SA Palm Beach, LLC v. Certain Underwriters at Lloyd's London

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 1 of 34

[PUBLISH]

In the

United States Court of Appeals

For the Eleventh Circuit

____________________

No. 20-14812

____________________

SA PALM BEACH, LLC,

on behalf of itself and all others similarly situated,

Plaintiff-Appellant,

versus

CERTAIN UNDERWRITERS AT LLOYD’S LONDON,

UNDERWRITERS AT LLOYDSLONDON KNOWN AS

SYNDICATES CNP 4444, AFB 2623, AFB 623,

BRT, 2987, BRT 2988, NEO 2468, SAM 727,

AXS1686, XIS H4202, QBE 1886, DUW 1729,

WBC 5886, CHN 2015, HDU 382, MSP 318, AGR,

Defendants-Appellees.

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2 Opinion of the Court 20-14812

____________________

Appeal from the United States District Court

for the Southern District of Florida

D.C. Docket No. 9:20-cv-80677-UU

____________________

____________________

No. 21-10190

____________________

EMERALD COAST RESTAURANTS, INC.,

Plaintiff-Appellant,

versus

ASPEN SPECIALTY INSURANCE COMPANY,

Defendant-Appellee.

____________________

Appeal from the United States District Court

for the Northern District of Florida

D.C. Docket No. 3:20-cv-05898-TKW-HTC

____________________

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20-14812 Opinion of the Court 3

____________________

No. 21-10490

____________________

R.T.G. FURNITURE CORP.,

Plaintiff-Appellant,

versus

ASPEN SPECIALTY INSURANCE COMPANY,

CRUM & FORSTER SPECIALTY INSURANCE COMPANY,

EVANSTON INSURANCE COMPANY,

EVEREST INDEMNITY INSURANCE COMPANY,

HALLMARK SPECIALTY INSURANCE COMPANY, et al.,

Defendants-Appellees.

____________________

Appeal from the United States District Court

for the Middle District of Florida

D.C. Docket No. 8:20-cv-02323-JSM-AEP

____________________

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4 Opinion of the Court 20-14812

____________________

No. 21-10672

____________________

ROCOCO STEAK, LLC,

d.b.a. Rococo Steak,

Plaintiff-Appellant,

versus

ASPEN SPECIALTY INSURANCE COMPANY,

Defendant-Appellee.

____________________

Appeal from the United States District Court

for the Middle District of Florida

D.C. Docket No. 8:20-cv-02481-VMC-SPF

____________________

Before WILLIAM PRYOR, Chief Judge, and JORDAN and ANDERSON,

Circuit Judges.

JORDAN, Circuit Judge:

These cases—which we’ve consolidated for decision follow-

ing oral argument—present a common question of insurance

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20-14812 Opinion of the Court 5

coverage prompted by the COVID-19 pandemic. The question is

whether, under Florida law, all-risk commercial insurance policies

providing coverage for “direct physical loss of or damage to” prop-

erty or “direct physical loss or damage to” property insure against

losses and expenses incurred by businesses as a result of COVID-

19.

The Florida Supreme Court has not addressed the matter.

Nor have the Florida intermediate appellate courts. So our analytic

endeavor, though informed, is necessarily predictive. Sitting, “in

effect, . . . as a state court[,]” Comm’r v. Estate of Bosch, 387 U.S.

456, 465 (1967), we follow the majority view and hold that under

Florida law there is no coverage because COVID-19 did not cause

a tangible alteration of the insured properties.

I

In March of 2020, in response to the public health crisis

caused by the spread of COVID-19, Florida’s Governor issued a se-

ries of executive orders restricting on-premises operations of non-

essential businesses, including restaurants, bars, and retail stores.

Several counties in Florida issued their own emergency stay-at-

home or shelter-in-place orders, echoing the restrictions imple-

mented by the Governor. These orders immediately impacted

businesses throughout the state; many were forced to close their

doors, and some never reopened.

All over the country, affected businesses submitted claims

under their all-risk insurance policies with the hope of recovering

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6 Opinion of the Court 20-14812

some of the losses and expenses caused by the COVID-19 pan-

demic. When the majority of these claims were rejected, a wave

of lawsuits ensued in the state and federal courts. The insureds

here—SA Palm Beach, LLC, Emerald Coast Restaurants, Inc., Ro-

coco Steak, LLC, and R.T.G. Furniture, Corporation—are among

the Florida businesses denied coverage.

Each of the insureds seeks coverage under an all-risk insur-

ance policy that provides compensation for losses and expenses in-

curred in connection with “direct physical loss of or damage to” the

covered property or “direct physical loss or damage to” the covered

property. Before getting to the merits of the appeals, we set out

the particulars of the underlying actions and the coverage provi-

sions at issue on appeal. 1

A

SA Palm Beach operated a fine-dining restaurant in Palm

Beach, Florida. See SA Palm Beach Amended Complaint at ¶ 16.

Like many other similar establishments, it was subject to state and

local closure orders. See id. at ¶ 34.

Certain Underwriters at Lloyd’s, London, issued a commer-

cial property insurance policy to SA Palm Beach. The policy pro-

vides in relevant part that Lloyd’s will “pay for direct physical loss

1 We do not summarize or discuss policy provisions not raised by the insureds

on appeal. And because we hold that the Florida Supreme Court would deny

coverage under the allegations in the complaints before us, we do not reach

the exclusions cited by the insurers.

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20-14812 Opinion of the Court 7

of or damage to Covered Property . . . caused by or resulting from

any Covered Cause of Loss.” See SA Palm Beach Policy, D.E. 24-1,

at 46 (emphasis added). As relevant here, the policy defines “Cov-

ered Causes of Loss” as “direct physical loss unless the loss is ex-

cluded or limited in this policy,” id. at 36 (emphasis added), but it

does not define the terms “direct,” “physical,” “loss,” or “damage.”

In its complaint, SA Palm Beach asserted that its policy pro-

vides “business interruption coverage” which “would indemnify

[it] for lost income and profits in the event that its business was shut

down.” See SA Palm Beach Amended Complaint at ¶ 37. Specifi-

cally, SA Palm Beach invoked coverage under the Business Income

and Extra Expense provisions of the policy. The relevant language

of those provisions is as follows.

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 [the insured] premises[.]”

Extra Expense: “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.”

SA Palm Beach Policy at 60 (emphases added).

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8 Opinion of the Court 20-14812

The policy defines “suspension” as “[t]he slowdown or ces-

sation of your business activities” or “[t]hat a part or all of the [in-

sured] premises is rendered untenantable[.]” See id. at 70. The

“period of restoration” is defined as the period of time that:

a. Begins:

(1) 72 hours after the time of direct physical loss or

damage for Business Income coverage; or

(2) Immediately after the time of direct physical loss

or damage for Extra Expense coverage;

caused by or resulting from any Covered Cause of

Loss at the [insured] premises; and

b. Ends on the earlier of:

(1) The date when the property at the [insured] prem-

ises should be repaired, rebuilt or replaced with rea-

sonable speed and similar quality; or

(2) The date when business is resumed at a new per-

manent location.

Id. at 68 (emphases added).

SA Palm Beach alleged that—in abiding by the closure or-

ders—it suffered “a direct physical loss of [its] property because [it

was] unable to use the[ ] property for its intended purpose.”

SA Palm Beach Amended Complaint at ¶ 44. It further claimed

that it suffered direct physical loss “in the form of diminished value,

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20-14812 Opinion of the Court 9

lost business income, and forced physical alterations during a pe-

riod of restoration.” Id. at ¶ 45. Notably, SA Palm Beach main-

tained that the closure orders were “the sole proximate cause” of

its losses and disclaimed any argument that “the virus itself caused

damage to [its] . . . property.” Id. at ¶ 54.

Lloyd’s moved for dismissal under Rule 12(b)(6), asserting

that SA Palm Beach had failed to sufficiently allege direct physical

loss of or damage to the insured property, a necessary predicate for

coverage under the Business Income and Extra Expenses provi-

sions of the policy. Additionally, Lloyd’s argued that the words

“repair[ ], rebuil[d], and replace[ ]” in the definition of “period of

restoration” mean that “loss” under the policy necessarily implies

physical damage.

SA Palm Beach responded that it had plausibly alleged direct

physical loss because the closure orders “rendered the property

non-functional or only partially functional as it was no longer suit-

able for its intended purpose of ‘physical’ sit-down, fine dining.” It

also asserted that the policy’s use of the disjunctive “or”—rather

than a conjunctive connector—in the phrase “direct physical loss

of or damage to” demonstrated that loss must mean something dif-

ferent than damage.

The district court granted the motion to dismiss. Relying in

part on our unpublished decision in Mama Jo’s Inc. v. Sparta Insur-

ance Co., 823 F. App’x 868, 879 (11th Cir. 2020) (holding that under

Florida law “an item or structure that merely needs to be cleaned

has not suffered a ‘loss’ which is both ‘direct’ and ‘physical’”), the

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10 Opinion of the Court 20-14812

court concluded that SA Palm Beach had failed to allege that its

property suffered a loss that was direct and physical, as required to

trigger coverage under the Business Income and Extra Expense

provisions. The court also agreed with Lloyd’s that the language

used to define the “period of restoration” indicated that loss of

functionality and ensuing economic harm are not the kind of actual

damage contemplated in the relevant provisions. The court there-

fore ruled that SA Palm Beach’s allegations were insufficient to es-

tablish coverage under the policy.

B

Emerald Coast operated a sports bar and restaurant in Des-

tin, Florida. See Emerald Coast Amended Complaint at ¶ 15. Like

SA Palm Beach, it was subject to state and local closure orders is-

sued during the COVID-19 pandemic. See id. at ¶¶ 65–72.

Aspen Specialty Insurance issued a commercial property in-

surance policy to Emerald Coast, and this policy includes Business

Income, Extra Expense, and Extended Business Income provisions.

The Business Income and Extra Expense provisions in Emerald

Coast’s policy are identical to those in SA Palm Beach’s policy, so

we do not repeat their language here. In summary, however, these

two provisions provide coverage for the necessary suspension of

operations during the “period of restoration” if the suspension is

caused by “direct physical loss of or damage to” property at the in-

sured premises. See Emerald Coast Policy, D.E. 7-1, at 60 (empha-

sis added). The policy also contains an Extended Business Income

provision, which reads as follows:

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20-14812 Opinion of the Court 11

Extended Business Income: “If the necessary ‘suspension’ of

your ‘operations’ produces a Business Income loss payable

under this policy, we will pay for the actual loss of Business

Income you incur during the period that: (a) Begins on the

date property . . . is actually repaired, rebuilt or replaced and

‘operations’ are resumed; and (b) Ends on the earlier of: (i)

The date you could restore your ‘operations’, with reasona-

ble speed, to the level which would generate the business

income amount that would have existed if no direct physical

loss or damage had occurred; or (ii) 60 consecutive days after

the date determined in . . . (a) above. . . . Loss of Business

Income must be caused by direct physical loss or damage at

the [insured] premises caused by or resulting from any Cov-

ered Cause of Loss.”

Id. at 62 (emphases added). The policy does not define the phrases

“direct physical loss of or damage to” property or “direct physical

loss or damage.”

Finally, the policy provides additional coverage—outlined in

a special form—for losses associated with spoilage. The Spoilage

provision insures against “Covered Causes of Loss” of “perishable

stock at the [insured] premises . . . that is in [the insured’s] care,

custody or control.” The “Covered Causes of Loss” include:

(a) Breakdown or Contamination by: (1) Change in

temperature or humidity resulting from mechani-

cal breakdown or failure of refrigerating, cooling

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12 Opinion of the Court 20-14812

or humidity control apparatus or equipment . . . ;

and (2) Contamination by the refrigerant.

(b) Power Outage, meaning a change in temperature

or humidity resulting from complete or partial in-

terruption of electrical power . . . due to condi-

tions beyond [the insured’s] control.”

Id. at 9–10.

Emerald Coast alleged that the “presence of any COVID-19

particles on physical property impair[ed] its value, usefulness

and/or normal function.” Emerald Coast Amended Complaint at

¶ 56. It tied the alleged “direct physical loss” to the closure orders,

noting that they “prohibited access to and use of ” the property “in

response to dangerous physical conditions” caused by COVID-19.

See id. at ¶ 82.

Aspen filed a Rule 12(b)(6) motion to dismiss, arguing that

Emerald Coast had failed to allege that it sustained losses as a result

of direct physical loss or damage to the insured property. Emerald

Coast, said Aspen, had only alleged lost income due to the COVID-

19 pandemic and the resulting government closure orders, which

temporarily prevented it from using its property as it was intended.

According to Aspen, the policy provisions require more than tem-

porary loss of use; the phrase “direct physical loss of or damage to”

requires “some discernible tangible impact to the covered prop-

erty.”

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In response, Emerald Coast asserted that nothing in the pol-

icy requires physical “alteration” of the property as a prerequisite

for coverage. Like SA Palm Beach, Emerald Coast argued that the

policy’s use of the disjunctive “or” in the coverage provision indi-

cates that “physical loss” is something separate and apart from

“physical damage”—either of which would satisfy the policy.

The district court agreed with Aspen and granted its motion

to dismiss. It held that the triggering language in the Business In-

come, Extra Expense, and Extended Business Income provisions

“clearly and unambiguously require[d] actual physical damage to

the property.” 2

C

Rococo Steak, LLC, operated a steakhouse in St. Petersburg,

Florida. See Rococo Complaint at ¶ 1. It too was subject to state

and local closure orders issued as a result of the COVID-19 pan-

demic. See id. at ¶¶ 40–42. 3

Aspen Specialty Insurance issued a commercial property in-

surance policy to Rococo. The policy contains Business Income

and Extra Expense provisions, which are identical to those in the

2 As we discuss in Part IV, the district court did not consider whether Emerald

Coast sufficiently alleged coverage under the Spoilage provision of the policy.

3 Because the complaint was originally filed in state court, some of Rococo’s

filings were combined as an attachment to Aspen’s notice of removal. See

D.E. 1-2 (including both Rococo’s complaint and the insurance policy).

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14 Opinion of the Court 20-14812

policies issued to SA Palm Beach (by Lloyd’s) and to Emerald Coast

(by Aspen), so we don’t repeat their language here. As a reminder,

however, both provisions insure against the necessary suspension

of operations during the “period of restoration” if caused by “direct

physical loss of or damage to” property at the insured premises.

See Rococo Policy, D.E. 1-2, at 90–91 (emphasis added). The Ro-

coco policy does not define the terms “direct,” “physical,” “loss,”

or “damage.”

In its complaint, Rococo alleged that it was “forced to sus-

pend business operations . . . as a result of damage sustained due to

the COVID-19 pandemic.” See Rococo Complaint at ¶ 9 (emphasis

added). Specifically, Rococo claimed that:

The presence of COVID-19 caused direct physical loss

of and/or damage to the covered premises under the

Policy by, among other things, damaging the prop-

erty, denying access to the property, preventing cus-

tomers from physically occupying the property, caus-

ing the property to be physically uninhabitable by

customers, causing its function to be nearly elimi-

nated or destroyed, and/or causing a suspension of

business operations on the premises.

Id. at ¶ 44 (emphases added). Rococo further asserted that

“[r]elated actions of civil authorities also prohibited access to and

occupancy/operation of the Restaurant, as a result of damage sus-

tained due to the COVID-19 pandemic.” Id. at ¶ 9 (emphasis

added). Rococo added that the actions taken by civil authorities

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20-14812 Opinion of the Court 15

“were issued in response to dangerous physical conditions and

damage” and “caused a suspension of business operations” at the

restaurant. Id. at ¶ 45.

Aspen moved to dismiss under Rule 12(b)(6), arguing that

Rococo had failed to allege any losses covered under the policy. It

relied on state court decisions interpreting the relevant trigger lan-

guage. It also pointed to other language in the policy, like the Pe-

riod of Restoration provision, which it argued implied the necessity

of tangible harm for coverage.

In response, Rococo argued that it had sufficiently alleged

“direct physical loss of or damage to” the premises caused by

COVID-19 because, contrary to Aspen’s contention, that phrase

does not require structural alteration of the premises. Rococo also

asserted in the alternative that viruses like COVID-19 “infest prop-

erty and stick to its surfaces” and such infestation does cause the

kind of structural alteration that comes within the purview of the

term “direct physical loss of or damage to” the covered premises.

Finally, Rococo maintained that the impairment of functionality

and habitability of the restaurant demonstrated that the property

had sustained direct physical loss or damage.

The district court granted Aspen’s motion to dismiss. Citing

our decision in Mama Jo’s, 823 F. App’x at 879, it held that Rococo

failed to allege the kind of tangible damage required to provide cov-

erage for “direct physical loss of or damage to” property. The court

likened COVID-19, which was at the heart of Rococo’s claims, to

the dust and debris in Mama Jo’s and quoted that decision for the

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16 Opinion of the Court 20-14812

proposition that “under Florida law, an item or structure that

merely needs to be cleaned has not suffered a ‘loss’ which is both

‘direct’ and ‘physical.’” Id.

D

Rooms-To-Go (“RTG”) is a furniture retailer operating

more than 150 stores in several states. Its principal place of business

is in Seffner, Florida. See RTG Complaint at ¶ 2, 7. RTG, like many

businesses, was subject to state and local closure orders and sus-

tained financial losses during the COVID-19 pandemic. See id. at ¶

42–50.

Given the nature of its operations, RTG secured 14 commer-

cial property insurance policies in the form of an insurance tower,

which spreads the risk across multiple insurers. The insurers in-

cluded Aspen Specialty Insurance, Crum & Forster Specialty Insur-

ance, Evanston Insurance, Everest Indemnity Insurance, Hallmark

Specialty Insurance, Homeland Insurance, Maxum Indemnity, and

Ironshore Specialty Insurance. The relevant terms in each of the

policies RTG obtained are substantively the same.

All of the policies contain Business Interruption, Extra Ex-

pense, Contingent Business Interruption, Civil Authority, In-

gress/Egress, and Loss Adjustment Expenses provisions. See id. at

¶ 68. With the exception of the Loss Adjustment Expenses provi-

sion, all of these provisions refer to the “Perils Insured Against”

clause in the policy to determine whether coverage exists. See RTG

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20-14812 Opinion of the Court 17

Policy, D.E. 1-1, at 16–17, 20–21. The “Perils Insured Against”

clause states:

This policy Insures against all risks of direct physical

loss of or damage to property described herein includ-

ing general average, salvage, and all other charges on

shipments covered hereunder; except as hereafter ex-

cluded.

Id. at 24 (emphasis added).

The Loss Adjustment Expenses provision reads:

This policy is extended to include expenses incurred

by the Insured, or by the Insured's representatives for

preparing and certifying details of a claim resulting

from a loss which would be payable under this policy.

These expenses include fees of professionals engaged

to assist the Insured in determining the cause and

origin of the loss, the amount of loss sustained, and

the amount of loss payable under this policy. This pol-

icy shall not cover the expenses of a public adjuster

and cost of attorneys.

Id. at 31 (emphasis added). RTG does not contend that this provi-

sion—though missing the exact triggering language included in the

other provisions—should be analyzed under a different frame-

work. The common interpretative fight, RTG seems to contend,

is over what constitutes a “direct physical loss of or damage to”

property.

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18 Opinion of the Court 20-14812

Like SA Palm Beach, Emerald Coast, and Rococo, RTG al-

leged that the COVID-19 closure orders prohibited access to its

properties, causing its stores to lose their use and normal function.

See RTG Complaint at ¶¶ 45–50. RTG claimed that its inability to

use or access its properties constituted direct physical loss under

the policy. See id. at ¶ 45.

In addition to alleging loss of use, RTG also asserted that

COVID-19 itself damaged its properties. Though it did not articu-

late a “damage theory” in its complaint, RTG alleged—in contrast

to its assertion that the closure orders constituted a covered peril

under the policies—that the “presence of coronavirus particles”

which were “detectable on various types of surfaces” caused “direct

physical damage” to its properties. See id. at ¶ 30, 33.

Invoking Rule 12(b)(6), RTG’s insurers filed a motion to dis-

miss. They argued that RTG had only asserted legal conclusions

and failed to plead facts that would constitute direct physical loss

or damage under the policies.

RTG responded that the closure orders did in fact cause a

loss of use of the property within the meaning of the coverage pro-

visions. It also noted that it had expressly alleged the presence of

COVID-19 on its properties, which would constitute direct physi-

cal loss of or damage triggering coverage under the policy.

The district court was unpersuaded by RTG’s arguments

and granted the insurers’ motion to dismiss. Adopting much of the

reasoning of Infinity Exhibits, Inc. v. Certain Underwriters at

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20-14812 Opinion of the Court 19

Lloyd’s London Known as Syndicate PEM 4000, 489 F. Supp. 3d

1303 (M.D. Fla. 2020), the court concluded that economic losses

associated with RTG’s shutdown due to COVID-19 closure orders

did not constitute “physical loss” under Florida law. With regard

to RTG’s allegation that the properties were damaged by the virus

itself, the court concluded—based in part on “common sense”—

that “COVID-19 is incapable of causing a tangible injury to prop-

erty” because it is a “virus that harms people, not structures.”

II

In these cases, which are premised on diversity jurisdiction,

we must decide whether the district courts correctly forecast and

applied Florida law in dismissing the insureds’ complaints. Our re-

view is therefore plenary. See Salve Regina Coll. v. Russell, 499

U.S. 225, 231 (1991) (“[A] court of appeals should review de novo a

district court’s determination of state law.”); Ellis v. Cartoon Net-

work, Inc., 803 F.3d 1251, 1255 (11th Cir. 2015) (“We review the

district court’s dismissal of [the] amended complaint under Rule

12(b)(6) de novo[.]”).

“To survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, to state a claim to relief

that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (internal quotation marks omitted). A claim is facially plau-

sible if the plaintiff “pleads factual content that allows the court to

draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Id. The plausibility standard, however, “is

not akin to a ‘probability requirement.’” Id. (citation omitted).

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20 Opinion of the Court 20-14812

III

Under Florida law, an insurance policy should be read “as a

whole, endeavoring to give every provision its full meaning and

operative effect.” U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871,

877 (Fla. 2007) (citation omitted). If the relevant language is plain

and unambiguous, it is interpreted as written. See State Farm Mut.

Auto. Ins. Co. v. Menendez, 70 So. 3d 566, 569–70 (Fla. 2011). But

if there is an ambiguity, it is construed against the insurer and in

favor of coverage. See J.S.U.B., 979 So. 2d at 877.

Language is not ambiguous merely because the policy fails

to define a term, or because the parties disagree about its meaning.

See Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 166

(Fla. 2003). A policy is ambiguous only when “its terms make the

contract susceptible to different reasonable interpretations, one re-

sulting in coverage and one resulting in exclusion.” Gulf Tampa

Drydock Co. v. Great Atl. Ins. Co., 757 F.2d 1172, 1174–75 (11th

Cir. 1985) (applying Florida law).

As the Florida Supreme Court has explained, an “all-risk pol-

icy” does not extend coverage to “every conceivable loss.” Sebo v.

Am. Home Assurance Co., Inc., 208 So. 3d 694, 696–97 (Fla. 2016)

(citation omitted). As a result, “[a]n insured claiming under an all-

risk[ ] policy has the burden of proving that the insured property

suffered a loss while the policy was in effect.” Empire Pro Resto-

ration, Inc. v. Citizens Prop. Ins. Corp., 322 So. 3d 96, 98 (Fla. 4th

DCA 2021) (internal quotation marks and citation omitted). See

generally Andrew B. Downs & Linda M. Bolduan, 4 Law and Prac.

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20-14812 Opinion of the Court 21

of Ins. Coverage Litig. § 52:4 (2021) (explaining that under all-risk

policies “all direct physical losses not excluded are covered”).

A

SA Palm Beach, Emerald Coast, and Rococo seek coverage

under the Business Income and Extra Expense provisions of their

respective policies. Emerald Coast additionally seeks coverage un-

der the Extended Business Income provision of its policy. RTG

seeks coverage under the Business Interruption, Extra Expense,

Contingent Business Interruption, Civil Authority, Ingress/Egress,

and Loss Adjustment Expenses provisions of its policy.

All but one of the provisions referenced above expressly re-

quire (on their own or by reference to other policy provisions) that

there be “direct physical loss of or damage to” property or “direct

physical loss or damage” to property. The one exception is the

Loss Adjustment Expenses provision of RTG’s policy. But because

RTG does not present any distinct arguments about that provision,

we consider it together with the other provisions in its policy.

There are no Florida decisions interpreting an all-risk com-

mercial insurance policy providing coverage for “direct physical

loss of or damage to” property or “direct physical loss or damage

to” property in the context of the COVID-19 pandemic. We have

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22 Opinion of the Court 20-14812

not located any such decisions and the parties have not pointed us

to any.4

We therefore “consider whatever might lend [us] insight, in-

cluding relevant state precedents, analogous decisions, considered

dicta, scholarly works, and any other reliable data tending convinc-

ingly to show how the [Florida Supreme Court] would decide the

issue at hand.” Guideone Elite Ins. Co. v. Old Cutler Presbyterian

Church, Inc., 420 F.3d 1317, 1326 n.5 (11th Cir. 2005) (internal quo-

tation marks and citation omitted). For the reasons which follow,

4 A Westlaw search yielded a number of Florida cases involving insurance

policies with the phrase “physical loss of or damage to.” These cases, how-

ever, are not very helpful because they involved undisputed tangible harm to

the property or dealt with legal issues not present here. See King’s Ridge

Cmty. Ass’n, Inc. v. Sagamore Ins. Co., 98 So. 3d 74, 75–79 (Fla. 5th DCA 2012)

(additional coverage for collapse based on deflection of trusses and drop ceil-

ing at clubhouse); XL Specialty Ins. Co. v. Aircraft Holdings, LLC, 929 So. 2d

578, 579 (Fla. 1st DCA 2006) (attorney-client privilege issue); Nat’l Union Fire

Ins. Co. of Pittsburgh v. Texpak Group N.V., 906 So. 2d 300, 301–02 (Fla. 3d

DCA 2005) (exception to exclusion); Gen. Star Indem. Co. v. West Fla. Village

Inn, Inc., 874 So. 2d 26, 28–29 (Fla. 2d DCA 2004) (calculation of deductibles);

Edward J. Gerrits, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 634 So. 2d

712, 713 (Fla. 3d DCA 1994) (indemnification claim by insured);West Am. Ins.

Co. v. Chateau La Mer II Homeowners Ass’n, Inc., 622 So. 2d 1105, 1106–08

(Fla. 1st DCA 1993) (collapsed balconies in condominium building); C.A.B. St.

George v. Harris, 440 So. 2d 62, 63–64 (Fla. 1st DCA 1983) (damage calculation

for stolen plane that was returned); Harris v. U.S. Fid. & Guar. Co., 409 So. 2d

1210, 1211 (Fla 1st DCA 1982) (explosion of boat engine).

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 23 of 34

20-14812 Opinion of the Court 23

we believe that the Florida Supreme Court would hold that, under

the allegations in the complaints before us, there is no coverage.

B

Although there are many different approaches by which fed-

eral courts predict state law, see Michael C. Dorf, Prediction and

the Rule of Law, 42 UCLA L. Rev. 651, 696–715 (1995), some of our

cases employ a presumption to forecast how state courts would de-

cide an unsettled issue. We “presume that [state] courts would

adopt the majority view on a legal issue in the absence of indica-

tions to the contrary.” Bobo v. Tenn. Valley Auth., 855 F.3d 1294,

1304 (11th Cir. 2017) (using this presumption to determine Ala-

bama law). See also Wammock v. Celotex Corp., 835 F.2d 818, 820

(11th Cir. 1988) (using this presumption to determine Georgia law);

Hensley v. E.R. Carpenter Co., 633 F.2d 1106, 1109 (5th Cir. Unit

A 1980) (using this presumption to determine Mississippi law). 5

The majority view, as set out in a leading insurance treatise,

is that a phrase like “physical loss of or damage to” requires a tan-

gible alteration to the covered property:

5 The case relied upon by Hensley did not use the term “presumption,” but

merely noted that our view of Mississippi law was “in agreement with the

general body of UCC law[.]” United States v. Southeast Miss. Livestock

Famers Ass’n, 619 F.2d 435, 439 (5th Cir. 1980). Nevertheless, what started

out as general agreement or consistency with the majority view has now be-

come a presumption that state courts will align themselves with the majority

position, absent contrary indications.

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 24 of 34

24 Opinion of the Court 20-14812

The requirement that the loss be “physical,” given the

ordinary definition of that term, is widely held to ex-

clude alleged losses that are intangible or incorporeal

and, thereby, to preclude any claim against the prop-

erty insurer when the insured merely suffers a detri-

mental economic impact unaccompanied by a dis-

tinct, demonstrable, physical alteration of the prop-

erty.

Steven Plitt et al., 10A Couch on Insurance § 148:46 (3rd ed. & Dec.

2021 update) (footnotes omitted).

As far as we can tell, every federal and state appellate court

that has decided the meaning of “physical loss of or damage to”

property (or similar language) in the context of the COVID-19 pan-

demic has come to the same conclusion and held that some tangi-

ble alteration of the property is required. There is therefore no

coverage for loss of use based on intangible and incorporeal harm

to the property due to COVID-19 and the closure orders that were

issued by state and local authorities even though the property was

rendered temporarily unsuitable for its intended use. See Uncork

& Create LLC v. Cincinnati Ins. Co., 27 F.4th 926, 930–34 (4th Cir.

2022) (West Virginia law); Q Clothier New Orleans, LLC v. Twin

City Fire Ins. Co., 29 F.4th 252, 257–61 (5th Cir. 2022) (Louisiana

law); Terry Black’s Barbecue, LLC v. State Auto. Mut. Ins. Co., 22

F.4th 450, 455–59 (5th Cir. 2022) (Texas law); Brown Jug, Inc. v.

Cincinnati Ins. Co., 27 F.4th 398, 402–05 (6th Cir. 2022) (Michigan

law); Estes v. Cincinnati Ins. Co., 23 F.4th 695, 699–702 (6th Cir.

2022) (Kentucky law); East Coast Ent. of Durham, LLC v. Houston

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 25 of 34

20-14812 Opinion of the Court 25

Cas. Co., ___ F.4th ___, 2022 WL 1086377, at *2–*3 (7th Cir. Apr.

12, 2022) (Illinois law); Monday Rest. LLC v. Intrepid Ins. Co., ___

F.4th ___, 2022 WL 1194000, at *1–*2 (8th Cir. Apr. 26, 2022) (Mis-

souri law); 10012 Holdings, Inc. v. Sentinel Ins. Co., Ltd., 21 F.4th

216, 220–23 (2d Cir. 2021) (New York law); Santo’s Italian Café LLC

v. Acuity Ins. Co., 15 F.4th 398, 400–06 (6th Cir. 2021) (Ohio law);

Sandy Point Dental, P.C. v. Cincinnati Ins. Co., 20 F.4th 327, 334–

37 (7th Cir. 2021) (Illinois law); Crescent Plaza Hotel Owner, L.P.

v. Zurich Am. Ins. Co., 20 F.4th 303, 308 (7th Cir. 2021) (Illinois

law); Oral Surgeons, P.C. v. Cincinnati Ins. Co., 2 F.4th 1141, 1144–

45 (8th Cir. 2021) (Iowa law); Mudpie, Inc. v. Travelers Cas. Ins.

Co. of Am., 15 F.4th 885, 891–93 (9th Cir. 2021) (California law);

Goodwill Indus. v. Phil. Indem. Ins. Co., 21 F.4th 704, 710–12 (10th

Cir. 2021) (Oklahoma law); Gilreath Fam. & Cosmetic Dentistry,

Inc. v. Cincinnati Ins. Co., 2021 WL 3870697, at *2 (11th Cir. Aug.

31, 2021) (Georgia law); Wakonda Club v. Selective Ins. Co. of

Am., ___ N.W.2d ___, 2022 WL 1194012, at *3–*7 (Iowa Apr. 22,

2022) (Iowa law); Verveine Corp. v. Strathmore Ins. Co., ___

N.E.3d ___, 2022 WL 1180061, at *5–*7 (Mass. Apr. 21, 2022) (Mas-

sachusetts law); Ind. Repertory Theatre v. Cincinnati Cas. Co., 180

N.E.3d 403, 408–11 (Ind. Ct. App. 2022) (Indiana law); Sweet Berry

Café, Inc. v. Society Ins., Inc., ___ N.E.3d ___, 2022 WL 780847, at

*6–*11 (Ill. App. Ct. Mar. 15, 2022) (Illinois law); Gavrilides Mgmt.

Co., LLC v. Mich. Ins. Co., ___ N.W.2d ___, 2022 WL 301555, at

*4–*6 (Mich. Ct. App. Feb. 1, 2022) (Michigan law); Sanzo Ent.,

LLC v. Erie Ins. Exch., 182 N.E.3d 393, 401–06 (Ohio Ct. App. 2021)

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 26 of 34

26 Opinion of the Court 20-14812

(Ohio law); Inns-by-the-Sea v. Cal. Mut. Ins. Co., 71 Cal. App. 5th

688, 698–712 (4th Dist., Div. 1 2021) (California law). 6

There are no indications suggesting that the Florida Su-

preme Court would reject the majority view. We therefore pre-

sume that Florida would adopt the majority position. See Bobo,

855 F.3d at 1304.

C

As an independent matter, we conclude that the majority

position is legally sound under Florida law. Indeed, the two Florida

cases that shed some light on the phrase “physical loss of or damage

to” property—Homeowners Choice Prop. & Cas. v. Maspons, 211

6 The majority view is not unanimous, as a number of district courts and state

trial courts have held that tangible injury to covered property is not necessary

under policy provisions identical or similar to the ones at issue here. See, e.g.,

In re Soc’y Ins. Co. COVID-19 Bus. Interruption Prot. Ins. Litig., 521 F. Supp.

3d 729, 738–43 (N.D. Ill. 2021) (Illinois law); Elegant Massage, LLC v. State

Farm Mut. Auto. Ins. Co., 506 F. Supp. 3d 360, 372–376 (E.D. Va. 2020) (Vir-

ginia law); Urogynecology Specialist of Fla. LLC v. Sentinel Ins. Co., 489

F.Supp. 3d 1297, 1301–03 (M.D. Fla. 2020) (Florida law); Studio 417, Inc. v.

Cincinnati Ins. Co., 478 F. Supp. 3d 794, 800–03 (W.D. Mo. 2020) (Missouri

law); Cherokee Nation v. Lexington Ins. Co., 2021 WL 506271, at *3–*6 (Okla.

Dist. Ct. Jan. 28, 2021) (Oklahoma law). Accord Mitchell F. Dolin et al., Bus.

& Com. Litig. Fed. Cts. § 107:37 (5th ed. & Dec. 2021 update) (“Various courts

have found that a structural change in covered property is not required. [ . . . ]

Some courts have suggested that the change in property must be ‘permanent’

or ‘structural’ to qualify as ‘damage.’ That approach seems problematic as it

would remove coverage for commonly covered non-structural damage, like

graffiti or vandalism.”) (footnotes omitted).

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 27 of 34

20-14812 Opinion of the Court 27

So. 3d 1067 (Fla. 3d DCA 2017), and Azalea, Ltd. v. Am. States Ins.

Co., 656 So. 2d 600 (Fla. 1st DCA 1995)—are consistent with the

majority position (or at the very least not inconsistent with that

position).

In Maspons, the insurer appealed a trial court order holding

it responsible for the cost of tearing out and replacing a concrete

slab to make a repair on a broken drain pipe in the insureds’ home.

See 211 So. 3d at 1068. The policy insured against “risk of direct

loss to property . . . only if that loss is a physical loss to property.”

Id. at 1069 (emphasis omitted). The Third District, relying on

Black’s Law Dictionary, explained that “[a] ‘loss’ is the diminution

of value of something, and in this case, the ‘something’ is the in-

sureds’ . . . property. ‘Direct’ and ‘physical’ modify loss and impose

the requirement that the damage be actual.” Id. at 1069 (citation

omitted). 7

Though it ultimately ruled in favor of the insurer based on

other language in the policy, the Third District held in Maspons

that the “failure of the drain pipe to perform its function

7 Our own dictionary searches for the words “loss” and “damage” have yielded

definitions of a kindred timbre. “Loss” means “[p]erdition, ruin, destruction,”

Shorter Oxford English Dictionary 1638 (5th ed. 2002), or “[d]estruction,”

American Heritage Dictionary of the English Language 1034 (4th ed. 2009).

“Damage” means “[h]arm done to a thing or (less usually . . . ) person: esp.

physical injury impairing value or usefulness,” Shorter Oxford English Dic-

tionary at 596, or “[h]arm or injury to property or to a person, resulting in loss

of value or the impairment of usefulness,” American Heritage Dictionary of

the English Language at 458.

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 28 of 34

28 Opinion of the Court 20-14812

constituted a ‘direct’ and ‘physical’ loss to the property within the

meaning of the policy.” Id. at 1068–69. But that failure was the

result of a physical “break”—tangible harm—which would require

“repair” to restore functionality. Id. at 1068.

Though the language in Maspons came from a home-

owner’s policy rather than a commercial insurance policy and is

not identical to the language in the policies before us, it is suffi-

ciently similar to make that case informative. See id. at 1068. And

because Maspons explains that direct and physical loss requires that

damage be actual, see id. at 1069, it does not help the insureds here.

Moreover, Maspons involved tangible harm to the covered prop-

erty, i.e., a physical break in the drain pipe, and such harm is miss-

ing here. See also Vazquez v. Citizens Prop. Ins. Corp., 304 So. 3d

1280, 1284–85 (Fla. 3d DCA 2020) (applying Maspons in a case

where water intrusion damaged some ceramic tiles and a kitchen

cabinet in the insured’s home).

In Azalea, the insured operated a mobile home park with its

own sewage treatment facility on site. See 656 So. 2d at 600. Van-

dals dumped an unknown substance into the sewage treatment fa-

cility, causing the destruction of a bacteria colony that was an inte-

gral part of the sewage treatment process. See id. at 601. The in-

sured then sought to recover under a provision in its commercial

insurance policy for “direct physical loss of or damage to” property

at the covered premises. See id. at 600–01.

The trial court ruled in favor of the insurer, but the First Dis-

trict reversed. The “bacteria colony [was] an integral part of the

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 29 of 34

20-14812 Opinion of the Court 29

sewage treatment facility” and was “specifically attached to and be-

came part of the treatment facility structure.” Id. at 602. As a re-

sult, there was a “tangible injury to the physical structure” because

the unknown “substance actually covered and adhered to the inte-

rior of the structure causing destruction of the bacteria colony

which was an integral part of the covered facility.” Id. (emphasis

added). The First District emphasized the amount of work that

was done to restore the sewage treatment facility back to working

order, including “hand chiseling . . . [the] chemical residue” from

the structure. See id. at 601.

Azalea, which aligns with the majority view, also does little

to help the insureds here. See id. That is because Azalea, like

Maspons, dealt with tangible harm to the covered property, i.e.,

the destruction of the bacteria colony which had physically become

part of the sewage treatment facility. See id.

Our unpublished decision in Mama Jo’s , which involved the

application of Florida law, also cuts against the insureds’ argument

that “direct physical loss of or damage to” property does not re-

quire actual, tangible, structural, or concrete harm to property but

merely demands that the property no longer be suitable for its in-

tended use. See 823 F. App’x at 878–79. In Mama Jo’s, dust and

debris from a nearby road construction project migrated into the

insured’s restaurant. The restaurant stayed open during the con-

struction project, and staff performed daily cleaning, but customer

traffic decreased. See id. at 871–72. The insured made two claims

under its commercial all-risk policy—one for cleaning and painting

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 30 of 34

30 Opinion of the Court 20-14812

expenses under the Building and Personal Property Coverage pro-

vision, which covered “direct physical loss of or damage to covered

property” from any covered cause of loss (including “direct physi-

cal loss”); and another under the Business Income Loss provision,

which required that the “suspension” of operations be “caused by

direct physical loss of or damage to” the property. See id. at 879.

Applying Florida law, and relying on Maspons, we held that

the district court had correctly granted summary judgment to the

insurer on both claims. See id. at 878–79. With respect to the clean-

ing and painting claim, we said that “under Florida law, an item or

structure that merely needs to be cleaned has not suffered a ‘loss’

which is both ‘direct’ and ‘physical.’” Id. at 879 (citing Maspons,

211 So. 3d at 1069). As for the lost income claim, the insured did

not “put forward any . . . evidence that it suffered a direct physical

loss of or damage to its property during the policy period.” Id.

We conclude that Mama Jo’s provides a correct statement of

Florida law in accord with the majority view and therefore find it

persuasive. Like the dust and debris in Mama Jo’s, COVID-19 did

not cause any material alteration of the insureds’ properties. See

id. It did require that the properties be cleaned to eliminate the

particles of the virus, but as Mama Jo’s explains, that does not con-

stitute a “physical loss of or damage to” the properties. See id.

D

The Business Income, Business Interruption, and/or Extra

Expense provisions of the SA Palm Beach, Emerald Coast, Rococo,

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 31 of 34

20-14812 Opinion of the Court 31

and RTG policies, and the Extended Business Income provision of

the Rococo policy, all require that there be a “suspension” or “in-

terruption” of operations and cover certain expenses and losses

during the period in which the covered property is “repaired,” “re-

built,” or “replaced.” See SA Palm Beach Policy at 68; Emerald

Coast Policy at 68; Rococo Policy at 98; RTG Policy at 20. With

regards to the provisions containing such language, there is an-

other reason why coverage does not exist for losses caused by

COVID-19.

Here’s how the Fourth Circuit put it in a similar case:

The need to repair, rebuild, replace, or expend time

securing a new, permanent property is a pre-condi-

tion for coverage of lost business income and other

expenses. Any alternative meaning of the terms

“physical loss” or “physical damage” that does not re-

quire a material alteration to the property would ren-

der meaningless this pre-condition to coverage for

business income loss. [ . . . ] Here, neither the closure

order nor the COVID-19 virus caused present or im-

pending material destruction or material harm that

physically altered the covered property requiring re-

pairs or replacement so that they could be used as in-

tended. Thus, . . . the policy’s coverage for business

income loss and other expenses does not apply to [an

insured’s] claim for financial losses in the absence of

any material destruction or material harm to its cov-

ered premises.

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 32 of 34

32 Opinion of the Court 20-14812

Uncork & Create, 27 F.4th at 932–33 (internal footnotes omitted).

See also Town Kitchen LLC v. Certain Underwriters at Lloyd’s,

London, 522 F. Supp. 3d 1216, 1222 (S.D. Fla. 2021) (“[T]he key

difference between the Plaintiff’s loss of use theory and something

clearly covered—like a hurricane—is that the property did not

change. The world around it did. And for the property to be use-

able again, no repair or change can be made to the property—the

world must change.”). We find this reasoning persuasive and fol-

low it here.

E

RTG and Rococo also argue that their complaints alleged

that COVID-19 itself actually damaged their properties. RTG al-

leged that “the presence of coronavirus particles caused . . . direct

physical damage” to its property. See RTG Complaint at ¶ 33. Ro-

coco alleged more generally that the “presence of COVID-19

caused direct physical . . . damage to the covered premises” and

“damage[ed] the property.” See Rococo Complaint at ¶ 44. Be-

cause they affirmatively pled that COVID-19 damaged their prop-

erties, RTG and Rococo maintain that—even under the majority

view—their claims should survive a motion to dismiss.

For its part, RTG did in fact assert that COVID-19 damaged

its property, but it also set out more specific details concerning this

general claim. It alleged that “coronavirus particles” caused the

damage, and that those particles were “detectable on various types

of surfaces.” RTG Complaint at ¶ 30, 33. These specific allegations

of what the “physical damage” consisted of govern over the general

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 33 of 34

20-14812 Opinion of the Court 33

allegation that there was “physical damage.” As we have ex-

plained, taking the allegations of a “complaint as true does not re-

quire us to ignore specific factual details of the pleading in favor of

general or conclusory allegations[.]” Griffin Indus., Inc. v. Irvin,

496 F.3d 1189, 1205–06 (11th Cir. 2007).

We know from Mama Jo’s, which we find persuasive, that

under Florida law “an item or structure that merely needs to be

cleaned has not suffered a ‘loss’ which is both ‘direct’ and ‘physi-

cal.’” 823 F. App’x at 879. In other words, surfaces not tangibly

altered or harmed can be cleaned without requiring repair. RTG’s

need to clean or disinfect stores to get rid of COVID-19 does not

constitute direct physical loss or damage under Florida law.

In its brief, Rococo argues that “the particles of COVID-19

structurally alter property surfaces and ambient air in a manner

that causes loss and damage by rendering affected premises danger-

ous to human health.” Rococo Br. at 31. But this allegation ap-

pears nowhere in its complaint. In fact, the complaint does not

even distinguish between loss and damage, and instead generally

alleges that COVID-19 “caused direct physical loss of and/or dam-

age to the covered premises” without providing any details. See

Rococo Complaint at ¶ 44. A plaintiff must “provide the grounds

of his entitlement to relief” in order to give the defendant fair no-

tice of its claim, see Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007) (internal quotation marks omitted and alteration adopted),

and here we do not think that Rococo’s bare allegation that

COVID-19 caused direct physical damage fulfills this obligation.

USCA11 Case: 20-14812 Date Filed: 05/05/2022 Page: 34 of 34

34 Opinion of the Court 20-14812

IV

We now turn to one claim based on a policy provision which

does not contain the language “direct physical loss of or damage

to” property or “direct physical loss or damage to” property. That

claim is the Spoilage provision claim made by Emerald Coast.

As the parties correctly note, the district court did not ad-

dress this claim in its order of dismissal. We believe the best course

of action is to remand the case so that the district court can decide,

in the first instance, whether this claim survives Aspen’s motion to

dismiss. See, e.g., F.D.I.C. v. N. Savannah Props., LLC, 686 F.3d

1254, 1261 (11th Cir. 2012). We therefore vacate in part the dismis-

sal of Emerald Coast’s complaint and send the case back for a ruling

on the claim under the Spoilage provision.

V

We affirm the dismissal of the complaints filed by SA Palm

Beach, Rococo, and RTG. We affirm in part and vacate in part the

dismissal of the complaint filed by Emerald Coast, and remand that

case for further proceedings consistent with this opinion.

AFFIRMED IN CASE NOs. 20-14812, 21-10672, & 21-10490;

AFFIRMED IN PART AND VACATED IN PART IN CASE NO.

21-10190.