United States District Court

for the

Southern District of Florida

AE Management, LLC, and others, 

Plaintiffs,

v.

Illinois Union Insurance Company

and Chubb National Insurance 

Company, Defendants.

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Civil Action No. 20-22925-Civ-Scola

Order Granting Motion to Dismiss

The Plaintiffs in this case—AE Management, LLC; AE Restaurant Group, 

Inc.; Italica Ristorante, Inc.; ADL Restaurant, LLC; Angelos Wine Bar Weston, 

LLC; AE Addison Place, LLC; AE Coral Springs, LLC; AE Oakland Bakery and 

Trattoria, LLC; and AE Aventura, LLC (the “Restaurants”)—are several 

restaurant owners and operators in South Florida. The Restaurants complain 

Defendants Illinois Union Insurance Company and Chubb National Insurance 

Company (the “Insurance Company”) failed to provide coverage under the 

parties’ commercial property insurance policy for losses they incurred as a 

result of government emergency orders, restricting in-person dining, issued in 

response to the COVID-19 pandemic. (Am. Compl., ECF No. 15.) The Insurance 

Company has filed a motion to dismiss the Restaurants’ amended complaint, 

contending the Restaurants’ claimed losses are not covered under the policy 

and, in any event, coverage is precluded by the policy’s virus exclusion. (Defs.’ 

Mot., ECF No. 29.) In response, the Restaurants argues they have sufficiently 

alleged their breach-of-contract claim against the Insurance Company. (Pls.’ 

Resp., ECF No. 32.) The Defendants have timely replied. (Defs.’ Reply, ECF No. 

38.) While the Court is sympathetic to the Restaurants’ hardship and losses, 

the Court agrees with the Insurance Company that the claimed losses are not 

covered under the policy and, therefore, grants the Insurance Company’s 

motion to dismiss (ECF No. 29.)

1. Background1

The Restaurants range from casual eateries to upscale Italian dining 

venues throughout South Florida. (Am. Compl. ¶ 28.) The Restaurants offer on1 The Court generally accepts the Plaintiffs’ factual allegations as true for the purposes of 

evaluating the Defendants’ motions to dismiss. Brooks v. Blue Cross & Blue Shield of Fla., Inc., 

116 F.3d 1364, 1369 (11th Cir. 1997). 

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premises dining and table service, delivery service, and take-out service, with 

the vast majority of their revenue coming from on-premises dining and table 

service. (Id. ¶¶ 30–31.) To protect their property, businesses, and income from 

losses, the Restaurants secured an insurance policy from Illinois Union. (Id. ¶ 

42.)

The policy was in effect at the time Florida’s governor issued an 

emergency order, on March 16, 2020, in response to growing concern about the 

COVID-19 pandemic, mandating that restaurant dine-in services maintain a 

six-foot distance between tables. (Id. ¶ 48.) The next day, on March 17, MiamiDade County issued an emergency order, requiring all restaurants with seating 

for more than eight people to cease offering on-premises services altogether. 

(Id. ¶ 49.) A few days later, on March 20, the governor ordered all restaurants 

in Broward and Palm Beach counties to cease offering on-premises services as 

well. (Id. ¶ 50.) 

The Restaurants complied with all these orders and, as a result, stopped 

offering on-premises dining. (Id. ¶ 51.) After May 11, the Restaurants operated 

their on-premises dining services, but with limited capacity. (Id. ¶ 58.) As a 

result of these restrictions, as would be expected, the Restaurants suffered 

losses of business income and incurred additional expenses. (Id. ¶ 60.)

The policy under which the Restaurants seek coverage is an all-risk 

commercial property insurance policy, with blanket limits of $7,879,226 for 

physical building and personal property damages and $15,704,226 for 

business income. (Id. ¶ 69.) According to the Restaurants, the policy does not 

contain an exclusion for the loss of business income caused by emergency 

orders resulting in the physical loss of or damage to Restaurant properties. (Id. 

¶ 71.) The policy contains a business-interruption clause: 

[The insurer] will pay for the actual loss of Business Income [the 

insured] sustain[s] due to the necessary “suspension” of [the 

insured] “operations” during the “period of restoration[.]” The 

“suspension” must be caused by direct physical loss of or damage 

to property at premises which are described in the Declarations 

and for which a Business Income Limit of Insurance is shown in 

the Declarations. The loss or damage must be caused by or result 

from a Covered Cause of Loss.

(Id. ¶ 74; Ex. A, Policy, ECF No. 15-1, 48.) The policy also includes coverage for 

“Extra Expense” which includes “necessary expenses [the insured] incur[s] 

during the ‘period of restoration’ that [the insured] 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.” (Am. Compl. ¶ 79; Policy at 48.) The 

Case 1:20-cv-22925-RNS Document 52 Entered on FLSD Docket 03/04/2021 Page 2 of 7
Restaurants say they timely provided notice to the Insurance Company, but the 

Insurance Company denied coverage. (Am. Compl. ¶ 85.)

2. Legal Standard

A court considering a motion to dismiss, filed under Federal Rule of Civil 

Procedure 12(b)(6), must accept all the complaint’s allegations as true, 

construing them in the light most favorable to the plaintiff. Pielage v. 

McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008). Although a pleading need 

only contain a short and plain statement of the claim showing that the pleader 

is entitled to relief, a plaintiff must nevertheless articulate “enough facts to 

state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 

550 U.S. 544, 570 (2007). “But where the well-pleaded facts do not permit the 

court to infer more than the mere possibility of misconduct, the complaint has 

alleged—but it has not shown—that the pleader is entitled to relief.” Ashcroft v. 

Iqbal, 556 U.S. 662, 679 (2009) (quoting Fed. R. Civ. P. 8(a)(2)) (internal 

punctuation omitted). A court must dismiss a plaintiff’s claims if it fails to 

nudge its “claims across the line from conceivable to plausible.” Twombly, 550 

U.S. at 570.

3. Analysis

As acknowledged above, the Court is not unsympathetic to the 

Restaurants’ position and the considerable losses they have no doubt incurred

as a result of the COVID-19 pandemic and the associated governmental orders 

impacting their business. “[A] growing number of state and federal courts in 

Florida and around the country,” however, “have considered the issue and have 

almost uniformly held that economic losses resulting from . . . government 

orders closing businesses to slow the spread of COVID-19 are not covered 

under ‘all risk’ policy language identical to that in this case because such 

losses were not caused by direct physical loss of or damage to the insured 

property.” Emerald Coast Restaurants, Inc. v. Aspen Specialty Ins. Co., No. 20-

cv-5898, 2020 WL 7889061, at *2 (N.D. Fla. Dec. 18, 2020).

The Restaurants argue they have sufficiently alleged their entitlement to 

coverage as a result of, alternatively, (1) “government orders limiting the 

functionality of [their] property”; (2) “the imminent risk of harm of future 

COVID-19 virus exposures,” separate and apart from the government orders; or 

(3) “the need to preserve property under the Policy and common law. . . in the 

face of an imminent risk of harm.” (Pls.’ Resp. at 2.) 

As the Restaurants frame it, the government orders caused the 

Restaurants, their employees, and their customers “to lose physical use of, and 

Case 1:20-cv-22925-RNS Document 52 Entered on FLSD Docket 03/04/2021 Page 3 of 7
physical access to, property at the covered restaurants premises.” (Id. at 3.)

According to the Restaurants, this loss of use of the premises, or loss of access 

to the premises, satisfies the policy’s requirement that there be “direct physical 

loss of or damage to property at [the insured] premises.” (Id. at 10.) The Court 

finds the Restaurants’ interpretation to stretch the plain meaning of the 

policy’s words beyond what they can bear. Simply put, and as other Courts in 

this district have noted when considering similar lawsuits, the Restaurants 

simply do not provide the Court with adequate reason to depart from the nearly 

unanimous view that neither the government’s orders nor COVID-19 caused

direct physical loss of or damage to the Restaurants’ property sufficient to 

trigger coverage. See, e.g., Cafe La Trova LLC v. Aspen Specialty Ins. Co., 20-

22055-CIV, 2021 WL 602585, at *8 (S.D. Fla. Feb. 16, 2021) (Altonaga, J.)

(“[T]o establish coverage, Plaintiff must show that its loss of business income 

occurred because its covered property suffered some actual, physical harm.”);

Carrot Love, LLC v. Aspen Specialty Ins. Co., No. 20-23586-Civ, 2021 WL 

124416, at *2 (S.D. Fla. Jan. 13, 2021) (Scola, J.) (adopting “the nearly 

unanimous view that COVID-19 does not cause direct physical loss or damage 

to a property sufficient to trigger coverage” under similar policy language); 

Atma Beauty, Inc. v. HDI Glob. Specialty SE, 1:20-CV-21745, 2020 WL 

7770398, at *4 (S.D. Fla. Dec. 30, 2020) (Gayles, J.) (“While Plaintiff argues 

that a loss of functionality of, access to, or intended use of the salon 

constitutes physical loss or damage, it is not supported by the plain language 

of the Policy or Florida law.”); Sun Cuisine, LLC v. Certain Underwriters at 

Lloyd’s London, No. 20-cv-21827, 2020 WL 7699672, at *4 (S.D. Fla. Dec. 28, 

2020) (Gayles, J.) (concluding that the “[p]laintiff’s allegations provide[d] the 

Court no reason to deviate from the prevailing consensus in this Circuit and 

others regarding business interruption claims arising from the COVID-19 

pandemic” that such claims “do not plausibly show direct physical loss or 

damage” to property); SA Palm Beach LLC v. Certain Underwriters at Lloyd's, 

London, No. 9:20-cv-80677, 2020 WL 7251643, at *5 (S.D. Fla. Dec. 9, 2020) 

(Ungaro, J.) (finding no direct physical loss where plaintiff alleged that it was 

“unable to use its property for its intended purpose”) (cleaned up).

To find otherwise would require the Court to read additional words into 

the policy. That is, under the Restaurants’ view, the words “access to” are 

somehow implied in the relevant coverage language. By their argument, then,

“direct physical loss of” property is equivalent to “direct physical loss of access 

to” property. But the Restaurants provide no means by which the Court could 

make such an interpretative leap. To the contrary, under Florida law, the 

phrase, “direct physical loss of or damage to property” requires “a distinct, 

demonstrable, physical alteration of the property” and does not include “losses 

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that are intangible or incorporeal.” Mama Jo’s, Inc. v. Sparta Ins. Co., 17-CV23362-KMM, 2018 WL 3412974, at *9 (S.D. Fla. June 11, 2018) (Moore, 

J.), aff’d, 823 Fed. App’x 868 (11th Cir. 2020). 

The Restaurants are critical of the cases the Insurance Company 

contends are persuasive. The Court finds these criticisms largely unwarranted. 

For example, the Court disagrees that the analyses and conclusions in 

Malaube, LLC v. Greenwich Ins. Co. are distinguishable. 20-22615-CIV, 2020 

WL 5051581 (S.D. Fla. Aug. 26, 2020) (Torres, Mag. J.). Malaube involved the 

same policy language and nearly identical allegations to those at issue here. 

Like here, the plaintiff restaurant in Malaube alleged that Florida government 

orders, issued in response to the COVID-19 pandemic, restricted the 

restaurant from providing on-premises dining, resulting in financial losses. 

Compare id. at *1, *5 with Am. Compl. at ¶ 46 (alleging state and local orders 

issued “[w]hen it became apparent” that knowledge of the COVID-19 pandemic 

alone “would not naturally facilitate voluntary strict social distancing and the 

curtailing of social-gathering business operations”) and ¶ 54 (the “emergency 

orders caused Plaintiffs’ losses”). The restaurant in Malaube “equate[d] the 

closure of its indoor dining to a physical loss because the business could no 

longer operate for its intended purpose.” Malaube, 2020 WL 5051581 at *5. 

Like here, the Malaube restaurant argued “that physical loss does not require 

structural alteration and that a property’s inability to operate with its intended 

purpose (i.e. the operation of both its indoor and outdoor dining sections) falls 

within the insurance policy’s coverage” requiring a direct physical loss of 

property. Id. After a comprehensive analysis, the Court in Malaube concluded 

that, under Florida law, the restaurant there failed to state a claim for coverage 

under the same provisions at issue here because it simply failed to allege 

“direct physical of or damage to property.” Id. at *9. Much like the other cases 

the Insurance Company relies upon, the Court finds Malaube directly on point 

and persuasive. 

Conversely, the Court is not persuaded by the cases the Restaurants cite

in support of their position. Upon review, the Court finds many of them 

mischaracterized by the Restaurants, distinguishable, or otherwise not 

compelling in the face of the numerous contrary cases issuing from state and 

federal courts throughout Florida. 

In an attempt to skirt their failure to establish a direct physical loss of or 

damage to their properties, the Restaurants, in their opposition to the motion 

to dismiss, contend entitlement to coverage under another theory: the losses 

they incurred, in restricting or discontinuing their on-premises dining, 

mitigated the risk of the virus’s contaminating their properties. (Pls.’ Resp. at 

14.) In short, the Restaurants maintain that “[b]y closing their on-premises 

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dining, [they] materially limited the [Insurance Company’s] overall exposure 

under the Policy.” (Id. at 15.) Not only is this an entirely new theory, not alleged 

anywhere in the complaint, but it is meritless as well. Under the relevant policy 

provision, “in the event of a loss,” the Restaurants must “[t]ake all reasonable 

steps to protect the Covered Property from further damage, and keep a record of 

. . . expenses necessary to protect the Covered Property.” (Policy at 52 

(emphasis added).) Under Florida law, such mitigation losses, under a 

mitigation provision like this, come into play only if an actual, covered loss has 

occurred. Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 170 (Fla. 

2003). Since the Restaurants have failed to allege a covered loss, their claim for 

mitigation coverage, had it been pleaded, would fail as well.

Additionally, just as the Restaurants fail to allege direct physical loss of 

or damage to property at their premises, they also fail to allege that any 

property away from their premises sustained any damage. Accordingly, any 

claim under the policy’s Civil Authority Coverage provision, which requires 

damage to property within a mile of the insured premises, fails as well. 

Lastly, because the Court finds the restaurants fail to allege facts 

establishing their entitlement to coverage, the Court declines to consider the 

applicability of the policy’s virus exclusion or whether Chubb was properly 

named as a defendant in this case.

4. Conclusion

For the reasons set forth above, the Court dismisses the Restaurants’ 

complaint, comprised solely of one count of breach of contract against the 

Insurance Company. The Court dismisses the Restaurants’ amended 

complaint with prejudice because they have failed to state a claim under Rule 

12(b)(6). Further, the Court denies the Restaurants’ request for leave to 

amend, inserted as an afterthought, at the conclusion of their opposition to the 

Insurance Company’s motion to dismiss: the request is both procedurally 

defective and lacking in substantive support. See Newton v. Duke Energy 

Florida, LLC, 895 F.3d 1270, 1277 (11th Cir. 2018) (“[W]here a request for leave 

to file an amended complaint simply is imbedded within an opposition 

memorandum, the issue has not been raised properly.”); Avena v. Imperial 

Salon & Spa, Inc., 740 Fed. App’x 679, 683 (11th Cir. 2018) (“[W]e’ve rejected 

the idea that a party can await a ruling on a motion to dismiss before filing a 

motion for leave to amend.”) (noting also that “a motion for leave to amend 

should either set forth the substance of the proposed amendment or attach a 

copy of the proposed amendment”) (cleaned up).

The Court also denies as moot both the Insurance Company’s motion to 

take judicial notice of the various civil-authority orders referenced in the 

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Restaurants’ complaint (ECF No. 30) and the Restaurants’ motion to strike 

exhibit 6 to the Insurance Company’s motion to dismiss (ECF No. 37). The 

Court’s order here did not rely on any of those documents and so the requested 

relief is moot.

Finally, the Clerk is directed to close this case. Any pending motions not 

disposed of in this order are also denied as moot.

Done and ordered at Miami, Florida, on March 4, 2021.

________________________________

Robert N. Scola, Jr.

United States District Judge

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