STATE OF NORTH CAROLINA 

COUNTY OF DURHAM 

NORTH STATE DELI, LLC d/b/a LUCKY?S , ... : 

DELICATESSEN, MOTHERS & SONS, LLC 

d/b/a MOTHERS & SONS TRATTORIA,,\' 

MATEO TAPAS, L.L.C. d/b/a MATEO BAR 

DE TAPAS, SAINT JAMES SHELLFISH LLC 

d/b/a SAINT JAMES SEAFOOD, CALAMARI 

ENTERPRISES, INC. d/b/a PARIZADE, BIN 

54, LLC d/b/a BIN 54, ARYA, INC. d/b/a 

CITY KITCHEN and VILLAGE BURGER, 

GRASSHOPPER LLC d/b/a NASHER CAFE, 

VERDE CAFE INCORPORATED d/b/a 

LOCAL 22, FLOGA, INC. d/b/a KIPOS 

GREEK TA VERNA, KUZINA, LLC d/b/a 

GOLDEN FLEECE, VIN ROUGE, INC. d/b/a 

VIN ROUGE, KIPOS ROSE GARDEN CLUB 

LLC d/b/a RO SEW ATER, and GIRA SOLE, 

INC. d/b/a FARM TABLE and GATEHOUSE 

TAVERN, 

Plaintiffs, 

V . 

THE CINCINNATI INSURANCE 

COMPANY; THE CINCINNATI CASUALTY 

COMPANY; MORRIS INSURANCE 

AGENCY INC.; and DOES 1 THROUGH 20, 

INCLUSIVE, 

Defendants. 

IN THE GENERAL COURT OF JUSTICE 

__ SUJ:?ERIOR COURT DIVISION 

CASE NO. 20-CVS-02569 

~,"' r'- '.""• A 

f'\J . , 1.., . 0 .v. 

ORDER GRANTING PLAINTIFFS' 

RULE 56 MOTION FOR PARTIAL 

SUMMARY JUDGMENT 

THIS MATTER was heard on September 23, 2020, before Senior Resident Superior 

Court Judge Orlando F. Hudson, Jr., with Gagan Gupta appearing for the plaintiff-restaurants 

(including Vin Rouge, Parizade, Mateo Bar de Tapas, Rosewater, Mothers & Sons Trattoria, 

Saint James Seafood, Lucky's Delicatessen, Bin 54, City Kitchen, Village Burger, Nasher Cafe, 
Local 22, Kipos Greek Taverna, Golden Fleece, Farm Table, and Gatehouse Tavern1

), and Brian 

Reid and Drew Vanore appearing for defendant-insurers The Cincinnati Insurance Company and 

The Cincinnati Casualty Company (collectively, "Cincinnati"). Plaintiffs brought a Motion for 

Partial Summary Judgment ("Motion") with respect to Count I of their Second Amended 

Complaint, seeking a declaratory judgment that Cincinnati must replace Plaintiffs' lost business 

income and extra expenses under insurance policy contracts entered into between the parties. 2 

THE COURT, having considered the pleadings, the Motion, the briefs filed in support of 

and in opposition to the Motion, the oral arguments of counsel at the hearing on the Motion, the 

declaration of Gagan Gupta, the affidavit testimony of the Plaintiffs and their supporting 

affidavits of Giorgios Nikolaos Bakatsias, Matthew Raymond Kelly, and Djafar "Jay" Mehdian, 

the applicable law, and other appropriate matters ofrecord, GRANTS Plaintiffs' Motion. 

Upon a review of the entire record, the Court holds there are no genuine issues as to any 

material fact and Plaintiffs are entitled to partial summary judgment against Cincinnati as a 

matter of law on the issue of liability under Count I of the Second Amended Complaint. To that 

end, the Court sets forth its primary reasoning herein. 

1 The parent companies of these restaurants, and the entities bringing this lawsuit, are Vin Rouge, 

Inc. d/b/a Vin Rouge; Calamari Enterprises, Inc. d/b/a Parizade; Mateo Tapas, L.L.C. d/b/a 

Mateo Bar de Tapas; Kipos Rose Garden Club LLC d/b/a Rosewater; Mothers & Sons, LLC 

d/b/a Mothers & Sons Trattoria; Saint James Shellfish LLC d/b/a Saint James Seafood; North 

State Deli, LLC d/b/a Lucky's Delicatessen; Bin 54, LLC d/b/a Bin 54; Arya, Inc. d/b/a City 

Kitchen and Village Burger; Grasshopper LLC d/b/a Nasher Cafe; Verde Cafe Incorporated d/b/a 

Local 22; Floga, Inc. d/b/a Kipos Greek Taverna; Kuzina, LLC d/b/a Golden Fleece; and Gira 

Sole, Inc. d/b/a Farm Table and Gatehouse Tavern (collectively, "Plaintiffs"). 

2 The operative pleading to which this Order applies is the Second Amended Complaint. 

2 
I. BACKGROUND3 

Plaintiffs, which operate sixteen restaurants in the North Carolina counties of Durham, 

Wake, Orange, Chatham, and Buncombe, purchased "all risk" property insurance policies 

("Policies") from Cincinnati to cover their restaurants. All risk policies cover all risks of loss 

unless those risks are expressly excluded or limited. Plaintiffs' Policies were effective during all 

relevant time perio1s and contain the same relevant language. 

The Policies include a Building and Personal Property Coverage Form and a Business 

Income (and Extra Expense) Coverage Form. These forms provide that Cincinnati will pay for 

business interruption coverage as follows: 

(1) Business Income 

We will pay for the actual loss of "Business Income" and 

"Rental Value" you sustain due to the necessary "suspension" of 

your "operations" during the "period of restoration." The 

"suspension" must be caused by direct "loss" to property at a 

"premises" caused by or resulting from any Covered Cause of 

Loss. 

(2) Extra Expense 

We will pay Extra Expense you sustain during the "period of 

restoration". Extra Expense means necessary expenses you 

sustain ... during the "period of restoration" that you would not 

have sustained if there had been no direct "loss" to property 

caused by or resulting from a Covered Cause of Loss. 

Under the Policies, "Covered Cause of Loss" means "direct 'loss' unless the 'loss' is 

excluded or limited" therein. The Policies define "loss" to mean "accidental physical loss or 

accidental physical damage." Therefore, absent an exclusion or limitation, the Policies provide 

3 The Court has not resolved any disputed issues of fact, as findings of fact are unnecessary for 

adjudicating Plaintiffs' Motion for Partial Summary Judgment. Rather, the Court offers an 

overview of key undisputed facts underlying the ultimate disposition. 

3 
coverage under these provisions where the policyholder shows (i) direct "accidental physical 

loss" to property, or (ii) direct "accidental physical damage" to property. The Policies do not 

define "direct," "accidental," "physical loss," or "physical damage." 

Plaintiffs seek coverage under the Policies for losses arising out of the response to the 

SARS-Co V-2 ("COVID-19") pandemic. Beginning in March 2020, governmental authorities 

across North Carolina entered civil authority orders mandating the suspension of business 

operations at various establishments, including Plaintiffs' restaurants (hereafter, "Government 

Orders"). The orders also prohibited, via stay-at-home mandates and travel restrictions, all nonessential movement by all residents. 

On August 3, 2020, Plaintiffs filed their Motion for Partial Summary Judgment 

("Motion"), seeking a declaratory judgment against Cincinnati under Count I that the 

Government Orders constitute covered perils under the Policies that caused "direct 'loss' to 

property" at the described premises, and that therefore Cincinnati must pay for the resulting lost 

Business Income and Extra Expenses as defined by the Policies. Plaintiffs' primary contention is 

that the Government Orders forced Plaintiffs to lose the physical use of and access to their 

restaurant property and premises, which constitutes a non-excluded "direct physical loss." 

II. STANDARDS OF INTERPRETATION FOR INSURANCE POLICIES 

The meaning of an insurance policy is a question of law, Accardi v. Hartford 

Underwriters Ins. Co., 373 N.C. 292,295, 838 S.E.2d 454, 456 (2020), and it is black-letter law 

that an undefined policy term is to be given its "ordinary meaning"; in doing so, North Carolina 

courts have determined that it is "appropriate to consult a standard dictionary." Allstate Ins. Co. 

v. Chatterton, 135 N.C. App. 92, 94-95, 518 S.E.2d 814, 817 (N.C. Ct. App. 1999). If the term is 

nevertheless "reasonably susceptible to more than one interpretation," then it is ambiguous and 

4 
only then is the contract subject to judicial construction. Id. ; see also Joyner v. Nationwide Ins., 

46 N.C. App. 807, 809, 266 S.E.2d 30, 31 (1980) (" [I]n deciding whether the language is plain or 

ambiguous, the test is what a reasonable person in the position of the insured would have 

understood it to mean, and not what the insurer intended."). "[A]ny ambiguity or uncertainty as 

to the words used in the policy should be construed against the insurance company and in favor 

of the policyholder or beneficiary." Accardi, 373 N.C. at 295, 838 S.E.2d at 456. 

III. DISCUSSION 

As an initial matter, the Policies do not define the terms "direct," "physical loss," or 

"physical damage."4 The Court must therefore turn first to the ordinary meaning of those terms. 

Merriam-Webster defines "direct," when used as an adjective, as "characterized by close logical, 

causal, or consequential relationship," as "stemming immediately from a source," or as 

"proceeding from one point to another in time or space without deviation or interruption." 

Direct, Merriam-Webster (Online ed. 2020). Merriam-Webster defines "physical" as relating to 

"material things" that are "perceptible especially through the senses." Physical, MerriamWebster (Online ed. 2020). The term is also defined in a way that is tied to the body: "of or 

relating to the body." Id. Webster's Third New International Dictionary defines physical as "of 

or relating to natural or material things as opposed to things mental, moral, spiritual, or 

imaginary." Physical, Webster's Third New International Dictionary (2020). The definition from 

Black's Law Dictionary comports: "Of, relating to, or involving material things; pertaining to 

real, tangible objects." Physical, Black's Law Dictionary (11th ed. 2019). Finally, "loss" is 

defined as "the act of losing possession," "the harm of privation resulting from loss or 

separation," or the "failure to gain, win, obtain, or utilize." Loss, Merriam-Webster (Online ed. 

4 Cincinnati does not contest whether Plaintiffs' losses were "accidental." 

5 
2020). Another dictionary defines the term as "the state of being deprived of or of being without 

something that one has had." Loss, Random House Unabridged Dictionary (Online ed. 2020). 

Applying these definitions reveals that the ordinary meaning of the phrase "direct 

physical loss" includes the inability to utilize or possess something in the real, material, or bodily 

world, resulting from a given cause without the intervention of other conditions. In the context of 

the Policies, therefore, "direct physical loss" describes the scenario where businessowners and 

their employees, customers, vendors, suppliers, and others lose the full range of rights and 

advantages of using or accessing their business property. This is precisely the loss caused by the 

Government Orders. Plaintiffs were expressly forbidden by government decree from accessing 

and putting their property to use for the income-generating purposes for which the property was 

insured. These decrees resulted in the immediate loss of use and access without any intervening 

conditions. In ordinary terms, this loss is unambiguously a "direct physical loss," and the 

Policies afford coverage. 

The parties sharply dispute the meaning of the phrase "direct physical loss." Cincinnati 

argues that "the policies do not provide coverage for pure economic harm in the absence of direct 

physical loss to property, which requires some form of physical alteration to property." Even if 

Cincinnati's proffered ordinary meaning is reasonable, the ordinary meaning set forth above is 

also reasonable, rendering the Policies at least ambiguous. Accordingly, in giving the ambiguous 

terms the reasonable definition which favors coverage, the phrase "direct physical loss" includes 

the loss of use or access to covered property even where that property has not been structurally 

altered. See Accardi, 373 N.C. at 295, 838 S.E.2d at 456 (" [A]ny ambiguity or uncertainty as to 

the words used in the policy should be construed against the insurance company and in favor of 

the policyholder or beneficiary."). 

6 
Moreover, it is well-accepted that "[t]he various terms of the policy are to be 

harmoniously construed, and if possible, every word and every provision is to be given effect." 

See C. D. Spangler Constr. Co. v. Industrial Crankshqft & Engineering Co., 326 N.C. 133, 142, 

388 S.E.2d 557,563 (1990). Here, the Policies provide coverage for "accidental physical loss or 

accidental physical damage." Cincinnati's argument that the Policies require physical alteration 

conflates "physical loss" and "physical damage." The use of the conjunction "or" means-at the 

very least-that a reasonable insured could understand the terms "physical loss" and "physical 

damage" to have distinct and separate meanings. The term "physical damage" reasonably 

requires alteration to property. See Damage, Merriam-Webster (Online ed. 2020) ("loss or harm 

resulting from injury to person, property, or reputation"). Under Cincinnati's argument, however, 

if "physical loss" also requires structural alteration to property, then the term "physical damage" 

would be rendered meaningless. But the Court must give meaning to both terms. 

Finally, nothing in the Policies excludes coverage for Plaintiffs' losses. Notably, it is· 

undisputed that the Policies do not exclude virus-related causes of loss. Cincinnati instead 

contends that three other exclusions apply: the "Ordinance or Law" exclusion, the "Acts or 

Decisions" exclusion, and the "Delay or Loss of Use" exclusion. Upon a review of the entire 

record, the Court concludes that these exclusions, based on their tenns and the undisputed facts, 

do not apply to Plaintiffs' losses as a matter oflaw. 

For these primary reasons, the Court concludes that the Policies provide coverage for 

Business Income and Extra Expenses for Plaintiffs' loss of use and access to covered property 

mandated by the Government Orders as a matter of law. 

7 
IV. CONCLUSION 

Accordingly, Plaintiffs' Motion for Partial Summary Judgment is GRANTED. This Court 

certifies, pursuant to Rule 54(b) of the North Carolina Rules of Civil Procedure, that this Order 

represents a final judgment as to Count I of the Second Amended Complaint and is immediately 

appealable as there is no just reason for delay of any such appeal. IT IS THEREFORE 

ORDERED, ADJUDGED AND DECREED AS FOLLOWS: That partial summary judgment 

is hereby granted in favor of Plaintiffs and against Cincinnati, jointly and severally, on Count I 

(Declaratory Judgment). 

This the Z~of October, 2020. 

. ' . 

IOR RESID UPERIOR JUDGE 

8 
CERTIFICATE OF SERVICE 

This is to certify that the undersigned has this day served the foregoing Order in the above 

captioned action on all parties by depositing a copy hereof in a postpaid wrapper in a post office 

depository under the exclusive care and custody of the United Postal Service, addressed as 

follows: 

STUARTM. PAYNTER 

GAGAN GUPTA 

106 S. Churton Street, Suite 200 

Hillsborough, NC 27278 

Counsel for Plaintiffs 

ANDREW A. VAN ORE III 

Post Office Box 1729 

Raleigh, NC 27602-1729 

Counsel for Defendant, The Cincinnati Insurance Company 

KENDRA STARK 

JUSTIN M. PULEO 

421 Fayetteville Street, Suite 330 

Raleigh, NC 27601 

Counsel for Defendant Morris Insurance Agency, Inc. 

This the~ day of October, 2020. 

~6 A STANT CLERK -

OF 1~ COURT 

D RHAMCOUNTY