K. Gillett (Chicago, IL); Samantha H. Padgett (Tallahassee), for Restaurant Law Center and Florida Restaurant and Lodging Association, as amici curiae.

Robinson & Cole LLP and Eugene P. Murphy, for American Property Casualty Insurance Association and National Association of Mutual Insurance Companies, as amici curiae.

Before LOGUE, HENDON and LOBREE, JJ.

LOBREE, J.

Commodore, Inc. d/b/a GreenStreet Café, Inc. ("GreenStreet"), a restaurant and bar located in the Coconut Grove neighborhood of Miami, filed a claim with its commercial property insurer, Certain Underwriters at Lloyd's, London ("Lloyd's"), for business income losses it suffered when it suspended its operations during the COVID-19 pandemic. While Lloyd's was investigating the claim, GreenStreet sought a declaratory judgment that the losses were covered under its insurance policy with Lloyd's. The trial court dismissed GreenStreet's petition for declaratory relief with prejudice, concluding that the policy at issue, which provided coverage for loss of business income due to the suspension of operations "caused by direct physical loss of or damage to property," did not provide coverage for GreenStreet's losses because " ‘direct physical loss ...’ requires some tangible alteration to insured property." GreenStreet appeals from the final judgment of dismissal of its petition for declaratory relief. Because the trial court correctly determined that the economic losses allegedly suffered by GreenStreet are not covered under the policy, we affirm.

Factual and Procedural Background

Lloyd's issued an all-risk commercial property policy (the "Policy") to GreenStreet, effective from February 15, 2020, to February 15, 2021. The Policy provides commercial property insurance "for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss." Relevant here, the Policy includes a Business Income (and Extra Expense) Coverage Form, which reads, in part, as follows:

A. Coverage

1. Business Income

* * *

We will pay for the actual loss of Business income you sustain due to the necessary "suspension" of your "operations" during the "period of restoration". The "suspension" must be caused by direct physical loss of or damage to property at premises which are described in the Declarations and for which a Business Income Limit Of Insurance is shown in the Declarations. The loss or damage must be caused by or result from a Covered Cause of Loss....

* * *

2. Extra Expense

* * *

b. Extra Expense means necessary expenses you incur during the "period of restoration" that you would not have incurred if there had been no direct physical loss or damage to property caused by or resulting from a Covered Cause of Loss.

(emphasis added). The "period of restoration" is a defined term in the Business Income (and Extra Expense) Coverage Form, and provides in relevant part, as follows:

F. Definitions

* * *

3. "Period of restoration" means the period of time that:

a. Begins 72 hours after the time of direct physical loss or damage caused by or resulting from any Covered Cause of Loss at the described premises; and

b. Ends on the earlier of:

(1) The date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality; or

(2) The date when business is resumed at a new permanent location.

The policy does not contain a virus exclusion.

As was common throughout the country during the COVID-19 virus pandemic, on March 15, 2020, the City of Miami issued a local emergency measure stating that no business was permitted to operate at excess of 50% of its authorized total occupancy load and limiting the hours of operations of non-essential businesses. This emergency measure was followed shortly thereafter by Miami-Dade County emergency order 03-20, which ordered restaurants with seating for more than eight people to close on-premises service of customers and the City of Miami's second amendment to local emergency measures, which prohibited restaurants from serving food for consumption in dining areas in premises. As a result of these orders, GreenStreet suspended its operations. Notably, under the orders, restaurants were still permitted to operate for delivery, pick-up, or take-out services, and delivery personnel, employees, contractors, and janitorial personnel were allowed access to the establishments.¹

GreenStreet promptly submitted a claim to Lloyd's for its losses. After Lloyd's neither issued a coverage position nor paid the claim, GreenStreet filed a petition for declaratory relief and damages seeking a declaratory judgment that the economic losses it suffered due to the suspension of its operations were covered under the Policy. GreenStreet alleged that the emergency orders issued to minimize the spread of COVID-19 "effectively limited on-premises dining and operations, resulting in a suspension of necessary operations and an immediate loss of Business Income and Extra Expense." Although the Policy did not define the phrase "physical loss of or damage to property," GreenStreet claimed that the phrase is reasonably interpreted to include a case where the insured commercial property is unusable for its intended income-producing use. In addition to loss of business income, GreenStreet also alleged that it incurred extra expense during the suspension of its business in the form of cleaning and disinfecting costs.

Lloyd's moved to dismiss the petition. After holding a hearing, the trial court dismissed GreenStreet's petition with prejudice and entered final judgment in favor of Lloyd's,² reasoning that "Florida precedent strongly suggests that ‘direct physical loss of or damage to property’ requires some tangible alteration to insured property, something Plaintiff has not—and cannot—allege." GreenStreet's appeal followed.

Standard of Review

"We review de novo an order dismissing a declaratory judgment count for failure to state a cause of action." Express Damage Restoration, LLC, 314 So. 3d at 534 ; accord Yacht Club by Luxcom, LLC v. Village of Palmetto Bay, 306 So. 3d 268, 271 n.4 (Fla. 3d DCA 2020).

Analysis

"Under Florida law, an insurance policy is treated like a contract, and therefore ordinary contract principles govern the interpretation and construction of such policy." Allstate Fire & Cas. Ins. Co. v. Hradecky, 208 So. 3d 184, 186 (Fla. 3d DCA 2016). On that basis, "we must follow the guiding principle that [the Florida Supreme] Court has consistently applied that insurance contracts must be construed in accordance with the plain language of the policy." Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 165 (Fla. 2003) ; accord State Farm Mut. Auto. Ins. Co. v. Menendez, 70 So. 3d 566, 569 (Fla. 2011) ("In interpreting an insurance contract, we are bound by the plain meaning of the contract's text."); Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000) ("Florida law provides that insurance contracts are construed in accordance with the plain language of the policies as bargained for by the parties."). Thus, in the absence of "a genuine inconsistency, uncertainty, or ambiguity in meaning [that] remains after resort to the ordinary rules of construction," courts are not free to "rewrite contracts, add meaning that is not present, or otherwise reach results contrary to the intentions of the parties." Excelsior Ins. Co. v. Pomona Park Bar & Package Store, 369 So. 2d 938, 942 (Fla. 1979).

"[S]imply because a provision is complex and requires analysis for application, it is not automatically rendered ambiguous." Swire Pac. Holdings, Inc., 845 So. 2d at 165 ; accord Menendez, 70 So. 3d at 570 ; Grover Com. Enters. v. Aspen Ins. UK, Ltd., 202 So. 3d 877, 880 (Fla. 3d DCA 2016). To that end, "[t]he failure to define a term involving coverage does not necessarily render the term ambiguous." Barcelona Hotel, LLC v. Nova Cas. Co., 57 So. 3d 228, 230 (Fla. 3d DCA 2011) ; accord Swire Pac. Holdings, Inc., 845 So. 2d at 166. When a term or provision is undefined in the policy, its plain, everyday usage is applied. Heritage Prop. & Cas. Ins. Co. v. Condo. Ass'n of Gateway House Apts. Inc., ––– So. 3d ––––, 46 Fla. L. Weekly D1867, D1868, 2021 WL 3640520 (Fla. 3d DCA Aug. 18, 2021) (stating "well-established principle that ‘[w]hen a policy provision remains undefined, common everyday usage determines its meaning’ " (quoting Sec. Ins. Co. of Hartford v. Com. Credit Equip. Corp., 399 So. 2d 31, 34 (Fla. 3d DCA 1981) )); see also State Farm Fire & Cas. Co. v. Castillo, 829 So. 2d 242, 244 (Fla. 3d DCA 2002) ("[T]erms utilized in an insurance policy should be given their plain and unambiguous meaning as understood by the ‘man-on-the-street.’ ").

It is firmly established that "[i]n interpreting ‘insurance policies, courts should read each policy as a whole, endeavoring to give every provision its full meaning and operative effect.’ " City of Florida City v. Pub. Risk Mgmt. of Fla., 307 So. 3d 135, 138 (Fla. 3d DCA 2020) (quoting Anderson, 756 So. 2d at 34 ); see also State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So. 2d 1072, 1075 (Fla. 1998) ("[P]rinciples governing the construction of insurance contracts dictate that ‘[w]hen construing an insurance policy to determine coverage the pertinent provisions should be read in pari materia .’ " (quoting Nationwide Mut. Fire Ins. Co. v. Olah, 662 So. 2d 980, 982 (Fla. 2d DCA 1995) )). Moreover, "[a]ll the various provisions of a contract must be so construed, if it...