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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT FLORIDA

CASE NO. 1:20-cv-22615-WILLIAMS

MALAUBE, LLC,

Plaintiff,

vs.

GREENWICH INSURANCE COMPANY,

Defendant.

 /

PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION TO 

DISMISS AND INCORPORATED MEMORANDUM OF LAW [DE 10]

Plaintiff, Malaube, LLC, by and through their undersigned counsel, files its response in 

opposition to Defendant Greenwich Insurance Company’s (“Greenwich”) Motion to 

Dismiss (“Motion”) [DE 10] and in support states as follows:

I. INTRODUCTION

Plaintiff’s policy is an “all risk” property policy that broadly covers loss resulting from any 

kind of “physical loss or damage” unless excluded. Here, there is no applicable exclusion. The 

issue here (and in other cases filed around the country) is whether Covid-19 can potentially 

constitute “physical loss or damage” as alleged by Plaintiff. Such allegation should be taken at 

true at this stage of the proceeding; that is, the referenced “Government Shutdowns” due to Covid19 forced Plaintiff to “suspend operations” thus “interfering with [Plaintiff’s] access to its 

business”. [DE 5 at ¶¶13-20]. 

Greenwich contends 1) that there is no Business Income coverage or Extra Expense 

coverage because there is no allegation of “direct physical loss of or damage to Plaintiff’s Covered 

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Property”; 2) that there is no Civil Authority coverage because there is no allegation of “physical 

damage” which prohibits Plaintiff from accessing Plaintiff’s property and 3) that a “virus 

exclusion” in the policy excludes coverage. [DE 10 at page 2]. Each of Greenwich’s contentions 

are wrong. 

Plaintiff’s restaurant interruption is a “physical loss” event as a direct result of Covid-19 

and the related Government Shutdown Orders. Plaintiff has lost the physical use of its restaurant, 

resulting in a significant loss of business income. Moreover, as explained below, the “virus 

exclusion” relied upon by Defendant Greenwich does not exclude coverage or at best is 

ambiguous, and therefore must be construed in favor of coverage. See, e.g., Washington National 

Ins. Corp. v. Ruderman, 117 So.3d 943 (Fla. 2013) (where the Florida Supreme Court answered a 

certified question from the U.S. Eleventh Circuit, affirming that any insurance policy ambiguity 

must automatically be construed in favor of coverage without resort to extrinsic evidence). 

Accordingly, the Motion must be denied.

II. ARGUMENT

A. Applicable general principals of law 

Under Florida law, any ambiguity must be construed in favor of coverage. See, e.g., 

Washington National Ins. Corp. v. Ruderman, 117 So.3d at 943 (Fla. 2013). Thus, if there are two 

reasonable interpretations of the same language, then the Court must construe the language in favor 

of the insured. Id.at 948 (“policy language is considered to be ambiguous ... if the language ‘is 

susceptible to more than one reasonable interpretation, one providing coverage and the other 

limiting coverage”) (citation omitted). 

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B. “Physical Damage” versus “Physical Loss” 

The Plaintiff’s policy covers loss from a suspension of operations “caused by direct 

physical loss of or damage to property at premises which are described in the Declarations.” 

[Doc.5-1 at Page 53]. There is much debate about whether “physical loss” is distinct from 

“physical damage”. But it must be. The use of the disjunctive “or” in the phrase “direct physical 

loss or damage” suggests that either a loss or damage is required, and that a loss is distinct from 

damage. See Foremost Ins. Co. v. Medders, 399 So. 2d 128, 130 (Fla. 5th DCA 1981). It is a 

fundamental rule of contract construction that a contract should not be interpreted in such a way 

to render provisions meaningless. Bethany Trace Owners’ Ass’n, Inc. v. Whispering Lakes I, LLC, 

155 So. 3d 1188 (Fla. 2nd DCA 2014). While “property damage” contemplates “structural” 

damage, “property loss” contemplates something different. Here, 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 COVID19, especially given that restaurants like Plaintiff’s business are indoors and prolong close contact 

with individuals. See, e.g., Amendment No. 2 to Miami-Dade County Emergency Order No. 26-

20. Because of the Government Shutdown Orders, Plaintiff cannot make full use of its property. 

This is the type of “physical loss” for which there is coverage under the Policy. 

I. The inability to use a restaurant for its intended purpose constitutes “direct

physical loss or damage.”

a. “Direct physical loss or damage” does not require structural alteration.

There are numerous cases being cited throughout the country on the “direct physical loss 

or damage” issue. Plaintiff submits that the better reasoned cases, and the cases consistent with 

Florida law, stand for the proposition that the Government Shutdown Orders at issue in this case 

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caused “direct physical loss”. See, e.g., Southlanes Bowl, Inc. v. Lumbermen's Mut. Ins. Co., 208 

N.W.2d 569 (Mich. Ct. App. 1973) (held that under business interruption policies of plaintiff 

insureds, engaged in business of operating places of amusement, physical damage to the insured 

premises was not a prerequisite to insurers' obligation to reimburse insurance for net losses 

resulting from closing of business by order of the governor during widespread riots and civil 

commotion); Sloan v. Phoenix of Hartford Ins. Co., 207 N.W.2d 434 (Mich. Ct. App. 1973)

(policy, which was drawn by insurer and which provided coverage against interruption of movie 

theater business due to riot, provided coverage of loss due to compliance with governor's executive 

order which, during period of riots, imposed curfew and closed places of amusement, though 

premises did not sustain physical damage); US Airways, Inc. v. Commonwealth Ins. Co., 65 Va. 

Cir. 238 (2004) (“since MWAA's orders denied access to Reagan National Airport and denied 

“access to real or personal property” of U.S. Airways, the orders qualify under the Civil Authority 

provision of the Policy”); Homeowners Choice Prop. & Cas. v. Maspons, 211 So. 3d 1067, 1069 

(Fla. 3d DCA 2017) (citation omitted) (a “loss” is a diminution of value of something and can 

include a failure of something to perform its function); Azalea, Ltd. v. American States Ins. Co., 

656 So. 2d 600, 602 (Fla. 1st DCA 1995) (finding direct physical loss when the business could not 

operate because a substance “actually covered and adhered to the interior of the structure”; and 

thus acknowledging that “physical loss” did not require physical damage to the structure); Travco 

Ins. Co. v. Ward, No. 715 F. Supp. 2d 699, 708 (E.D. Va. 2010) (noting that the majority of cases 

nationwide find that physical damage to property is not necessary where, at least, the property has 

been rendered unusable by a covered cause of loss); Sentinel Mgmt. Co. v. New Hampshire Ins. 

Co., 563 N.W.2d 296, 300 (Minn. Ct. App. 1997) (“Direct physical loss also may exist in the 

absence of structural damage to the insured property.”); Hughes v. Potomac Ins. Co., 18 Cal. Rptr. 

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650, 655 (Cal. Dist. Ct. App. 1962) (finding coverage when dwelling was unsafe due to a 

landslide); Trinity Industries Inc. v. Insurance Co. of North America, 916 F.2d 267, 270-271 (5th

Cir. 1990) (defining “physical loss or damage” broadly to include “an initial satisfactory state that 

was changed by some external event into an unsatisfactory state.”); Gen. Mills, Inc. v. Gold Medal 

Ins. Co., 622 N.W.2d 147, 152 (Minn. Ct. App. 2001) (“direct physical loss can exist without 

actual destruction of property or structural damage to property”...[w]hen General Mills is unable 

to lawfully distribute its products because of FDA regulations, that function is seriously 

impaired”). 

b. A property’s unsuitability for an intended purpose constitutes “physical loss or

damage.”

A court must consider the nature and intended use of property, and the purpose of the 

insurance contract.” Prudential Prop. & Cas. Ins. Co. v. Lillard-Roberts, No. CV-01-1362-ST, 

2002 WL 31495830, at *28 (D. Or. June 18, 2002). The inability to use the property or a portion 

of the property for sit down dinning and/or in door dinning constitutes a direct physical loss. See, 

e.g., Western Fire Ins. Co. v. First Presbyterian Church, 437 P.2d 52 (Colo. 1968) (holding the 

loss of use of church, rendered uninhabitable by gasoline, constituted a direct physical loss).

Gregory Packaging, Inc. v. Travelers Property Casualty Co., No. 2:12-cv-04418, 2014 WL 

6675934 at *16-*17. (D. N.J. Nov. 25, 2014) (there was physical loss or damage to the plant from 

ammonia because “the heightened ammonia levels rendered the facility unfit for occupancy until 

the ammonia could be dissipated.”); TRAVCO Insurance Co. v. Ward, 715 F. Supp. 2d 699, 709 (E.D. 

Va.2010), aff’d, 504 F. App’x. 251 (4th Cir. 2013) (the court found “direct physical loss” where a 

“home was rendered uninhabitable by the toxic gases” released by defective drywall, regardless of 

lasting physical damage to the property itself); Hampton Foods, Inc. v. Aetna Cas. & Sur. Co., 787 

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F.2d 349, 352 (8th Cir. 1986) (business income coverage available where there was risk of collapse 

of structure).

Defendant’s reliance on Mama Jo’s, Inc. v. Sparta Insurance Co., No. 17-CV-23362-

KMM, 2018 WL 3412974 (S.D. Fla. June 11, 2018), is misplaced. First, that case was a summary 

judgment case, not a motion to dismiss case. Second, the alleged cause was simply construction 

dust. Third, the business continued to operate and was not “uninhabitable” or substantially

“unusable”. Id. On the other hand, the Government Shutdown Orders have caused Plaintiff’s 

business to be unusable in a very material aspect. There is a higher risk of COVID-19 with 

prolonged contact between individuals, especially in inside areas. The risk of transmission and 

property damage is heightened in restaurants, where air is recirculated and space is limited. The 

Government Shutdown Orders were issued as a result of the foregoing and resulted in a suspension 

of Plaintiff’s ordinary course of business. 

Based on the foregoing, Plaintiff has adequately pled that the Government Shutdown 

Orders have caused “physical loss and damage” because the Plaintiff’s business can no longer 

operate for its intended purpose.

C. The “Virus Exclusion” Does not Exclude Coverage

Provisions excluding or limiting the liability of the insurer are construed even more strictly

against the insurer than those provisions that allow coverage, ((Auto–Owners, 756 So.2d 29, 34 

(Fla. 2000)), and “the burden of proof rests on the insurance company to demonstrate that the 

coverage was inapplicable,” ((U.S. Concrete Pipe Co. v. Bould, 437 So.2d 1061, 1065 (Fla.1983)). 

If exclusions are reasonably susceptible to more than one meaning, they are considered ambiguous 

and are to be construed in favor of the insured. Swire Pac. Holdings, 845 So.2d 161, 165 (Fla. 

2003); See also Penzer v. Transp. Ins. Co., 545 F.3d 1303, 1309 (11th Cir. 2008), certified question 

answered, 29 So. 3d 1000 (Fla. 2010).

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

must be construed in favor of the insured, the Motion must be denied in the event that there is an 

ambiguity in the exclusion. At best, there is. The relevant language provides: “[w]e will not pay 

for loss or damage caused by or resulting from any virus, bacterium or other microorganism that 

induces or is capable of inducing physical distress, illness or disease[.]” See DE 10 at page 7. 

However, the Amended Complaint alleges that the Government Shutdown Orders, and not a virus, 

is what caused Plaintiff’s business losses. See DE 5 at ¶¶13-20. 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 Plaintiff’s business. 

Here, there virus exclusion is susceptible to more than one reasonable construction and as 

a result, the Motion must be denied. See Managed Care Solutions, Inc. v. Cmty. Health Sys., Inc., 

2011 WL 6024572, at *6 (S.D. Fla. Dec. 2, 2011) (Moreno, C.J.) (“The contract section in dispute 

is reasonably susceptible to more than one interpretation, and thus this issue should be decided at 

the summary judgment stage and the motion to dismiss on this basis should be denied.”); Larach 

v. Standard Chartered Bank Int'l (Americas) Ltd., 724 F. Supp. 2d 1228, 1239 (S.D. Fla. 2010)

(Moreno, C.J.) (denying motion to dismiss because the “parties' differing interpretations of their 

respective obligations under the [contract] demonstrate that this issue is not ripe for decision at the 

motion to dismiss stage”); Hypower, Inc. v. Saab Sensis Corp., 12-61668-CIV, 2013 WL 

12141509, at *2 (S.D. Fla. May 10, 2013) (denying motion to dismiss when it would require the 

Court to construe and apply arguably ambiguous contract terms to the facts and potentially attempt 

to discern the parties' intent from course of dealing). 

Plaintiff has specifically pled that the Government Shutdown Orders caused its losses and 

not the virus itself, and such allegation should be accepted for purposes of a Rule 12 Motion. 

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Defendant Greenwich’s motion and proposed contract interpretation ignores that well established 

principle that Florida law requires strict construction of insurance contracts. Notably, the virus 

exclusion does not mention a pandemic circumstance or damages resulting from a pandemic. If 

Defendant Greenwich want to exclude coverage resulting from government orders, it could have 

said so. But it did not. The absence of a reference to a “pandemic” in the virus exclusion necessarily 

requires the denial of Defendant’s Motion. 

Because Plaintiffs’ loses were not specifically caused by a “virus”, but instead were caused 

by the Government Shutdown Orders; the virus exclusion is not operative and the subject policy 

affords Plaintiff coverage.1 

III. CONCLUSION

For the reasons set forth hereinabove, Defendant’s Motion should be denied. 

1 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 the 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. This is a further reason why dismissal is not appropriate 

at this juncture. 

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Respectfully submitted,

HERSKOWITZ SHAPIRO

Two Datran Center

9130 S. Dadeland Blvd., Suite 1609

Miami, FL 33156

t: (305) 423-1986; f: (305) 670-3884

By: /s/ Lyle E. Shapiro

 LYLE. SHAPIRO 

 Florida Bar No: 120324 

lyle@hslawfl.com

KRYSTINA T. ENDARA 

Florida Bar No.: 1004139 

krystina@hslawl.com

AND

GALLUP AUERBACH

4000 Hollywood Boulevard Presidential 

Circle-Suite 265 South Hollywood, 

Florida 33021

t: 954-894-3035; f: 954-894-8015

By: /s/ Jacob K . Auerbach JACOB 

K. AUERBACH Florida Bar 

No: 084003 jauerbach@galluplaw.com

Counsel for Plaintiff

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CERTIFICATE OF SERVICE

WE HEREBY CERTIFY that on July 30, 2020, we electronically filed the foregoing 

document with the Clerk of the Court using CM/ECF. I also certify that the foregoing document 

is being served this day on all counsel of record indicated in the attached service list via transmission

of Notice of Electronic Filing generated by CM/ECF.

/s/ Lyle E. Shapiro 

Lyle E. Shapiro

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