This opinion is nonprecedential except as provided by

Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA

IN COURT OF APPEALS

A23-0639

Fond du Lac Management, Inc.,

Appellant,

vs.

Lexington Insurance Company,

Respondent,

Certain Underwriters at Lloyd's, London Subscribing to Policy #PJ193647, et al., 

Respondents,

Underwriters at Lloyd's, London - Aspen Specialty Insurance Company, et al., 

Respondents,

Arch Specialty Insurance Company,

Defendant,

Evanston Insurance Company,

Respondent,

Allied World National Assurance Company,

Respondent.

Filed December 11, 2023

Affirmed

Smith, Tracy M., Judge

Carlton County District Court

File No. 09-CV-22-1172

Sean Copeland, Scott A. Buchanan, Fond du Lac Band of Lake Superior Chippewa, 

Cloquet, Minnesota; and

Dan Drachler, Jacob H. Polin (pro hac vice), Lieff Cabraser Heimann & Bernstein, LLP, 

San Francisco, California (for appellant)
2

Beth A. Jenson Prouty, Arthur, Chapman, Kettering, Smetak & Pikala, P.A., Minneapolis, 

Minnesota (for respondent Lexington Insurance Company)

Nicholas A. Dolejsi, Mackenzie Moy, Zelle LLP, Minneapolis, Minnesota (for respondents 

Certain Underwriters at Lloyd’s, London Subscribing to Policy Nos. PJ193647, 

PJ1900131, PM1933021, PJ1900067, Endurance Worldwide Insurance Ltd. t/as Sompo 

International, and Homeland Insurance Company of New York)

Stacy A. Broman, Meagher + Geer, P.L.L.P., Minneapolis, Minnesota (for respondents 

Hallmark Specialty Insurance Company and Underwriters at Lloyd’s, London – Aspen 

Specialty Insurance Company)

Dan W. Goldfine, Dickinson Wright PLLC, Phoenix, Arizona (for respondent Evanston 

Insurance Company)

Daryl T. Fuchihara, Johnson, Kille & Seiler, P.A., Duluth, Minnesota (for respondent 

Allied World National Assurance Company)

Considered and decided by Bratvold, Presiding Judge; Reyes, Judge; and Smith, 

Tracy M., Judge.

NONPRECEDENTIAL OPINION

SMITH, TRACY M., Judge

In this insurance-coverage dispute, appellant-insured Fond du Lac Management, 

Inc. (Fond du Lac) challenges the district court’s dismissal under Minnesota Rule of Civil 

Procedure 12.02(e) of its contract claims against respondent-insurers1 based on denial of 

business-interruption coverage for losses due to COVID-19-related business closures. 

Fond du Lac argues that the district court erred by determining that the complaint fails to 

state a claim because it does not set forth alleged facts that support a finding of physical 

1 Respondent-insurers are those entities listed as respondents in the caption of this case. 

Defendant Arch Specialty Insurance Company takes no part in this appeal.
3 

loss or damage to Fond du Lac’s properties caused by the SARS-CoV-2 virus.2 Because 

we conclude that Fond du Lac failed to allege that the virus was present at and contaminated 

its properties, causing direct physical loss or damage, we affirm.

FACTS 

The complaint and attached exhibits set forth the following alleged facts. Fond du 

Lac operates Black Bear Casino Resort, Fond-du-Luth Casino, and Black Bear Golf Course 

in Carlton County and St. Louis County. Fond du Lac is the “corporate business 

committee” for the Fond du Lac Band of Lake Superior Chippewa (the Band). 

Fond du Lac purchased an all-risk property-damage insurance policy from insurers 

to provide coverage for its casinos and golf course. The policy became effective on July 1, 

2019. 

On March 13, 2020, the Band declared a state of emergency concerning the COVID19 pandemic. The Band then ordered Black Bear Casino Resort and Fond-du-Luth Casino 

to close beginning March 18, 2020.3 As a result of these closures, Fond du Lac suffered a 

loss of “millions of dollars.” On June 15, 2020, the casinos reopened, but at reduced 

capacity pursuant to the Band’s orders. The reduced capacity resulted in further losses. 

In February 2021, Fond du Lac requested business-interruption coverage for its 

losses. The policy provided the following business-interruption coverage: 

2 The SARS-CoV-2 virus causes the coronavirus disease (COVID-19). World Health Org., 

Coronavirus disease (COVID-19), https://www.who.int/health-topics/coronavirus#tab=

tab_1 [https://perma.cc/45UV-JU2H]. 

3 Black Bear Golf Course was already closed for the winter and remained closed during the 

relevant policy period. 
4

Against loss resulting directly from interruption of business, 

services or rental value caused by direct physical loss or 

damage, as covered by this Policy to real and/or personal 

property insured by this Policy, occurring during the term of 

this Policy.

In a letter dated July 6, 2022, a claims adjuster, on behalf of insurers, denied Fond 

du Lac’s request for coverage. The letter stated that the losses were not covered under the 

policy because “there is no evidence that the closure of the casinos and golf course or the 

continued reduced capacity issues at the casinos were the result of physical loss or damage 

to property.”

On June 29, 2022, Fond du Lac sued insurers for breach of contract and breach of 

covenant of good faith and fair dealing. Fond du Lac also sought declaratory relief

establishing coverage. Insurers moved to dismiss the complaint for failure to state a claim 

on which relief can be granted under Minnesota Rule of Civil Procedure 12.02(e). The 

district court granted insurers’ motion to dismiss, concluding that Fond du Lac did not 

allege “any facts that, if true, would plausibly show any physical loss or injury to [its]

insured properties.”

Fond du Lac appeals.

DECISION

When reviewing a case dismissed under Minnesota Rule of Civil Procedure 12.02(e) 

for failure to state a claim on which relief can be granted, appellate courts must determine 

“whether the complaint sets forth a legally sufficient claim for relief.” Hebert v. City of 

Fifty Lakes, 744 N.W.2d 226, 229 (Minn. 2008). The standard of review is de novo. Id.
5

“A claim is sufficient against a motion to dismiss based on [r]ule 12.02[e] if it is 

possible on any evidence which might be produced, consistent with the pleader’s theory, 

to grant the relief demanded.” N. States Power Co. v. Franklin, 122 N.W.2d 26, 29 (Minn. 

1963). In analyzing the sufficiency of a claim, appellate courts “accept the facts alleged in 

the complaint as true and construe all reasonable inferences in favor of the nonmoving 

party.” Walsh v. U.S. Bank, N.A., 851 N.W.2d 598, 606 (Minn. 2014). “[T]he pleading of 

broad general statements that may be conclusory is permitted.” Halva v. Minn. State Colls. 

& Univs., 953 N.W.2d 496, 503 (Minn. 2021) (quotation omitted). But appellate courts are 

not bound by legal conclusions in the complaint. Hebert, 744 N.W.2d at 235. Appellate

courts consider the complaint as a whole, “including the facts alleged throughout the 

complaint and the attachments to the complaint.” Hardin Cnty. Sav. Bank v. Hous. & 

Redevelopment Auth. of City of Brainerd, 821 N.W.2d 184, 192 (Minn. 2012); see Minn. 

R. Civ. P. 10.03 (“A copy of any written instrument which is an exhibit to a pleading is a 

part of the statement of claim . . . set forth in the pleading.”).

Legal Framing

Fond du Lac claims that it is entitled to coverage for losses under the businessinterruption provision of the policy. For coverage under that provision, the losses must 

have resulted directly from an interruption of business caused by “physical loss or damage”

to the insured properties. Fond du Lac argues that it sufficiently pleaded that the SARSCoV-2 virus was present at and contaminated the insured properties, causing them physical 

loss or damage, resulting in business-interruption losses.
6

“Physical loss or damage” is not defined in the policy. “An insurance policy must 

be construed as a whole, and unambiguous language must be given its plain and ordinary 

meaning.” Midwest Fam. Mut. Ins. Co. v. Wolters, 831 N.W.2d 628, 636 (Minn. 2013) 

(quotation omitted).

Fond du Lac, citing dictionary definitions of the words “physical,” “loss,” and 

“damage,” argues that the plain and ordinary meaning of the phrase “physical loss or 

damage” is “a physical change to the property [that] impairs its function or lessens its 

value.” Fond du Lac asserts that structural damage to the property is not required and that 

the presence of a contaminant that renders the property unusable constitutes “physical loss 

or damage.” Fond du Lac also contends that the absence from its all-risk policy of an 

exclusion for virus-related losses supports its argument that a virus can cause “physical 

loss or damage.” Applying its interpretation of the policy, Fond du Lac argues that, 

according to its complaint, the SARS-CoV-2 virus was present at and contaminated its 

properties, rendering them unsafe and unusable, and thereby causing physical loss or 

damage to the insured properties.

Fond du Lac relies on three Minnesota cases to support its argument. In Marshall

Produce Co. v. St. Paul Fire & Marine Insurance Co., the Minnesota Supreme Court 

concluded that the insured’s fire policies covered losses incurred when the federal 

government rejected the canned egg powder manufactured by the insured because smoke 

from a nearby fire had entered the insured’s processing plant and contaminated the cans

and the packaging around the cans. 98 N.W.2d 280, 296-97 (Minn. 1959). In Sentinel

Management Co. v. New Hampshire Insurance Co., we concluded that the insured owner 
7

of apartment buildings had demonstrated coverage for a “direct, physical loss to property” 

under its all-risk insurance policy when asbestos contamination impaired or destroyed the 

buildings’ function even though the contamination did not cause a “tangible injury to the 

physical structure” of the buildings. 563 N.W.2d 296, 300-01 (Minn. App. 1997). And in 

General Mills, Inc. v. Gold Medal Insurance Co., we affirmed coverage under the insured’s 

all-risk policy for losses due to “direct physical loss or damage to property” when cereal 

products manufactured by the insured were deemed adulterated under federal regulations 

because oats used in their manufacture had been treated with an unapproved pesticide. 622 

N.W.2d 147, 151-52 (Minn. App. 2001), rev. denied (Minn. Oct. 17, 2000, Apr. 17, 2001). 

Fond du Lac contends that these cases support its assertion that contamination by

“coronavirus particles” meets the definition of “physical loss or damage.”

Insurers, on the other hand, argue that “physical loss or damage” unambiguously 

requires “actual, tangible harm” to the insured properties and that the SARS-CoV-2 virus 

does not cause such harm. They argue that another provision in the policy—the “period of 

restoration” provision—confirms that “tangible, physical” harm to the property is required. 

That provision limits business-interruption coverage to a period from “the date direct 

physical loss occurs and interrupts normal business operations” to “the date that the 

damaged property should have been repaired, rebuilt or replaced.” Insurers argue that the 

terms “repair,” “rebuild,” and “replace” in the context of the phrase “direct physical loss 

or damage” to property demonstrate that the “loss” or “damage” must be “physical” in 

nature. 
8

Insurers also cite caselaw from other jurisdictions rejecting claims for coverage for 

COVID-19-related business-interruption losses due to alleged physical loss or damage to 

property. For example, insurers cite Olmsted Medical Center v. Continental Casualty Co., 

in which the United States Court of Appeals for the Eighth Circuit, applying Minnesota 

law, affirmed dismissal of a complaint under Federal Rule of Civil Procedure 12(b)(6) for 

failure to state a claim. 65 F.4th 1005, 1009-12 (8th Cir. 2023). The Eighth Circuit 

determined that the complaint was insufficient because, even if some forms of 

contamination can support a finding of “physical loss,” the insured medical center had not 

alleged that the SARS-CoV-2 virus had such an effect on its property. Id. at 1010. In 

arriving at that conclusion, the court reasoned that Marshall Produce provided little 

guidance because that case addressed policies insuring property “against all loss or damage 

by fire” rather than a policy insuring against business-interruption losses caused by “direct 

physical loss of or damage to covered property.” Id. at 1010-11 (quotation omitted). And 

it decided that General Mills and Sentinel Management were distinguishable because the 

pesticide contamination in General Mills and the asbestos contamination in Sentinel 

Management were “permanent absent some intervention” and rendered the properties 

essentially useless while “a SARS-CoV-2 contamination is surface-level, removed with 

relative ease, and will dissipate on its own in a matter of days, if not sooner.” Id. at 1011.4

4 Insurers cite other appellate decisions from federal and non-Minnesota jurisdictions 

similarly rejecting, in a rule 12 posture, claims for coverage for COVID-19-related 

business-interruption losses due to physical loss or damage to property. E.g., Verveine

Corp. v. Strathmore Ins. Co., 184 N.E.3d 1266, 1276 (Mass. 2022) (affirming dismissal of 

insureds’ complaint because the alleged presence of virus does not constitute loss or 

damage to the property); Colectivo Coffee Roasters, Inc. v. Soc’y Ins., 974 N.W.2d 442, 
9 

To summarize, Fond du Lac contends that contamination by the SARS-CoV-2 virus 

constitutes “physical loss or damage” to property and that the complaint sufficiently alleges 

that the virus was present at and contaminated Fond du Lac’s properties. Insurers, on the 

other hand, argue that the SARS-CoV-2 virus cannot cause “physical loss or damage” to 

property and that, even if the virus could cause such loss or damage, the complaint is 

insufficient because it fails to allege facts that would show that the virus was present at and 

contaminated the properties. Thus, the questions presented are (1) whether contamination 

by the SARS-CoV-2 virus states a claim premised on direct physical loss or damage and 

(2) whether the complaint read as a whole alleges contamination by the virus. We need not 

decide the first question if the answer to the second question is no. We therefore turn to the 

complaint and its exhibits to determine whether Fond du Lac alleges that its properties were 

contaminated by the SARS-CoV-2 virus. 

Allegations in the Complaint 

Fond du Lac points us to the following three paragraphs in the complaint: 

447 (Wis. 2022) (same); Wilson v. USI Ins. Serv. LLC, 57 F.4th 131, 145-46 (3d Cir. 2023)

(same); Uncork & Create LLC v. Cincinnati Ins. Co., 27 F.4th 926, 933 (4th Cir. 2022) 

(same); Circle Block Partners, LLC v. Fireman’s Fund Ins. Co., 44 F.4th 1014, 1020-21 

(7th Cir. 2022) (same); SA Palm Beach, LLC v. Certain Underwriters at Lloyd’s London, 

32 F.4th 1347, 1362 (11th Cir. 2022) (same); see also Sullivan Mgmt., LLC v. Fireman’s 

Fund Ins. Co., 879 S.E.2d 742, 745 (S.C. 2022) (ruling, in answer to certified question 

from federal district court, that presence of virus on property does not constitute physical 

loss or damage to property); Neuro-Commc’n Servs., Inc. v. Cincinnati Ins. Co., 219 

N.E.3d 907, 915 (Ohio 2022) (same); Cherokee Nation v. Lexington Ins. Co., 521 P.3d 

1261, 1270 (Okla. 2022) (ruling that insurers are entitled to summary judgment because 

virus did not constitute physical loss or damage to property); Starr Surplus Lines Ins. Co. 

v. Eighth Jud. Dist. Ct. ex rel. County. of Clark, 535 P.3d 254, 264 (Nev. 2023) (same). 
10 

39. Members of the Band have been exposed to and 

contracted Coronavirus, and on information and belief, have 

then entered onto the premises of some of the Plaintiff’s 

businesses at issue in this Complaint. 

. . . . 

41. Based on the preceding conditions, and 

confirmed instances of infections near the businesses by 

persons who were likely to visit the businesses (or come into 

contact with persons who visited the businesses) it is likely that 

customers, employees, vendors, or other persons infected with 

or carrying Coronavirus particles entered the businesses, or 

that Coronavirus otherwise infected surfaces, air, or people at 

the businesses. 

. . . . 

56. The presence of the Coronavirus and the Orders 

prohibited certain physical access to, use of, and operations at 

and by the Plaintiff’s businesses, their employees, and their 

customers. . . . As a result of the presence of the Coronavirus 

and the Orders, physical components of the Plaintiff’s 

businesses became unusable, damaged, and/or lost the ability 

to generate income. 

Based on these paragraphs, we understand Fond du Lac’s theory to be that SARSCoV-2 particles likely entered the properties, which would have contaminated the

properties and caused physical loss or damage. See Franklin, 122 N.W.2d at 29 (measuring 

sufficiency of complaint with reference to pleader’s theory). For the reasons that follow, 

we conclude that the complaint and the exhibits do not sufficiently allege that the virus was 

present at and contaminated the properties. 

In paragraph 39, Fond du Lac asserts “on information and belief” that members of 

the Band infected with COVID-19 entered some of its insured properties. Even if this 

allegation, made “on information and belief,” is supported by sufficient information to 
11 

meet the notice-pleading standard, the paragraph does not allege that the believed presence 

of infected persons on some properties resulted in actual physical contamination of the 

properties. 

In paragraph 41, Fond du Lac alleges that coronavirus particles “likely” infected its 

insured properties. But alleging that the properties were “likely” contaminated is different 

from alleging that contamination actually happened. Fond du Lac argues that alleging the 

“likelihood” of contamination is sufficient at the pleading stage. We disagree. To establish 

coverage under its theory of “physical loss or damage,” Fond du Lac would have to prove 

that the SARS-CoV-2 virus was, in fact, present at and contaminated its properties. 

Therefore, to state a claim for coverage under that theory, Fond du Lac has to allege that 

the virus was present at and contaminated the properties. 

 Finally, while in paragraph 56 Fond du Lac alleges that the presence of the 

coronavirus and state and Band orders impaired Fond du Lac’s businesses, in context those 

allegations refer to the COVID-19 pandemic and the resulting government orders 

generally—not to the presence of the SARS-CoV-2 virus at the insured properties. 

Moreover, Fond du Lac’s responses to the claims adjuster when it first sought 

business-interruption coverage, which are incorporated as exhibits into the complaint, 

demonstrate that Fond du Lac was not aware of any presence of or contamination by the 

SARS-CoV-2 virus at its properties before its casinos reopened. 

Q: Have any insured location(s) been tested for the presence 

of the virus that causes COVID-19? 

A: No. There was no evidence of any facility contamination 

by the SARS-CoV-2, nor was the Band aware of a readily 
12

available commercial test for the presence of SARS-CoV-2 in 

the environment or on environmental surfaces.

. . . .

Q: Of any locations referenced with reported COVID-19 

cases, without specifically identifying the person affected, . . . 

[w]as there a positive COVID-19 test that confirmed the 

disease?

A: 14 employees were positive for COVID-19 at BBCR[5]

; 

there was a lesser number at Fond-du-Luth. However, all of 

these positive results came after BBCR and Fond-du-Luth

reopened in June; the first reported COVID-19 infection by an 

employee was reported to have occurred on October 7, 2020.

And Fond du Lac alleges in paragraph 42 of the complaint that the properties were required 

to close on March 18, 2020, “under the Orders by recognized civil authorities and the 

ongoing and worsening pandemic”—not because the SARS-CoV-2 virus was present at 

and contaminated the properties.

Considering the complaint and the attached exhibits as a whole, we conclude that 

Fond du Lac has not pleaded facts sufficient to show actual contamination of its insured 

properties causing physical loss or damage to property. We therefore need not decide 

whether, under the policy, the SARS-CoV-2 virus could ever cause “physical loss or 

damage” to property as required to trigger business-interruption coverage. The district 

court did not err by dismissing the complaint for failure to state a claim on which relief can 

be granted.

Affirmed.

5 “BBCR” refers to Black Bear Casino Resort.