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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

MIAMI DIVISION

Case No. 1:20-cv-22615-WILLIAMS

MALAUBE, LLC, 

Plaintiff,

vs. 

GREENWICH INSURANCE COMPANY, 

Defendant.

DEFENDANT, GREENWICH INSURANCE COMPANY’S REPLY MEMORANDUM IN 

RESPONSE TO PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS 

I. INTRODUCTION

In the “Introduction” section of its Response in Opposition to Defendant’s Motion to 

Dismiss Plaintiff’s Amended Complaint (“Response”), Plaintiff insists that there is no applicable 

exclusion, and that the issue in this case is whether COVID-19 can potentially constitute “physical 

loss or damage” as alleged by Plaintiff. [Resp., p.1]. Further, the Plaintiff asserts that the 

Government Shutdowns due to the COVID-19 pandemic forced Plaintiff to “suspend operations” 

thus “interfering with Plaintiff’s access to its business”. [Id.] Plaintiff’s arguments fail for 

multiple reasons. 

First, Plaintiff ignores the plain language of the Policy’s virus exclusion, which bars 

coverage for all Business Income loss that is caused by or results from a virus that is capable of 

inducing disease, which clearly includes the COVID-19 virus. 

Second, Plaintiff ignores the fact that the Government Shutdown Orders expressly allowed

Plaintiff’s restaurant to remain open to provide delivery and take-out dining services. 

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Case No. 1:20-cv-22615-WILLIAMS

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Third, Plaintiff’s argument that the inability to use its restaurant to allow for in-service 

dining constitutes “direct physical loss of or damage to” the Insured property, is unavailing and 

contrary to prevailing analogous case law. 

II. ARGUMENT

A. Plaintiff’s Attempt to Avoid the Virus Exclusion Defies the Plain Language of 

the Contract and Controlling Precedent.

In its Motion to Dismiss, Greenwich showed that the Plaintiff alleges financial losses that 

fall squarely within the Policy’s virus exclusion, which applies to all “loss or damage caused by 

or resulting from any virus...that is capable of inducing physical distress, illness or disease.” [See 

Document 5-1 at Page 67]. Plaintiff’s attempts to avoid application of the virus exclusion are 

ineffectual. 

Plaintiff represents that the virus exclusion at issue is ambiguous, and therefore the 

exclusion must be construed in favor of coverage, because any ambiguities must be construed in 

favor of the Plaintiff. [Resp., p. 7]. However, the Plaintiff fails to identify the virus exclusion 

wording that is ambiguous and offers no analysis to support the assertion that the exclusion is 

unclear and was not intended to apply in the context of a pandemic. 

The virus exclusion appears in an endorsement titled ‘EXCLUSION OF LOSS DUE TO 

VIRUS OR BACTERIA,” which modifies the Policy’s Commercial Property Coverage Part. [See 

Document 5-1 at Page 67]. The first paragraph of the endorsement states that the virus exclusion 

“applies to all coverage under all forms and endorsements that comprise this Coverage Part or 

Policy, including but not limited to forms or endorsements that cover property damage to buildings 

or personal property and forms or endorsements that cover business income, extra expense or 

action of civil authority.” [Id. (emphasis added)] Under Florida law, an insurance policy 

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Case No. 1:20-cv-22615-WILLIAMS

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provision is “ambiguous” only if it is susceptible to more than one reasonable interpretation, one 

providing coverage and the other limiting coverage. Shaw v. National Union Fire Ins. Co. of 

Pittsburgh, Pa., 605 F.3d 1250, 1252 (11th Cir. 2010). Here, the virus exclusion is clear and 

unambiguous and should be applied to preclude coverage for Plaintiff’s claims. 

Further, the Response asserts that Plaintiff pled that the Government Shutdown orders, not 

the COVID-19 virus, caused the loss, and that its allegations should be accepted for purposes of a 

Rule 12 Motion. Plaintiff asserts in the Response that “It is the well-founded public reaction of 

the government authorities, in the current public health crisis, that has been the proximate cause 

of the interrupting [sic] Plaintiff’s business.” [Resp., p. 7]. Plaintiff is attempting to remove the 

COVID-19 Virus from the chain of causation, relying on the Government Shutdown Orders as the 

proximate cause and ignoring the role of the virus. Plaintiff cannot deny that the Government 

Shutdown Orders were issued in response the COVID-19 pandemic. The virus clearly was the 

cause that led to the issuance of the Government Shutdown Orders. Thus, there is no doubt that 

the financial losses Plaintiff claims under Business Interruption and Civil Authority coverages 

were “caused by or result[ed] from” a virus, and such losses are excluded. 

Moreover, Plaintiff ignores the fact that the very Civil Authority coverage on which it relies 

requires that the Civil Authority order be issued in response to “damage to property”: 

When a Covered Cause of Loss causes damage to property other than property 

at the described premises, 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, provided that both of the following 

apply: 

(1) Access to the area immediately surrounding the damaged property is 

prohibited by civil authority as a result of the damage, and the described 

premises are within that area but are not more than one mile from the 

damaged property; and 

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Case No. 1:20-cv-22615-WILLIAMS

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(2) The action of civil authority is taken in response to dangerous physical 

conditions resulting from the damage or continuation of the Covered 

Cause of Loss that caused the damage, or the action is taken to enable a 

civil authority to have unimpeded access to the damaged property. 

[See Document 5-1 at Page 54.] The Plaintiff alleges no damage to property other than the 

“damage” supposedly caused by the COVID-19 virus. But if the presence of the COVID-19 virus 

is the so-called “damage” which the civil authority action responded to, then the virus exclusion 

plainly applies (excluding “loss or damage caused by or resulting from any virus”). 

The Plaintiff also asserts that the virus exclusion does not mention a pandemic 

circumstance or damages resulting from a pandemic, and the absence of a reference to “pandemic” 

in the virus exclusion necessarily requires the denial of Greenwich’s Motion to Dismiss. [Resp., 

p. 8). Specifically, Plaintiff states “The validity, purpose, and scope of the virus exclusion is being 

investigated by Plaintiff and other litigants around the country, including Defendant’s and other 

insurer’s contention that insured did not pay for the coverage that they are seeking, and whether 

insurance industry is estopped from relying on the virus exclusion due to misrepresentations made 

to regulators who had to grant approval to the virus exclusion in policies.” [Id.] Plaintiff asserts 

this is another reason why dismissal is not appropriate at this juncture. This argument fails 

because, as stated above, Plaintiff offers no textual analysis of the virus exclusion that would 

support the assertion that the exclusion was not intended to apply in the context of a pandemic or 

that the virus exclusion is somehow ambiguous. In Dimmit Chevrolet, Inc. v. Southeastern 

Fidelity Ins. Corp., 636 So. 2d 700 (Fla. 1993) the Supreme Court of Florida found it inappropriate 

and unnecessary to consider arguments pertaining to the drafting history of the pollution exclusion 

at issue, in the absence of any ambiguous policy language. Absent a showing that the virus 

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Case No. 1:20-cv-22615-WILLIAMS

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exclusion is ambiguous, it would be inappropriate to consider arguments pertaining to the drafting 

history of the virus exclusion. 

B. Plaintiff’s Arguments Do Not Establish that “Physical Damage” is distinct 

from “Physical Loss”. 

Plaintiff argues that there is a distinction to be made between “Physical Damage” and 

“Physical Loss,” [Resp., p. 3], but offers no legal authority or analysis that supports this position. 

Plaintiff asserts that “physical damage” contemplates “structural” damage, and that “physical loss” 

contemplates something different, and argues that “the Government Shutdown Orders caused 

‘physical loss’ to Plaintiff’s restaurant because the Orders determined that closing Plaintiff’s 

restaurant and the businesses around it would mitigate against the spread of COVID-19 . . .” [Resp., 

p. 3]. However, Plaintiff fails to identify any meaningful difference between “physical damage” 

and “physical loss.” Plaintiff merely asserts that physical loss contemplates something other than 

structural damage, without offering an explanation of what “physical loss” actually contemplates

or how the orders limiting the Plaintiff’s restaurant operations caused any “direct physical loss” to 

the property. 

Where courts have construed “direct physical loss,” they universally have declined to 

extend coverage for “loss of use” absent—at a minimum—some precipitating physical event or 

physical force that was applied to the property and caused the loss of use. Even under the most 

expansive view of “direct physical loss” where there is no demonstrable structural injury or 

alteration to the covered property, courts still look for the “crucial interaction between the covered 

property and some outside physical force.” Ne. Georgia Heart Ctr., P.C. v. Phoenix Ins. Co., No. 

2:12-CV-00245-WCO, 2014 WL 12480022, *6 (N.D. Ga. May 23, 2014). To hold otherwise

would render the word “physical” meaningless in the context of these policies. Florida law 

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Case No. 1:20-cv-22615-WILLIAMS

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requires courts, in construing insurance policies, to read each policy as a whole, endeavoring to 

give every provision its full meaning and operative effect. See Shaw, 605 F.3d at 1252. 

C. Plaintiff’s Arguments Do Not Establish Structural Alteration Not Is Required. 

Plaintiff cannot credibly allege that its restaurant operations were suspended by direct 

physical loss of or damage to property, and in fact operations were never suspended, nor was there 

any physical loss or damage. Use of the property was restricted, to reduce the risk of the spread 

of the COVID-19 virus, but operations were not suspended and the property was physically 

unaffected. Essentially, Plaintiff argues that the loss of use of its restaurant for dine-in services 

equates to a direct physical loss. As to that issue, this Court should hold that there is no dispute 

that Plaintiff has not suffered a covered direct physical loss. 

The cases Plaintiff cites in support of the assertion that “Direct physical loss or damage” 

does not require structural alteration are all readily distinguishable. Plaintiff cites to Southlanes 

Bowl, Inc. v. Lumbermen’s Mut. Ins. Co., 208 N.W.2d 569 (Mich. Ct. App. 1973), which was

expressly distinguished by Southern Hospitality, Inc. v. Zurich American Ins. Co., 393 F.3d 1137 

(10th Cir.2004). Southern Hospitality held that coverage under a property insurance policy for 

business income loss caused by action of a civil authority that prohibited access to the insured 

premises did not apply to lost income suffered by insured hotel operators when customers were 

prevented from reaching hotels by air due to the Federal Aviation Administration order grounding 

all flights in wake of 9/11. The Court reasoned that the order prohibited access to flights, rather 

than access to hotels, and the order did not close hotels. 

Plaintiff also cites to Sloan v. Phoenix of Hartford Ins. Co., 207 N.W.2d 434 (Mich. Ct. 

App. 1973), which was expressly distinguished by Roundabout Theatre Co. v. Continental 

Casualty Co., 302 A.D.2d 1 (N.Y. App. Div. 2002). In Roundabout, the court rejected a claim for

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Case No. 1:20-cv-22615-WILLIAMS

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losses incurred where a government street closure order rendered the insured’s property 

inaccessible. The court held that the “loss of, damage to, or destruction of property” policy 

provision did not provide coverage for “loss of use” of the property and that the policy language 

at issue “clearly and unambiguously” provided coverage only where the insured’s property 

suffered direct physical damage. Id. at 6. Notably, Roundabout rejected the very argument 

Plaintiff now advances, that “loss of” would be redundant to “destruction of” property if it does 

not mean “loss of use.” The court there reasoned that “loss of” could refer to theft or misplacement 

of property. Roundabout, 302 A.D.2d at 7. 

Plaintiff also cites to Travco Ins. Co. v. Ward, 715 F. Supp. 2d 699 (E.D. Va. 2010), aff’d,

504 F. App’x 251 (4th Cir. 2013), which addresses losses caused by toxic gases from Chinese 

drywall being emitted on the property. Travco is distinguishable because, unlike here, there was 

a physical element that interacted with the property and rendered it unusable. Indeed, recognizing 

the requirement that the loss have a “physical” cause, Travco explicitly relied on cases holding 

that “physical damage to the property is not necessary, at least where the building in question has 

been rendered unusable by physical forces.” Id. at 708 (emphasis added). 

Plaintiff also seeks support from Homeowners Choice Prop. & Cas. v. Maspons, 211 So. 

3d 1067 (Fla. 3d DCA 2017), but that case supports dismissal here. In Homeowners Choice, the 

court explicitly stated: 

A ‘loss’ is the diminution of value of something, and in this case, the insureds’ 

house or personal property ... ‘Direct’ and ‘physical’ modify loss and impose the 

requirement that the damage be actual. Examining the plain language of the

insurance policy in this case, it is clear that the failure of the drain pipe to perform 

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

meaning of the policy. 

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Id. At 1069. As the court in Homeowners Choice explicitly stated, the words “direct” and 

“physical” impose the requirement that the damage be “actual.” Here, there is no actual direct or 

physical loss to the Plaintiff’s property.

Plaintiff also cites Azalea, Ltd. v. American States Ins. Co., 656 So. 2d 600, 602 (Fla. 1st

DCA 1995), where the Appellate court reversed the holding of the trial court and found there was 

“direct physical loss” where chemicals dumped into a sewage system destroyed a bacteria colony 

that was an integral part of a sewage treatment facility. Plaintiff argues that this “physical loss” 

did not require physical damage to the structure. In other words, Plaintiff argues that the mere 

presence of contamination that adheres to a structure can cause direct physical loss. However, in

Azalea, there actually was a structural alteration. The court found that the bacteria colony was 

specifically attached to and became part of the treatment facility structure, and the facility could 

not operate or exist unless the colony was replaced. [Id.] The residue from the unknown 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.] Moreover, if the alleged physical 

loss at issue here is the presence of the COVID-19 virus, that so-called “physical loss” would be 

plainly excluded by the virus exclusion. 

The same arguments made by Plaintiff here, based on the same basic case law on which 

Plaintiff relies, were soundly rejected earlier today by Judge Kelly Higashi in another restaurant 

case brought in the Superior Court for the District of Columbia. Rose’s 1, LLC, et al. v. Erie 

Insurance Exchange, No. 2020 CA 002424 B (Order attached as Exhibit A). The Court in Rose’s 

1 noted that the civil authority orders by the local mayor “did not effect any direct changes to the 

properties” and “did not have any effect on the material or tangible structure of the insured 

properties.” Id. at 5. Further, the Court explained: 

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[U]nder a natural reading of the term “direct physical loss,” the words “direct” and 

“physical” modify the word “loss.” As such, pursuant to Plaintiffs’ dictionary 

definitions, any “loss of use” must be caused, without the intervention of other 

persons or conditions, by something pertaining to matter – in other words, a direct 

physical intrusion on to the insured property. Mayor Bowser’s orders were not such 

a direct physical intrusion.

Further, none of the cases cited by Plaintiffs1 stand for the proposition that a 

governmental edict, standing alone, constitutes a direct physical loss under an 

insurance policy. 

Id. 

D. Plaintiff’s Inability to Use its Property for an Intended Purpose Does Not 

Constitute Physical Loss or Damage. 

Plaintiff argues that the inability to use its restaurant for an intended purpose constitutes 

physical loss or damage, but that argument also fails.

First, Plaintiff was never prevented from operating take-out and delivery services, so 

Plaintiff has been able to operate the restaurant for the purposes of providing food orders to 

customers. Also, the cases Plaintiff cites to are all readily distinguishable. Plaintiff cites to

Western Fire Ins. Co. v. First Presbyterian Church, 437 P.2d 52, 54 (Colo. 1968) to support its 

position that the inability to use the property or a portion of the property for sit-down dining and/or 

indoor dining constitutes a direct physical loss. In Western Fire, loss of use resulted from the

“infiltration of gasoline in the soil under and around the building, which gasoline and vapors 

thereof infiltrated and contaminated the foundation and halls and rooms of the [property]...” 

Western Fire is distinguishable from the case at issue because there was a physical contaminant 

that intruded onto the insured property to cause the loss of use. 

 

1 Including Gregory Packaging, Western Fire, Sloan and TRAVCO, all cited by Plaintiff here and 

distinguished herein.

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Case No. 1:20-cv-22615-WILLIAMS

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Likewise, in every other case Plaintiff cites for this proposition there was a physical 

contaminant that intruded onto the insured property or some physical force that acted upon the 

property to cause the loss of use.2 Plaintiff’s reliance on these decisions is misplaced for multiple 

reasons. There is no Florida authority that equates the mere inability to use or occupy insured 

property with “physical loss of or damage to” property. Further, all of the decisions cited on page 

5 of Plaintiff’s Response involved external substances that actually rendered the property unusable, 

including cases where buildings were affected by pervasive odors, harmful fumes, mold, or other 

harmful agents. By contrast, Plaintiff does not allege that the COVID-19 virus was present in 

Plaintiff’s restaurant or rendered the property physically unfit for use. 

III. CONCLUSION

For the reasons set forth herein and in its Motion to Dismiss Plaintiff’s First Amended

Complaint, Greenwich requests that the Court dismiss the causes of action asserted by Plaintiff in 

its First Amended Complaint in their entirety and with prejudice, pursuant to Fed. R. Civ. P. 

12(b)(6). 

Dated: August 6, 2020 Respectfully submitted,

s/Christine M. Renella

Christine M. Renella (Bar No. 65485) 

crenella@zelle.com

ZELLE LLP 

SunTrust International Center 

2 Gregory Packaging, Inc. v. Travelers Prop. Cas. Co. of America, Civ. No. 2:12–cv–04418 

(WHW), 2014 WL 6675934 (D.N.J. Nov. 25, 2014) (ammonia spill on facility); Prudential Prop. 

& Cas. Ins. Co. v. Lillard-Roberts, No. CV-01-1362-ST, 2002 WL 31495830 (D. Or. June 18, 

2002) (homeowner’s policy covered for mold damage); Travco Ins. Co. v. Ward, 715 F. Supp. 2d 

699 (E.D. Va. 2010), aff’d, 504 F. App’x 251 (4th Cir. 2013) (toxic gases from Chinese drywall 

being emitted on to the property); Hampton Foods, Inc. v. Aetna Cas. & Sur. Co., 787 F.2d 349 

(8th Cir. 1986) (Insured forced to vacate its building due to danger of the building’s collapse). 

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Case No. 1:20-cv-22615-WILLIAMS

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One Southeast Third Avenue, Ste. 1600 Miami, 

Florida 33131-4332 

Tel: 305-299-9939 

crenella@zelle.com

Dan Millea (admitted pro hac vice on 7/6/2020) 

ZELLE LLP

500 Washington Avenue S., Suite 4000 

Minneapolis, MN 55415 

Tel: 612-336-9170 

dmillea@zelle.com

Counsel for Defendant Greenwich Insurance 

Company 

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing was served by 

CM/ECF on August 6, 2020, on all counsel or parties of record below. 

Lyle E. Shapiro

Krystina T. Endara 

lyle@hslawfl.com

Krystina@hslawfl.com 

HERSKOWITZ SHAPIRO

Two Datran Center

9130 S. Dadeland Blvd., Suite 1609 

Miami, Florida 33156 

Tel: (305) 423-1986 

Attorneys for Plaintiff

Jacob K. Auerbach

GALLUP AUERBACH

jauerbach@gallup-law.com

4000 Hollywood Boulevard 

Presidential Circle-Suite 265 South 

Hollywood, Florida 33021 

Tel: (954) 894-3035 

Attorney for Plaintiff

s/Christine M. Renella

Christine M. Renella

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