UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF FLORIDA 

FORT LAUDERDALE DIVISION

Case No. 0:20-cv-60873-SINGHAL

FITNESS OM LLC d/b/a CLUB PILATES,

Plaintiff,

vs.

ARCH INSURANCE COMPANY,

Defendant.

_________________________________________/

DEFENDANT’S MOTION FOR JUDGMENT ON THE PLEADINGS

Pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, Defendant Arch 

Insurance Company (“Arch”) respectfully moves the Court to enter judgment in its favor on the 

claims filed against it by Plaintiff Fitness OM LLC d/b/a Club Pilates (“Plaintiff”), and states as 

follows:

I. INTRODUCTION

Plaintiff operates a Pilates studio in Fort Lauderdale, Florida. Plaintiff purchased a 

Commercial Inland Marine policy from Arch that covers losses caused by direct physical loss or 

damage to covered property. Plaintiff’s covered property is sports equipment and contents in its 

Pilates studio. After government orders were issued to slow the spread of COVID-19, including 

the closing of gyms and fitness studios in Florida, Plaintiff purportedly closed its Pilates studio to 

the public and submitted an insurance claim to Arch for lost business income. Arch denied the 

claim because Plaintiff’s business losses were not caused by direct physical loss or damage to its

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sports equipment and contents, as required by the policy, or by a civil authority order that 

prohibited access to its studio due to direct physical loss or damage to other people’s property. 

Instead, Plaintiff’s losses were caused by government measures to slow the spread of COVID-19 

through social distancing. After Arch denied the claim, Plaintiff filed this lawsuit. Plaintiff sued 

Arch for declaratory judgment and breach of contract, seeking coverage under the policy.

For the following reasons, judgment should be entered in Arch’s favor on all of 

Plaintiff’s claims against it:

First, a requirement for coverage under the policy is “direct physical loss or damage to 

Covered Property.” Plaintiff does not meet this requirement. Plaintiff does not and cannot allege 

that its losses were caused by direct physical loss or damage to the sports equipment and contents 

in its Pilates studio. Plaintiff alleges that government orders closing gyms and fitness centers to 

slow the spread of COVID-19 precluded Plaintiff from using the sports equipment and contents 

to operate a Pilates studio open to the public. Complaint ¶ 19. In other words, Plaintiff alleges 

its business losses arose from nothing happening to its property. However, loss of use of 

property for reasons other than tangible impairment of the property is simply not covered by the 

plain and unambiguous terms of the policy. 

Second, none of the government orders alleged trigger civil authority coverage under the 

policy. The policy affords coverage if an action of civil authority prohibits access to Plaintiff’s 

premises due to direct physical loss or damage to property other than at Plaintiff’s premises. 

None of the orders attached to the Complaint were issued because of direct physical loss or 

damage to property at someone else’s premises and none prohibited Plaintiff from accessing its 

Pilates studio to offer virtual classes, for example. 

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Third, Plaintiff’s losses are excluded under the policy. There is an exclusion for losses 

caused by or resulting from a loss of market. Plaintiff’s losses were caused by a loss of market 

and not direct physical loss or damage to property. For this reason alone, there is no coverage 

under the policy for Plaintiff’s losses. 

II. BACKGROUND

A. The Policy

Arch issued a Commercial Inland Marine policy to Plaintiff bearing policy number 

SBIML0087802 for the period of May 1, 2019 to May 1, 2020 (the “Policy”). Complaint ¶ 8. 

The Policy is attached to Plaintiff’s Complaint as Exhibit A. (Doc. No. 1-1). The Policy insures 

“Sports Equipment and Contents” located at 3802 N. Federal Highway, Fort Lauderdale, Florida,

up to a limit of $100,000. Policy at 28 (Miscellaneous Articles Declaration) (Doc. No. 1-1). 

Specifically, the Policy’s XPONENTIAL FITNESS ENDORSEMENT (the “Fitness 

Endorsement”) provides:

A. Coverage

We will pay for loss of or damage to Covered Property from any of the 

Covered Causes of Loss.

1. Covered Property

Covered Property, as used in this coverage form, means the 

property described in the Declarations that:

a. You own, or

b. Is in your care, custody or control.

2. Property Not Covered

Covered Property does not include:

a. Real Property, except glass included on Form IL 1201, 

where applicable;

b. Aircraft, Motor Vehicles designed for highway use or 

Watercraft;

c. Property after it is sold and delivered or otherwise disposed 

of, including property sold under a deferred payment sales 

agreement; or

d. Contraband, or property in the course of illegal 

transportation or trade.

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3. Covered Causes Of Loss

Covered Causes of Loss means Direct Physical Loss or Damage to 

Covered Property except those causes of loss listed in the 

Exclusions.

Policy at 30, Fitness Endorsement, at ¶ A.1. 

Business Income and Extra Expense Coverage

In addition, the Policy covers certain “business income” and “extra expense” losses, as 

follows: 

13. Business Income and Extra Expense

a. Coverage is extended to cover “Business Income”/“Extra 

Expense” incurred when your covered property is damaged by a 

Covered Cause of Loss.

We will pay any “Extra Expense” to continue your normal 

operations:

(1) at the described premises; or

(2) at replacement premises or temporary locations; including:

(a) relocation expenses; and

(b) costs to equip or operate the replacement or temporary 

locations; and

We will also pay for any corresponding “Extra Expense” to 

minimize the suspension of your normal operations if you cannot 

continue them.

b. We will pay for the actual loss of “Business Income” you sustain 

and necessary “Extra Expense” caused by action of civil authority 

that prohibits access to the described premises due to direct 

physical loss of or damage to property, other than at the described 

premises, caused by or resulting from any Covered Cause of Loss. 

The coverage for “Business Income” will begin 72 hours after the 

time of that action and will apply for a period of up to three 

consecutive weeks after coverage begins. The coverage for “Extra 

Expense” will begin immediately after the time of that action and 

will end: (1) 3 consecutive weeks after the time of that action; or 

(2) when your “Business Income” coverage ends; whichever 

comes first.

Policy at 28, Fitness Endorsement at ¶ A.13. “Business income” and “extra expense” are defined 

as follows:

c. The following, when used in this section, are defined as follows:

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(1) “Business Income” means Net Income (Net Profit or Loss before 

income taxes) that would have been earned or incurred during the 

“period of restoration;” and continuing normal operating expenses 

including payout.

(2) “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.

(3) “Period of Restoration” means the period of time that:

(a) Begins with the date of physical loss or damage caused by 

or resulting from any Covered Cause of Loss; and

(b) Ends on the date when the property should be repaired, 

rebuilt or replaced with reasonable speed and similar 

quality.

(c) “Period of Restoration” does not include any increased 

period required due to the enforcement of any ordinance or 

law that regulates the construction, use or repair, or 

requires the tearing down of any property; or requires any 

insured or others to test for, monitor, clean up, remove, 

contain, treat, detoxify or neutralize, or in any way respond 

to, or assess the effects of pollutants.

(d) The expiration date of this policy will not cut short the 

“Period of Restoration.”

Policy at 28, Fitness Endorsement at ¶ A.13. 

Exclusion for Delay, Loss of Use, and Loss of Market

The Policy includes the following exclusion:

We will not pay for loss or damage caused by or resulting from any of the 

following:

* * *

b. Delay, loss of use, loss of market or any other consequential loss.

Policy at 28, Fitness Endorsement at ¶ B.2.b. 

B. The Alleged Loss

Plaintiff alleges it owns and operates a fitness studio in Fort Lauderdale, Florida. 

Complaint ¶ 3. Plaintiff alleges it sustained “direct physical loss” and “loss of business income,” 

and incurred “extra expense” as a result of the COVID-19 pandemic and various executive 

orders issued by Governor DeSantis in Florida to slow the community spread of COVID-19. 

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Complaint ¶¶ 16-20. The following are the executive orders at issue in the Complaint:

Executive Order No. 20-51: On March 1, 2020, Governor DeSantis issued Executive 

Order No. 20-51 and declared a state of emergency in Florida as a result of COVID-19. 

Complaint ¶ 16. Executive Order No. 20-51 is attached to the Complaint as Ex. B. (Doc. No. 1-

2). 

Executive Order No. 20-71: On March 20, 2020, Governor DeSantis issued Executive 

Order No. 20-71, closing gyms and fitness centers in Florida as a result of COVID-19. The order 

is attached to the Complaint as Ex. C. (Doc. No. 1-3, § 3). Executive Order No. 20-71 stated: 

WHEREAS, on March 15, 2020, President Donald J. Trump and the 

Centers for Disease Control and Prevention (“CDC”) issued the “15 Days to Slow 

the Spread” guidance advising individuals to adopt far-reaching social distancing 

measures, such as avoiding gatherings of more than 10 people, and in states with 

evidence of community spread, bars, restaurants, food courts, gyms and other 

indoor and outdoor venues where groups of people congregate should be closed. 

* * *

WHEREAS, the State Surgeon General has advised me that gyms and 

fitness centers are establishments that attract gatherings of more than 10 people 

and are more susceptible for spreading COVID-19. 

* * *

Section 3. Gyms and Fitness Centers

I hereby order the closure of gymnasiums and fitness centers within the State of 

Florida. This order shall not apply to gymnasiums and fitness centers which are 

(1) amenities of hotels which have a capacity of 10 persons or less, (ii) are an 

amenity of a residential building, (iii) are interior to any fire or police stations or 

(iv) are located inside any single-occupant office building.

Executive Order No. 20-71 at 1, 4-5 (Doc. No. 1-3, at 1). 

Executive Order No. 20-91: On April 1, 2020, Governor DeSantis issued Executive 

Order No. 20-91 “to take action to ensure that the spread of COVID-19 is slowed, and that 

residents and visitors in Florida remain safe and secure.” (Doc. No. 1-4, at 2). The Order is 

attached to the Complaint as Exhibit D. (Doc. No. 1-4). Executive Order No. 20-91 required 

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that “all persons in Florida shall limit their movements and personal interactions outside of their 

home to only those necessary to obtain or provide essential services or conduct essential 

activities.” (Doc. No.1-4, at § 1.B). The Order defines the meaning of “essential services,” 

which did not include fitness centers. (Doc. No.1-4, at § 2).

Plaintiff alleges it sustained “a direct physical loss” and “suffered loss of business income 

[and] has incurred ‘extra expense.’” Complaint ¶ 19; see also id. ¶ 22. Plaintiff filed a claim 

with Arch for “lost income as a result of [its] inability to conduct normal operations as a result of 

the Coronavirus with a reported date of loss of March 17, 2020.” Complaint, Exhibit E (Doc. 

No. 1-5). 

C. Arch’s Coverage Position and This Lawsuit

On March 23, 2020, American Specialty, Arch’s claims administrator, sent a letter to 

Plaintiff denying coverage for Plaintiff’s claim. The letter stated: “It is our understanding that 

your business has been shut down by government order to reduce the spread of the COVID-19 

virus. Our investigation has concluded that there was no direct physical damage to your property 

caused by a peril resulting from this date of loss.” (DE 1-5). 

Plaintiff subsequently filed this coverage action against Arch asserting a count for 

declaratory judgment and a count for breach of contract.

III. MEMORANDUM OF LAW

A. Motion-for-Judgment-on-the-Pleading Standard

“Judgment on the pleadings is appropriate where no issue of material fact remains 

unresolved and the moving party is entitled to judgment as a matter of law.” Medkser v. 

Feingold, 307 Fed. Appx. 262, 264 (11th Cir. 2008). When considering a motion for judgment 

on the pleadings, a court may consider documents attached to the complaint if they are central to 

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the plaintiff’s claim and undisputed. Bank of Camilla v. St. Paul Mercury Ins. Co., 531 Fed. 

Appx. 993, 994 (11th Cir. 2013).

“In ruling on a motion for judgment on the pleadings, the Court applies a standard very 

similar, if not identical, to that when ruling on a motion to dismiss brought pursuant to Rule 

12(b)(6).” Artell v. ARS Nat’l Servs., No. 15-22580-CIV-WILLIAMS, 2016 U.S. Dist. LEXIS 

154163, at *3 (S.D. Fla. Nov. 4, 2016). As such, “[a]lthough a plaintiff need not provide 

‘detailed factual allegations,’ a plaintiff’s complaint must provide ‘more than labels and 

conclusions.’” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 

L. Ed. 2d 929 (2007)). “‘A formulaic recitation of the elements of a cause of action will not do . 

. . [and] factual allegations must be enough to raise a right to relief above the speculative level.’” 

Id.

B. Principles of Policy Interpretation Under Florida Law

Under Florida law, the interpretation of an insurance policy, like any contract, is a matter 

of law to be decided by the court.1 Hegel v. First Liberty Ins. Corp., 778 F.3d 1214, 1219 (11th

Cir. 2015). “In insurance coverage cases under Florida law, courts look at the insurance policy 

as a whole and give every provision its ‘full meaning and operative effect.’” State Farm Fire &

Cas. Co. v. Steinberg, 393 F.3d 1226, 1230 (11th Cir. 2004) (citing Hyman v. Nationwide Mut. 

Fire. Ins. Co., 304 F.3d 1179, 1186 (11th Cir. 2002)). “Florida law provides that insurance 

contracts are construed in accordance with the plain language of the policies as bargained for by 

the parties.” Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000). “‘[I]f a policy 

 1 Florida law applies to this coverage dispute. Trailer Bridge, Inc. v. Illinois Nat. Ins. Co., 657 

F.3d 1135, 1141 (11th Cir. 2011); Shapiro v. Associated Intern. Ins. Co., 899 F.2d 1116. 1119-

1121 (11th Cir. 1990). “[H]owever, the case law of other jurisdictions that have examined 

similar policy provisions may be considered to determine the issues of state law as [the] Court 

believes the Florida Supreme Court would.” Trailer Bridge, 657 F.3d at 1141.

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provision is clear and unambiguous, it should be enforced according to its terms whether it is a 

basic policy provision or an exclusionary provision.’” Taurus Holdings, Inc. v. U.S. Fidelity & 

Guar. Co., 913 So. 2d 528, 532 (Fla. 2005) (quoting Hagen v. Aetna Cas. & Sur. Co., 675 So.2d 

963, 965 (Fla. 5th DCA 1996)).

“‘[I]f the relevant policy language is susceptible to more than one reasonable 

interpretation, one providing coverage and the other limiting coverage, the insurance policy is 

considered ambiguous.’” Sphinx Int’l, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 412 

F.3d 1224, 1228 (11th Cir. 2005) (quoting Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 

2d 161, 165 (Fla. 2003)). “But courts should not strain to find ambiguity.” Id. “‘Only when a 

genuine inconsistency, uncertainty, or ambiguity in meaning remains after resort to the ordinary 

rules of construction is the rule about ambiguity apposite.’” Id. (quoting Excelsior Ins. Co. v. 

Ponoma Park Bar & Package Store, 369 So. 2d 938, 942 (Fla. 1979)). “In sum, if there is no 

genuine ambiguity, there is no reason to bypass the policy’s plain meaning.” Id. The lack of a 

definition of a term in a policy does not render the policy provision ambiguous. Deni Assocs. of

Fla., Inc. v. State Farm Fire & Cas. Ins. Co., 711 So. 2d 1135, 1139 (Fla. 1998) (“reject[ing] the 

argument that because the words ‘irritant’ and ‘contaminant’ are not defined, the policy 

exclusion is ambiguous.”).

C. Plaintiff’s Losses Are not Covered Under the Policy

Plaintiff alleges that it sustained direct physical loss, business income, and extra expense

losses as a result of Governor DeSantis’ executive orders issued to slow the spread of COVID19, including an order closing commercial gyms and fitness centers in Florida like Plaintiff’s. 

Complaint ¶¶ 16-20. The plain and unambiguous language of the Policy does not provide 

coverage for Plaintiff’s losses. 

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1. There is No Business Income and Extra Expense Coverage Because Plaintiff 

Has Not Sustained Direct Physical Loss or Damage to Covered Property

Plaintiff alleges that due to Governor DeSantis’ executive orders, “the insured property is 

not able to function as intended” and “Plaintiff has lost the use of the insured property . . . and 

the ability to operate as a fitness center” and suffered business income and extra expense losses. 

Complaint ¶¶ 19, 20. However, business income and extra expense coverage under the Policy is 

only available where the Plaintiff has sustained “Direct Physical Loss or Damage to Covered 

Property.” Some demonstrable physical impairment or physical compromise to the integrity of 

Plaintiff’s equipment and the contents of the Pilates studio is required. Plaintiff has alleged no 

such damage here.

Specifically, the Policy provides that it “will pay for loss of or damage to Covered 

Property from any of the Covered Causes of Loss.” Policy at 30, Fitness Endorsement ¶ A (Doc. 

No. 1-1 at 30). Further, the Policy provides that “[c]overage is extended to cover ‘Business 

Income’/‘Extra Expense’ incurred when your covered property is damaged by a Covered Cause 

of Loss.” Policy at 33, Fitness Endorsement ¶ A.13 (Doc. No. 1-1 at 33) (emphasis added). 

The Policy defines “Covered Causes of Loss” as “Direct Physical Loss or Damage to 

Covered Property except those causes of loss listed in the Exclusions.” Policy at 30, Fitness 

Endorsement ¶¶ A & A.3 (Doc. No. 1-1 at 30) (emphasis added). “Covered Property” is 

identified as “Sports Equipment and Contents” located at 3802 N. Federal Highway, Fort 

Lauderdale, Florida. Policy at 28, 30, Fitness Endorsement ¶ A.2 & Miscellaneous Articles 

Declarations; Fitness Endorsement (Doc. No. 1-1 at 28, 30).

The phrase “Direct Physical Loss or Damage to Property” is not defined in the Policy. 

“When a term in an insurance policy is undefined, it should be given its plain and ordinary 

meaning, and courts may look to legal and non-legal dictionary definitions to determine such 

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meaning.” GEICO v. Macedo, 228 So. 3d 1111, 1113 (Fla. 2017). Merriam-Webster Dictionary

defines “direct” as “proceeding from one point to another in time or space without deviation or 

interruption: STRAIGHT” and “marked by absence of an intervening agency, instrumentality, 

or influence.” https://www.merriam-webster.com/dictionary/direct?src=search-dict-hed (quoting 

definitions of “direct adjective,” 1.a. and 4.a.). 

In addition, Merriam-Webster Dictionary defines “physical” as “of or relating to natural 

science,” “having material existence: perceptible especially through the senses and subject to 

the laws of nature” and “of or relating to material things.” https://www.merriamwebster.com/dictionary/physical (quoting definitions of “physical adjective,” 1.a., 2.a &b). 

Further, courts require that there be a demonstrable physical alteration to the covered 

property. The U.S. District Court for the Southern District of Florida has explained that “[a]

direct physical loss ‘contemplates an actual change in insured property then in a satisfactory 

state, occasioned by accident or other fortuitous event directly upon the property causing it to 

become unsatisfactory for future use or requiring that repairs be made to make it so.’” Mama

Jo’s, Inc. v. Sparta Ins. Co., No. 17-CV-23362-KMM, 2018 WL 3412974, at *9 (S.D. Fla. June 

11, 2018) (quoting MRI Healthcare Ctr. of Glendale, Inc. v. State Farm Gen. Ins. Co., 187 Cal. 

App. 4th 766, 779 (2010)) (holding that restaurant’s cleaning of dust and debris from road 

construction was not physical loss or damage to property). Courts in other jurisdictions similarly 

hold that tangible impairment to property is required. See Newman Myers Kreines Gross Harris, 

P.C. v. Great Northern Ins. Co., 17 F. Supp.3d 323 (S.D.N.Y. 2014) (holding no business 

interruption coverage where office building was preemptively closed in preparation for storm 

and there was no structural damage to offices); Roundabout Theatre Co., Inc. v. Continental Cas. 

Co., 302 A.D.2d 1, 3, 6-8 (N.Y. Sup. Ct. App. Div. 2002) (holding no coverage for cancellation 

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of 35 scheduled performances of Cabaret caused by closure of street fronting theatre and 

precluding the public’s access due to scaffolding that fell from nearby building because the 

theatre sustained no physical damage); Universal Image Productions, Inc. v. Federal Ins. Co.,

475 F. App’x 569, 573 (6th Cir. 2012) (holding mold and bacteria in a building did not constitute 

“direct physical loss because that phrase ‘contemplates change in insured property’ or ‘tangible’

damage.”).

As alleged in the Complaint, nothing has happened to the equipment and contents in 

Plaintiff’s Pilates studio. Government orders temporarily precluded Plaintiff from opening its 

doors to the public. This is a very different scenario from cases that do find direct physical loss 

or damage to property. For example, in Azalea, Ltd. v. American States Ins. Co., vandals 

dumped an unknown substance into a sewage treatment facility serving a mobile home park. 

The substance adhered to the walls of the facility and had to be chipped away to be removed. In 

addition, the substance destroyed the bacterial colony in the plant that was an integral part of the 

sewage treatment process. See Azalea, Ltd. v. American States Ins. Co., 656 So. 2d 600, 601-02 

(Fla. 1st DCA 1995). The policy at issue provided: “We will pay for direct physical loss of or 

damage to Covered Property . . . .” Id. at 600 (emphasis added). The trial court concluded that 

the insured’s “loss of use” of the sewage treatment facility did not constitute direct physical loss, 

as required by the policy language. Id. at 602. However, the appellate court reversed based on 

the circumstances of the loss – “residue from the dumped substance actually covered and 

adhered to the interior of the structure causing destruction of the bacteria colony which was an 

integral part of the covered facility.” Id.

By contrast, in Mama Jo’s, Inc. v. Sparta Ins. Co., the court concluded that a restaurant’s 

cost to clean dust and debris from road construction work was not covered because it did not 

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constitute “direct physical loss of or damage to Covered Property at the premises . . . caused by 

or resulting from any Covered Cause of Loss,” because there was no “‘actual change in insured 

property then in a satisfactory state, occasioned by accident or other fortuitous event directly 

upon the property causing it to become unsatisfactory for future use or requiring that repairs be 

made.’” 2018 WL 3412974, at **1, 9 (citations omitted). Plainly, if dust and debris do not 

constitute “direct physical loss of or damage to Covered Property,” then Plaintiff’s allegations, 

which are devoid of any physical component of loss or damage to the insured sports equipment 

and contents of the Pilates studio, must also fail.2

Plaintiff alleges that its “loss of use of the insured property and insured property’s 

inability to function as intended . . . is a direct physical loss.” Complaint ¶ 20. However, the

inability to use property because someone or something external to the property has precluded its 

use is not direct physical loss or damage under the Policy. In Newman Myers, power company 

Con Edison preemptively shut off power to certain power distribution centers that supplied 

power to 40 Wall Street in New York City where the insured law firm’s offices were located, 

prior to Hurricane Sandy making landfall. The power remained cut for approximately four days. 

The law firm made a claim for business interruption coverage because of the loss of power to 40 

Wall Street and not because of any structural damage to the building or its offices. In holding 

that there was no coverage under the policy, the court wrote: “The words ‘direct’ and ‘physical,’ 

 2 In Social Life Magazine, Inc. v. Sentinel Insurance Company, Ltd., No. 20-cv-3311, the U.S. 

District Court for the Southern District of New York denied a motion for preliminary injunction 

filed by a magazine publisher seeking business interruption coverage due to the COVID-19 

pandemic because there was no property damage to the insured’s property to trigger coverage. 

See May 14, 2020 Transcript, at Tr. 15:8-18, attached hereto as Exhibit A; see also Tr. 8:16-18 

(“That is what has caused the damage is that the governor has said you need to stay home. It is 

not that there is any particular damage to your specific property.”). Following the hearing, the 

plaintiff filed a notice of dismissal, (Doc. No. 28), and wrote a letter to the court stating it 

believed a written order on its motion for preliminary injunction was not required. (Doc. No. 

29). The court subsequently closed the case without entering a written order. (Doc. No. 30).

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which modify the phrase ‘loss or damage,’ ordinarily connote actual, demonstrable harm of some 

form to the premises itself, rather than forced closure of the premises for reasons exogenous to 

the premises themselves, or the adverse business consequences that flow from such closure.” Id.

at 331. The court further stated: “[T]he Court is unaware of authority supporting, [the law 

firm’s] argument that ‘direct physical loss or damage’ should be read to include [or] to extend to 

mere loss of use of a premises, where there has been no physical damage to such premises.” Id. 

Similarly, the fact that government orders precluded Plaintiff from using its sports 

equipment and contents for in-person workouts does not constitute direct physical loss or 

damage to property in the absence of tangible harm to the property itself. See, e.g., Source Food 

Tech., Inc. v. United States Fidelity & Guaranty Co., 465 F.3d 834, 837-38 (8th Cir. 2006) 

(holding no business interruption coverage where insured could not import Canadian beef 

product due to USDA prohibition on the importation of ruminants after a Canadian cow tested 

positive for mad cow disease because the beef product insured sought to import suffered no 

physical contamination); Roundabout Theatre Co., 302 A.D.2d at 3, 6-8 (holding no direct 

physical loss resulting from City’s closure of street fronting theatre due to the collapse of 

scaffolding at a nearby building where the theatre suffered no physical damage).

Plaintiff does not allege tangible impairment of its equipment and contents. Plaintiff only 

alleges not being able to use the equipment and contents to operate a Pilates studio because of 

government’s efforts to slow the spread of COVID-19 by implementing social distancing 

through a variety of measures, including closing gyms and fitness centers in Florida. Complaint 

¶¶ 19-20; Executive Order No. 20-71, attached to Complaint as Exhibit C (Doc. No. 1-3) 

(“President Donald J. Trump and [the CDC] issued the ‘15 Days to Slow the Spread’ guidance 

advising individuals to adopt far-reaching social distancing measures, such as avoiding 

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gatherings of more than 10 people, and in states with evidence of community spread, bars, 

restaurants, food courts, gyms and other indoor and outdoor venues where groups of people 

congregate should be closed. . . . . I hereby order the closure of gymnasiums and fitness centers 

within the State of Florida.”); Executive Order No. 20-91, attached to the Complaint as Exhibit D

(Doc. No. 1-4) (“WHEREAS, it is necessary and appropriate to take action to ensure that the 

spread of COVID-19 is slowed, and that residents and visitors in Florida remain safe and 

secure”; “[A]ll persons in Florida shall limit their movements and personal interactions outside 

of their home to only those necessary to obtain or provide essential services or conduct essential 

activities.”).

Lastly, other provisions of the Policy support the fact that physical loss or damage to 

property is a requirement for coverage. “Business income” and “extra expense” coverage are 

limited to a “period of restoration.” Policy at 33, Fitness Endorsement ¶ 13.c(1) & (2) (Doc. No. 

1-1, at 33). “Period of restoration” is defined as “the period of time that: (a) Begins with the date 

of physical loss or damage caused by or resulting from any Covered Cause of Loss; and (b) Ends 

on the date when the property should be repaired, rebuilt or replaced with reasonable speed and 

similar quality.” Policy at 33, Fitness Endorsement ¶ 13.c(3)(a) & (b) (Doc. No. 1-1, at 33) 

(emphasis added). “The words ‘repair’ and ‘replace’ contemplate physical damage to insured 

[property] as opposed to loss of use of it.” Newman Myers, 17 F. Supp.3d at 332.

Because there is no direct physical loss to the contents and equipment in Plaintiff’s 

Pilates studio, Plaintiff’s losses are not covered by the Policy.

2. There is No Civil Authority Coverage Because the Government Orders Do 

Not Prohibit Access to Plaintiff’s Premises Due to Direct Physical Loss of or 

Damage to Property of Others

In addition to seeking business income and extra expense losses due to direct physical 

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loss or damage to Plaintiff’s property, Plaintiff seeks coverage for business income and extra 

expense losses pursuant to the civil authority provision of the Policy. Complaint ¶ 20. The 

Policy provides: “We will pay for the actual loss of ‘Business Income’ you sustain and necessary 

‘Extra Expense’ caused by action of civil authority that prohibits access to the described 

premises due to direct physical loss of or damage to property, other than at the described 

premises, caused by or resulting from a Covered Cause of Loss.” Policy at 33, Fitness 

Endorsement ¶ A.13.b (Doc. No. 1-1 at 33) (emphasis added). Thus, according to the plain and 

unambiguous language of the Policy, to be entitled to coverage, the business income or extra 

expense loss must be: “(1) caused by an action of civil authority; (2) the action of civil authority 

must prohibit access to the described premises of the insured; (3) the action of civil authority 

prohibiting access to the described premises must be caused by direct physical loss of or 

damage to property other that at the described premises; and (4) the loss or damage to 

property other than the described premises must be caused by or result from a covered cause of 

loss as set forth in the policy.” Dickie Brennan & Co., Inc., v. Lexington Ins. Co., 636 F.3d 683, 

686 (5th Cir. 2011) (emphasis added) (holding no civil authority coverage because there was no 

causal link between hurricane evacuation order and physical damage to property). Plaintiff 

cannot establish that the executive orders prohibited access to its Pilates studio because of direct 

physical loss or damage to other premises. 

First, there must be a nexus between the civil authority action and physical loss or 

damage to property. See Dickie Brennan & Co., Inc., 636 F.3d at 686-87 (“The general rule is 

that ‘[c]ivil authority coverage is intended to apply to situations where access to an insured’s 

property is prevented or prohibited by an order of civil authority issued as a direct result of 

physical damage to other premises in the proximity of the insured’s property.’”); Paradies 

Case 0:20-cv-60873-AHS Document 24 Entered on FLSD Docket 06/18/2020 Page 16 of 20
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Shops, Inc. v. Hartford Fire Ins. Co., No. 03-3154, 2004 WL 5704715, at **6-7 (N.D. Ga. Dec. 

15, 2004) (holding there was no civil authority coverage because FAA orders grounding planes 

because of threat of future terrorist attacks on September 11 did not prohibit access to the 

insured’s gift shops at airports due to physical loss or damage to property); Syufy Enters. v. 

Home Ins. Co. of Ind., No. 94-0756, 1995 WL 129229, at *2 (N.D. Cal. Mar. 21, 1995) (holding 

no civil authority coverage because curfews were imposed to “prevent looting, rioting and 

resulting property damage” and not because of property damage to adjacent property); United 

Air Lines, Inc. v. Ins. Co. of State of PA, 439 F.3d 128, 130 (2d Cir. 2006) (holding, in part, no 

civil authority coverage because order grounding planes was based on the fear of future terrorist 

attacks and not because of adjacent property damage). Plaintiff does not and cannot allege such 

a nexus. It is clear from the four corners of the executive orders attached to the Complaint that 

they were not issued as a result of direct physical loss or damage to property at plaintiff’s or any 

other premises. Rather, the orders were issued to slow the spread of COVID-19 through social 

distancing measures. 

Second, even if Plaintiff could establish that the executive orders were issued as a result 

of direct physical loss or damage to property, civil authority coverage is not triggered unless 

access to the insured’s premises is fully prohibited by the civil authority action. See, e.g., S. 

Hospitality, Inc. v. Zurich Am. Ins. Co., 393 F.3d 1137, 1139-41 (10th Cir. 2004) (holding civil 

authority coverage was not triggered by FAA order grounding flights after September 11 because 

the order did not “prohibit access” to plaintiff’s hotels, it only made it more difficult to access 

them); St. Paul Mercury Ins. Co. v. Magnolia Lady, Inc., 97-153, 1999 WL 33537191, at *3 (N. 

D. Miss. Nov. 4, 1999) (holding that civil authority coverage was not triggered by bridge closure 

because plaintiff continued to operate casino-hotel and to accept customers); Syufy Enters., 1995 

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WL 129229, at *2 (holding no civil authority coverage was triggered because curfews imposed 

in San Francisco, Los Angeles, and Las Vegas following the verdict in the Rodney King case did 

not prohibit access to plaintiff’s premises in those cities).

Plaintiff does not allege that access to its premises was fully prohibited by the executive 

orders. Plaintiff alleges that it was required to close its doors to the public to implement social 

distancing measures to slow the spread of COVID-19. Complaint ¶¶ 19-20. Although 

Executive Order No. 20-71, attached to the Complaint, ordered gyms and fitness centers to close, 

it did not preclude Plaintiff from accessing its premises to offer virtual classes. (Doc. No. 1-4). 

Third, as set forth above, Plaintiff does not and cannot allege direct physical loss or 

damage to its covered property (sports equipment and contents) or anyone else’s property.

3. Plaintiff’s Losses Result from Causes Excluded By the Policy

The Policy does not cover risks excluded by the Policy. Excluded from coverage are 

“loss or damages caused by or resulting from . . . . [d]elay, loss of use, loss of market, or any 

other consequential loss.” Doc. No. 1-1 at 35 (Fitness Endorsement ¶ 13.B.2.b). Where losses 

are excluded by the plain and unambiguous terms of the policy, the exclusion must be enforced. 

National Union Fire Ins. Co. of Pittsburgh, PA v. Texpak Group N.V., 906 So. 2d 300 (Fla. 3d 

DCA 2005) (holding there was no business interruption coverage because the losses complained 

of – costs incurred as a result of design defect – were excluded under the policy). Plaintiff’s 

losses are caused by a loss of market and not by direct physical loss or damage to property. 

The phrase “loss of market” is unambiguous. Merriam-Webster Dictionary defines 

“market” as “a geographic area of demand for commodities or services;” “a specified category of 

potential buyers;” “the course of commercial activity by which the exchange of commodities is 

effected: the extent of demand;” “an opportunity for selling;” and “the available supply of or 

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potential demand for specified goods or services.” https://www.merriamwebster.com/dictionary/market?src=search-dict-hed (quoting definitions of market in 4.a-c). In 

addition, “market” has been defined to mean “the geographical or economic extent of 

commercial demand for any particular product and generally refers to a more or less identifiable 

group of prospective purchasers seeking a particular type of product offered by a more or less 

identifiable group of sellers.” Boyd Motors, Inc. v. Employers Ins. of Wausau, 880 F.2d 270, 273

(10th Cir. 1989) (construing unambiguous exclusion in inland marine policy). “[A] market is 

lost when, for example, due to delay in distribution, changes in consumer habits, etc., a certain 

type of product is no longer in demand with its intended purchasers.” Id. 

Plaintiff’s alleged losses are caused by a temporary loss of market for fitness services 

because the executive orders temporarily closed fitness centers and ordered people in Florida to 

stay at home to slow the spread of COVID-19. Losses caused by loss of market are excluded by 

the Policy. Plaintiff cannot recover for an otherwise excluded cause of loss by characterizing an 

indirect damage as direct physical loss.

CONCLUSION

For the foregoing reasons, Arch respectfully requests the Court to enter judgment in 

Arch’s favor on all of Plaintiff’s claims against it.

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Respectfully submitted,

STROOCK & STROOCK & LAVAN LLP

200 South Biscayne Boulevard

Suite 3100

Miami, Florida 33131

Tel: (305) 358-9900

Fax: (305) 789-9302

By: s/ Laura Besvinick 

Laura Besvinick, Esq.

Florida Bar Number: 391158

lbesvinick@stroock.com

asantiesteban@stroock.com

Julie E. Nevins, Esq.

Florida Bar Number: 182206

jnevins@stroock.com

asantiesteban@stroock.com

Attorneys for Defendant Arch Insurance 

Company

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on June 18, 2020, I electronically filed the foregoing with 

the Clerk of the Court by using the CM/ECF system, which will send a notice of electronic filing 

to all counsel of record.

By: s/ Laura Besvinick 

Case 0:20-cv-60873-AHS Document 24 Entered on FLSD Docket 06/18/2020 Page 20 of 20