NOT RECOMMENDED FOR PUBLICATION File Name: 22a0533n.06
No. 2 1

- 322 4
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
FAMILY TACOS, LLC , Plaintiff

- Appellant ,

v.
AUTO

- OWNERS INSURANCE COMPANY , Defendant

- Appellee

. ) ) ) ) ) ) ) ) ) ) ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO
OPINION

B efore : MOORE , GRIFFIN , and MURPHY, Circuit Judges. MURPHY, Circuit Judge

. Family Tacos , LLC, operates two restaurants in northeast Ohio. Like many restaurant owners , it lost substantial bu siness due to the COVID

- 19 pandemic and the ensuing government orders that restrict ed in

- person dining

. Family Tacos sought to recover this lost income under a commercial insurance policy that it purchased from Auto

- Owners Insurance Company. The policy obligates Auto

- Owners to pay for some amounts of lost income when this economic loss grows out of a “ direct physical loss of or damage to” Family Tacos’ property. Policy , R.5

- 2 , PageID 2 3 7 . The district court granted Auto

- Owners’ motion to dismiss because neither the pandemic nor the government shutdown caused a “direct physical loss of or damage
to ” Family Tacos’ restaurants

. In the meantime, another district court asked the Ohio Supreme Court to consider a similar insurance

- policy question. See Neuro

- Commc’n Servs., Inc. v. Cincinnati Ins. Co. , __ N.E.3d __, 2022 WL 17573883, at *3 (Ohio Dec. 12, 2022). We held thisNo. 2 1

- 322 4 , Family Tacos, LLC v. Auto

- Owners Ins

. Co.

2 case for the Ohio Supreme Court’s answer. That court has now interpreted similar policy language to bar coverage in these circums tances

— consistent with our own prior answer to this question. See id. at *4 (quoting Santo’s Italian Café LLC v. Acuity Ins. Co. , 15 F.4th 398, 402 (6th Cir. 2021)). Bound by Neuro

- Communication , we affirm

. I Family Tacos operates two restaurants in Kent , Ohio. L ike many Ohio restaurant owners , Family Tacos has unfortunately suffered significant losses from the combined effects of the COVID

- 19 pandemic and the follow

- on government orders that prohibited in

- person dining

. Before the pandemic, Family Tacos had purchased an “all

- risk” commercial insurance policy from Auto

- Owners. This policy indicates generally that Auto

- Owners will cover “direct physical loss of or damage to” Family Tacos’ property. Policy, R.5

- 2, PageID 2 23. Two other types of coverage are relevant. The policy’s “ Business I ncome Provision ” allows Family Tacos
to seek certain lost income or extra expenses from Auto

- Owners

. Specifically, t his provision permits Family Tacos to recover for the “actual loss of Business Income” resulting from a “suspension” of its restaurant operations if th e suspension i s “caused by direct physical loss of or damage to ” Family Taco s ’ property

. Id. , PageID 237

. It also permit s Family Tacos to recover other “necessary expenses ” that the company “ would not have incurred if there had been no direct physical loss or damage to property [

. ] ” Id. The policy’s “ C ivil A uthority Provision ” next allows Family Tacos to seek lost income and
extra expenses incurred as a r esult of governmental responses to damage to neighboring property. The policy provides that Family Tacos may seek its income and expenses if an “action of civil authority” ( that is, a government action) prohibits it from accessing its restaurants because of

“ damage to ” nearby propert ies that was caused by a “Covered Cause of Loss

. ” Id. , PageID 238

.No. 2 1

- 322 4 , Family Tacos, LLC v. Auto

- Owners Ins

. Co.

3 The polic y defines “Covered Cause of Loss” to mean “Risks of Direct Physical Loss.” Id. , PageID 246.
T he policy also contains many exclusions that prohibit coverage even if it would otherwise insure certain losses

. Among other exclusions, the policy notes that Auto

- Owners will not pay for losses caused by a virus that can induce “ physical distress, illness or disease. ” Id. , PageID 247. Once the pandemic hit, Family Tacos sought to recover its lost income under the Business Income Provision and the Civil Authority Provision

. Before Auto

- Owners could resolve this request , Family Tacos sued it in state court . Family Tacos sought a declara tory judgment that it

was entitle d to coverage and alleg ed that Auto

- Owners ’ denial of coverage would breach both the policy and the covenant of good faith and fair dealing. Family Tacos also sought to certif y a class action made up of several classes of businesses

. Auto

- Owners removed the case to federal court on the basis of diversity jurisdiction and the Class Action Fairness Act. Auto

- Owners then moved to dismiss Family Tacos’ complaint for failure to state a claim. The district court granted this motion

. Family Tacos, LLC v. Auto Owners Ins. Co. , 520
F. Supp. 3d 909 , 912 (N.D. Ohio 2021). It reasoned that neither the pandemic nor the government shutdown order s qualif

ied as a “ direct physical loss ” to Fam ily Tacos’ property that c ould trigger
coverage for lost income under the Business Income Provision

. Id. at 915

– 21. This reading of “direct physical loss,” the court next noted, also disqualified Family Tacos from coverage under the Civil Authority Provi sion. Id. at 92 1

. This provision required the damage to nearby property to arise from a “Covered Cause of Loss,” a phrase that the policy equated with a “direct physical loss.” Id. The court went on to hold , in the alternative , that Family Tacos’ claim f e ll within the exclusion for losses caused by a virus

. Id. at 922.No. 2 1

- 322 4 , Family Tacos, LLC v. Auto

- Owners Ins

. Co.

4 Family Tacos appealed. We review the district court’s dismissal of its complaint de novo. See Wilkerson v. Am. Fam

. Ins. Co. , 997 F.3d 666 , 668 (6th Cir. 2021).
II We start by fra ming the narrow nature of the parties’ debate. The parties agree that Ohio
contract law governs. The y also agree on the governing contract rules : Ohio courts i nterpret unambiguous contract terms as written and they construe ambiguous terms in favor of th e insured

. See Neuro

- Commc’n , 2022 WL 17573883 , at *3; Dominish v. Nationwide Ins. Co. , 953 N.E.2d 820, 822 ( Ohio 2011); Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm , 652 N.E.2d 684, 686 ( Ohio 1995). The parties likewise agree that their dispute under the Business Income Provision
turns on whether Family Tacos suffered a “direct physical loss of or damage to ” its propert y . Policy, R.5

- 2, PageID 23 7

. And Family Tacos does not challenge the district court’s further conclusion that the Civi l Authority Provision also requires a “direct physical loss” because it notes that the “damage to” nearby property must result from a “Covered Cause of Action.” Id. , PageID 238. Given these points of agreement , this appeal boils down to whether the spread of COVID

- 19

or the ensuing government shutdown order s could qualify as a “direct physical loss of or damage to” Family Tacos’ restaurants ( or nearby propert ies )

. Auto

- Owners says that this text is unambiguous and requires a tangible harm to pro perty

. Family Taco s responds that “direct physical loss” is ambiguous and could be read to cover limits on the use o f property. The Ohio Supreme Court decided to consider a similar question in Neuro

- Communication

. 2022 WL 17573883 , at *3. In that case, the relevant insured business provided “hearing and balance services to its patients[.]” Id. at *2. The Ohio government’s shutdown orders forced it to close its operations for about six weeks , and it sought reimbursement for lost income under a similar insurance policy issued by Cincinnati Insurance Company. Id. The Ohio Supreme CourtNo. 2 1

- 322 4 , Family Tacos, LLC v. Auto

- Owners Ins

. Co.

5 rejected the business’s argument that the phrase “physical loss” could include a loss of use of its property to serve customers. Id. at *4. It reasoned that a “physical loss” requires “ loss or damage to Covered Property that is physical in nature ” and thus does not cover simply “ a loss of the ability to use Covered Property for business purposes. ” Id. In the p rocess, the Ohio Supreme Court agreed with our own prior decision in Santo’s

. See 2022 WL 17573883 , at *4. Like this case, Santo’s concerned an Ohio restaurant owner seeking to recover business losses caused by the pandemic and the Ohio government ’s resp onses restricting in

- person dining. See 15 F.4th at 400. And l ike Auto

- Owners’ insurance policy, the policy in Santo’s covered the loss of business income resulting from a suspension of operations “‘caused by direct physical loss of or damage to property ’ at the restaurant.” Id. (citation omitted). Santo’s held that this phrase (“direct physical loss of or damage to ” property ) unambiguously excluded losses arising from COVID

- 19 or related government shutdown orders. Id. at 401

– 02. We interpreted th is language as covering only “tangible” deprivations of or “tangible” harms to property, like those caused by a theft or fire

. See id. at 403 (citing 1 0A Steven Plitt et al., Couch
on Insurance § 148: 3 (2021) ) . The Ohio Supreme Court’s approval of Santo’s c onfirms that we properly applied Ohio contract law. See Neuro

- Commc’n , 2022 WL 17573883 , at *4. This case raises the same question as Neuro

- Communication (and Santo’s ) , so we must reach the same answer. In cases governed by Ohio contract law, we “must fo llow the controlling decisions of the Ohio Supreme Court.” Henry v. Wausau Bus. Ins. Co. , 351 F.3d 710, 713 (6th Cir. 2003). And we see no basis to distinguish the contract in this case from the one in Neuro

Communication

. Cf. SAS Int’l, Ltd. v. Gen. St ar Indem. Co. , 36 F.4th 23 , 26

– 29 (1st Cir. 2022)

. To be sure, a phrase in one contract does not necessarily take the same meaning as the same phrase in another contract if the context suggests that the parties intended a different meaning

. SeeNo. 2 1

- 322 4 , Family Tacos, LLC v. Auto

- Owners Ins

. Co.

6 Wilkerson , 997 F.3d at 669

– 70 . But the context suggests that the parties meant for the same meaning across these cases. To begin with, specialized trade usages can support an inference of consistent meaning

. Cf. Frigaliment Importing Co. v. B.N.S. Int ’l Sales Corp. , 190 F. Supp. 116, 119 (S.D.N.Y. 1960) (Friendly, J.). A nd, as Santo’s recognized, the phrases at issue in these cases “are the general touchstones of coverage

. . . for most commercial property insurance policies.” 15 F.4th at 402 (citing 1 0A Couch on Insurance § 148: 46). That is perhaps why

— as the Ohio Supreme Court noted

— the great weight of appellate authority to consider this question has interpreted similar insurance policies in the same way (under other states’ laws). See Neuro

Commc’ n , 2022 WL 17573883 , at *7; see, e.g. , Ryan P. Estes, D.M.D., M.S., P.S.C. v. Cin cinnati Ins. Co. , 23 F.4th 695 , 699

– 702 (6th Cir. 2022) (Kentucky law); Mudpie, Inc. v. Travelers Cas. Ins. Co. of Am. , 15 F.4th 885 , 890

– 91 (9th Cir. 2021) (California law); SAS Int’l , 36 F.4th at 26

– 29 (1st Cir. 2022) (Massachusetts law); Q Clothier New Orleans, L.L.C. v. Twin City Fire Ins. Co. , 29 F.4th 252 , 258

– 60 (5th Cir. 2022) (Louisiana law); Oral Surgeons, P.C. v. Cincinnati Ins. Co. , 2 F.4th 1141, 1143

– 44 (8th Cir. 2021) (Iowa law) ; see also Cherokee Nation v. Lexington Ins. Co. , __ P.3d __, 2022 WL 4138429 , *4 n.13 (Okla. Sept. 13, 2022) (citing cases). In addition, o ther provisions in Auto

- Owners’ policy confirm that the policy use s “direct physical loss” in the same way to require tangible harm. L ike the policy in Neuro

- Communication , the Business Income Provision permits an insured to recover income for business suspensions only during a “period of restoration”

— a defined period t hat end s when the property should have been “repaired, rebuilt or replaced with reasonable speed and similar quality[.]” Policy, R.5

- 2, PageID 237 , 245

. This provision would make no sense if “direct physical loss” need not be tangible. See
Neuro

- Commc’n , 2022 WL 17573883 , at *4; see also Santo’s , 15 F.4th at 402

– 03. Likewise, the Civil Authority Provision applies only if the government restricts Family T acos’ ability to accessNo. 2 1

- 322 4 , Family Tacos, LLC v. Auto

- Owners Ins

. Co.

7 its restaurants either because of the “dangerous physical conditions” of the nearby damaged property or because the government needs “unimpeded access to the damaged property.” Policy, R.5

- 2, PageID 238. This provision, too, conte mplates tangible property harm. In sum, we are bound by Neuro

- Communication ’s interpretation. Under its analysis , Family Tacos has not adequately alleged the required “direct physical loss of or damage to ” its property or to nearby propert ies simply from its loss of use

. Neuro

- Commc’n , 2022 WL 17573883 , at *4. As we noted in Santo’s , therefore, we need not consider any other interpretive question , such as whether the virus exclusion would otherwise have barred Family Tacos’ claim

. See 15 F.4th at 406

– 07. We affirm.