Court Opinion

ID: 8140194
Source: CourtListenerOpinion
Date Created: 2022-09-09 20:00:40.04048+00
Date Added: 2024-06-11T16:39:31.175509
License: Public Domain

RECOMMENDED FOR PUBLICATION
                               Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                      File Name: 22a0209p.06

                   UNITED STATES COURT OF APPEALS
                                  FOR THE SIXTH CIRCUIT

                                                            ┐
 WILD EGGS HOLDINGS, INC.; WILD EGGS OPERATIONS,
                                                            │
 LLC; WILD EGGS FRANCHISING, LLC,
                                                            │
                              Plaintiffs-Appellants,         >        No. 21-5962
                                                            │
                                                            │
        v.                                                  │
                                                            │
 STATE AUTO PROPERTY     AND   CASUALTY INSURANCE           │
 COMPANY,                                                   │
                                 Defendant-Appellee.        │
                                                            ┘

Appeal from the United States District Court for the Western District of Kentucky at Louisville.
                No. 3:20-cv-00501—Rebecca Grady Jennings, District Judge.

                                     Argued: June 9, 2022

                            Decided and Filed: September 9, 2022

                  Before: BOGGS, MOORE, and GRIFFIN, Circuit Judges.
                                 _________________

                                           COUNSEL

ARGUED: Edmund S. Sauer, BRADLEY ARANT BOULT CUMMINGS LLP, Nashville,
Tennessee, for Appellants. Adam H. Fleischer, BATESCAREY LLP, Chicago, Illinois, for
Appellee. ON BRIEF: Edmund S. Sauer, BRADLEY ARANT BOULT CUMMINGS LLP,
Nashville, Tennessee, for Appellants. Adam H. Fleischer, Michael H. Passman, BATESCAREY
LLP, Chicago, Illinois, for Appellee. Christopher E. Kozak, PLEWS SHADLEY RACHER &
BRAUN, LLP, Indianapolis, Indiana, Edward M. O’Brien, Andrew-John Bokeno, WILSON
ELSER MOSKOWITZ EDELMAN & DICKER, LLP, Louisville, Kentucky, for Amici Curiae.

       GRIFFIN, J., delivered the opinion of the court in which BOGGS, J., joined. MOORE, J.
(pp. 12–15), delivered a separate dissenting opinion.
 No. 21-5962                             Wild Eggs Holdings, Inc., et al. v.                      Page 2
                                         State Auto Prop. & Cas. Ins. Co.

                                               _________________

                                                      OPINION
                                               _________________

       GRIFFIN, Circuit Judge.

       At the beginning of the COVID-19 pandemic, Indiana, Ohio, and Kentucky suspended
in-person, “non-essential” business through respective “Stay at Home” orders. So plaintiff Wild
Eggs1 halted dine-in operations at its restaurants in those states and then sought insurance
coverage for lost revenue from defendant State Auto Property and Casualty Insurance Company.
Wild Eggs claims in this lawsuit that State Auto breached the parties’ insurance contract when it
denied coverage. The district court granted State Auto’s motion to dismiss, concluding that Wild
Eggs had failed to state a claim upon which relief could be granted. We affirm.

                                                           I.

       Wild Eggs owns and operates a chain of breakfast and lunch restaurants. When the
COVID-19 pandemic began in March 2020, the states in which Wild Eggs does business
imposed Stay at Home orders for all “non-essential” businesses. Kentucky prohibited “[a]ll in-
person retail businesses that are not life-sustaining.” The same was true in Indiana and Ohio.
The orders dramatically affected Wild Eggs’s operations—it was forced to suspend in-person
dining and to restrict restaurant use to curbside pickup and delivery.

       State Auto has insured Wild Eggs since 2016. Wild Eggs notified State Auto of its claim
for business losses under two provisions of note. First, it claimed coverage under the Restaurant
Extension Endorsement (the “Endorsement”), which provides for 30 days of lost business
income for the suspension of restaurant operations due to the order of a civil authority that
resulted from an actual or alleged exposure of a restaurant to a disease. Second, it claimed
coverage for all lost business income resulting from “direct physical loss of or damage to
property” under the “Business Income Coverage” provision. State Auto denied coverage, and
Wild Eggs subsequently filed this breach-of-contract suit.

       1
           Although separate entities, we refer to plaintiffs as Wild Eggs singularly for ease.
 No. 21-5962                          Wild Eggs Holdings, Inc., et al. v.                               Page 3
                                      State Auto Prop. & Cas. Ins. Co.

        Contending that neither the Business Income Coverage provision nor the Endorsement
provided coverage, State Auto filed a motion to dismiss. The district court granted the motion,
agreeing with State Auto that (1) the Endorsement did not apply because the closures of Wild
Eggs’s restaurants did not result from an exposure to COVID-19 at the restaurants themselves;
and (2) the Business Income Coverage provision did not apply because Wild Eggs did not suffer
tangible damage to its property.

        Wild Eggs now appeals.

                                                       II.

        We review de novo a district court’s decision on a motion to dismiss. Brown Jug, Inc. v.
Cincinnati Ins. Co., 27 F.4th 398, 402 (6th Cir. 2022). The complaint is construed in the light
most favorable to the plaintiffs, but it must contain “enough facts to state a claim to relief that is
plausible on its face.” Phillips v. DeWine, 841 F.3d 405, 413–14 (6th Cir. 2016) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

        Kentucky law governs this case.2 A court sitting in diversity must apply “the law of the
state’s highest court.” Brown Jug, 27 F.4th at 402 (citation omitted). “In Kentucky, the proper
meaning of a disputed contract term presents a legal question for the court.” Estes v. Cincinnati
Ins. Co., 23 F.4th 695, 699 (6th Cir. 2022) (citing Foreman v. Auto Club Prop.-Cas. Ins. Co.,
617 S.W.3d 345, 349 (Ky. 2021)). Kentucky courts “apply certain rules of construction to
insurance contracts, including a rule that when the terms of an insurance contract are
unambiguous and not unreasonable, they will be enforced as written.” Foreman, 617 S.W.3d at
349. Unambiguous terms are interpreted “in the light of usage and understanding of the average
person,” while ambiguous terms are “strictly construed against the insurer so as not to defeat the
policyholder’s reasonable expectation of coverage.” Id. at 349–50 (citation omitted). But the
rule of strict construction “does not mean that every doubt must be resolved against the insurer
and does not interfere with the rule that the policy must receive a reasonable interpretation

        2
         The policy here was issued in Kentucky through a Kentucky broker, and it covers more locations in
Kentucky than in either Ohio or Indiana. Thus, Kentucky has the “most significant relationship” to the policy. See
Schnuerle v. Insight Commc’ns Co., 376 S.W.3d 561, 566–67 (Ky. 2012).
 No. 21-5962                      Wild Eggs Holdings, Inc., et al. v.                      Page 4
                                  State Auto Prop. & Cas. Ins. Co.

consistent with the plain meaning in the contract.” Id. at 350 (citation omitted). Rather, we
“consider what could be reasonably expected by the insured from the plain contract language, as
it is controlling.” Id.

                                                  III.

        Wild Eggs first argues that it stated a claim for breach of contract under the Endorsement.
The Endorsement states, in pertinent part:

        1. The Causes of Loss applicable to the Business Income Form attached to this
        policy shall also include the following:
                a. The “suspension” of your “operations” at the described
                   premises due to the order of a civil authority; or adverse public
                   communications or media reports, resulting from the actual or
                   alleged:
                                                 ***
                    (2) Exposure of the described premises to a contagious
                        or infectious disease.

In the policy, the “described premises” are Wild Eggs’s restaurants. “Suspension” is defined as
“[t]he slowdown or cessation of your business activities.” “Operations” means Wild Eggs’s
“business activities occurring at the described premises.”         Read together, the Endorsement
requires a suspension of restaurant operations due to an order of civil authority that results from
an alleged exposure of the restaurant to a disease.

        Because it is undisputed that Wild Eggs’s restaurants were shut due to orders of civil
authorities, the issue in question is whether Wild Eggs can satisfy the Endorsement’s required
causal connections, that the suspension “due” to civil authority must “result[] from” an “alleged
exposure” to a disease. Wild Eggs focuses on the phrase “alleged exposure.” It argues that,
because the policy explicitly describes that the exposure can be merely “alleged,” it need not
show an “actual” exposure. Wild Eggs therefore notes that the mere possibility or allegation that
COVID-19 was at the restaurant in March 2020 satisfies the policy’s language. But regardless of
whether Wild Eggs has sufficiently pleaded an “alleged exposure,” Wild Eggs interpretation still
falls short by failing to give full effect to the “resulting from” language.
 No. 21-5962                          Wild Eggs Holdings, Inc., et al. v.                                Page 5
                                      State Auto Prop. & Cas. Ins. Co.

        The suspension first must be “due to” the order of civil authority. Because the policy
does not define this term, we turn to dictionary definitions to define it (and others, below). See,
e.g., Aetna Cas. & Sur. Co. v. Commonwealth, 179 S.W.3d 830, 838 (Ky. 2005).3 “Due,” as an
adjective, is defined as “[t]hat is owed, appropriate, allotted, or attributable to someone or
something,”4 or “capable of being attributed: ASCRIBABLE.”5 This means that the suspension
must be owed, ascribed, or attributed to the order. In other words, the only suspensions that may
be covered are those caused by orders of civil authority.

        Next, the subsequent “resulting from” phrase then creates a causal relationship between
the civil-authority-induced suspension and the alleged exposure. “Result,” as an intransitive
verb, is defined as “[t]o arise as a consequence, effect, or outcome of some action, process, or
design; to occur as a result to; to end or conclude in a specified manner,”6 or “to proceed or arise
as a consequence, effect, or conclusion . . . death resulted from the disease.”7                       Thus, the
suspension must arise as a consequence, effect, outcome, or conclusion from the alleged
exposure. The context and syntax of the sentence—where “alleged exposure” follows the
“suspension” and “order”—demonstrates that the “alleged exposure” must cause not only the
suspension, but also the order producing the suspension. That is, the suspension must be “due
to,” or attributed to, the order, which must “result[] from,” or be caused by, the exposure. The
policy contemplates a singular line of causation—the exposure causes the order, which in turn
causes the suspension. Any other interpretation, such as that advanced by Wild Eggs, would
incorrectly decouple the causal relationship between the order and the alleged exposure.

        3
          Consulting several dictionaries contemporaneous to or published shortly after the policy language applies
is a best practice. See A. Scalia & B. Garner, Reading Law: The Interpretation of Legal Texts 417–19
(Thompson/West 2012). The policy here was entered into in April 2019. For that reason, we use current online
dictionaries.
        4
        Due, Oxford English Dictionary Online, https://www.oed.com/view/Entry/58238?rskey=XvFtdb&result
=2&isAdvanced=false#eid (last accessed August 3, 2022).
        5
         Due, Merriam-Webster Dictionary Online, https://www.merriam-webster.com/dictionary/due (last
accessed August 3, 2022).
        6
         Result,   Oxford      English      Dictionary         Online,      https://www.oed.com/view/Entry/
164062?rskey=tGTcrE&result=2&isAdvanced=false#eid (last visited August 3, 2022).
        7
         Result, Merriam-Webster Dictionary Online, https://www merriam-webster.com/dictionary/resulting (last
accessed August 3, 2022).
 No. 21-5962                        Wild Eggs Holdings, Inc., et al. v.                    Page 6
                                    State Auto Prop. & Cas. Ins. Co.

       Because the “alleged exposure” must cause the “suspension . . . due to the order of a civil
authority,” the alleged COVID-19 exposure must cause both the order and the resulting
suspension. But here, the proper order is reversed: the States responded to a large-scale threat of
disease by mandating that restaurants (and other non-essential businesses) close to prevent
exposure. The Stay at Home orders were prophylactic measures intended to curb generally the
spread of COVID-19 statewide, not to respond to an exposure of Wild Eggs’s restaurants. The
Kentucky order, for example, cited the national public-health emergency, the general severity of
the COVID-19 disease, and the need to prepare for a public-health emergency in the state. There
is no mention of an exposure at Wild Eggs’s restaurants. The same concerns prompted the
Indiana and Ohio orders. For that reason, no causal relationship exists. Here, the suspension of
Wild Eggs’s operations was not due to an order that itself arose as an outcome or effect of an
alleged exposure of a restaurant.

       This conclusion does not change even though Wild Eggs alleged actual exposures of
certain restaurants in the form of positive COVID-19 tests for some employees. In its amended
complaint, Wild Eggs noted several closures in August 2020 due to employees’ positive COVID-
19 tests, even after the restaurants opened for limited dine-in operations. But those positive tests
did not create the Stay at Home orders that caused Wild Eggs to close; and how could they have?
Wild Eggs alleges that those positive tests occurred after the original Stay at Home orders were
lifted or modified to provide limited in-person dining. Positive tests in August 2020 could not
have been the cause of the Stay at Home orders issued in March 2020. At most, those positive
tests were the effect that the orders were intended to prevent. And those exposure-induced
closures could not have given rise to coverage under this policy because they occurred after the
policy expired in April 2020. See 14 Steven Plitt et al., Couch on Insurance § 201:4 (3d ed. Dec.
2021 update) (“[W]here the claims made against an insured fall outside the policy’s period, the
insurer should not be called to foot the bill for ex-policyholders in their attempt to extend
coverage.”).

       Kentucky courts would reach this same conclusion. They would rely on close readings of
dictionary definitions, and those definitions here support State Auto’s interpretation that the
suspension did not arise from an alleged exposure. See, e.g., Aetna Cas. & Sur. Co., 179 S.W.3d
 No. 21-5962                     Wild Eggs Holdings, Inc., et al. v.                      Page 7
                                 State Auto Prop. & Cas. Ins. Co.

at 838. Additionally, in certain circumstances, Kentucky courts have also looked to the treatise
Couch on Insurance. See, e.g., Wehr Constructors, Inc. v. Assurance Co. of Am., 384 S.W.3d
680, 683 (Ky. 2012).     Couch notes that “resulting from” language in an insurance policy
generally means “flowing from” or “having its origin in” something. 7 Couch on Insurance
§ 101:52. Though this phrase “does not require a direct proximate causal connection,” it does
necessitate “some causal relation or connection.” Id. Application of this treatise provision here
supports our conclusion that the policy requires a causal connection between the suspension,
order, and exposure, and that no such connection exists.         The civil authority orders and
suspension did not “hav[e] [their] origin in” an exposure at Wild Eggs’s restaurants but in a
general statewide concern for the spread of COVID-19.

       Our conclusion does not stand alone.        In Terry Black’s Barbecue, L.L.C. v. State
Automobile Mutual Insurance Co., the Fifth Circuit, interpreting identical language, held that the
civil-authority orders did not result from a restaurant’s exposure to COVID-19 and, thus, there
was no coverage. 22 F.4th 450, 458 (5th Cir. 2022). “Resulting from” requires causation, and,
in Terry Black’s Barbecue, the insured “failed to allege even a remote causal relationship
between the civil authority orders and its restaurants’ alleged or actual exposure to COVID-19.”
Id. This was true from a “common sense” perspective of the pandemic: “The civil authority
orders ‘resulted from’ the global pandemic and the need to take measures to contain and prevent
the spread of COVID-19. The language in the orders indicates that they were enacted to avoid
exposure to COVID-19, not because of exposure to COVID-19.” Id. at 458–59. The same is
true here, and Kentucky courts would find this on-point analysis persuasive. See, e.g., Wehr, 384
S.W.3d at 683–87 (considering out-of-state caselaw).

       Wild Eggs argues it should still prevail because the policy is ambiguous and, thus, should
be construed against State Auto in Wild Eggs’s favor. But for the reasons discussed above, the
policy language is not ambiguous, and Wild Eggs’s interpretation is unmoored from the plain
language of the policy. This too renders inapplicable the doctrine of contra proferentem, i.e.,
that an agreement is construed against the drafter. See Bituminous Cas. Corp. v. Kenway
Contracting, Inc., 240 S.W.3d 633, 638 (Ky. 2007) (“[A]n ambiguous policy is to be construed
against the drafter, and so as to effectuate the policy of indemnity.” (emphasis added)). Because
 No. 21-5962                          Wild Eggs Holdings, Inc., et al. v.                               Page 8
                                      State Auto Prop. & Cas. Ins. Co.

there is no ambiguity, we cannot construe the material phrase against State Auto (the drafter),
and instead must look only to its plain and ordinary meaning. See Foreman, 617 S.W.3d at 350.

        Finally, Wild Eggs argues (and the dissent accepts) that the reasonable-expectations
doctrine triggers coverage. In Kentucky, “courts are nevertheless bound to look at an insured’s
reasonable expectations in deciding whether the insurance contract is ambiguous and what the
contract means.” Ky. Emps.’ Mut. Ins. v. Ellington, 459 S.W.3d 876, 883 (Ky. 2015). Wild
Eggs argues that this description from Ellington requires us to consider reasonable expectations
before a finding of ambiguity, but Ellington did not hold as such. Rather, it reaffirmed the
longstanding Kentucky rule that “the ‘reasonable expectations doctrine’ resolves an insurance
policy ambiguity in favor of the insured’s reasonable expectations.”                    Id. (emphasis added)
(quoting Aetna Cas. & Sur. Co., 179 S.W.3d at 837). See also True v. Raines, 99 S.W.3d 439,
443 (Ky. 2003) (noting that the reasonable expectations doctrine “applies only to policies with
ambiguous terms”). Ellington also clarified that, while unequivocal language may exclude
coverage, the opposite finding, i.e., an ambiguity in a policy, is not enough by itself to provide
coverage—rather, the doctrine considers the underlying facts and “looks to the reasonableness of
what an insured may believe about coverage.” Ellington, 459 S.W.3d at 883. Applying this test,
Ellington noted that an ambiguity existed in the policy at issue but that the insured still could not
have reasonably expected coverage given the surrounding facts.                    Id. at 883–84. Ellington
demonstrates that here, contrary to Wild Eggs’s and the dissent’s arguments, the reasonable-
expectations doctrine does not provide coverage. No ambiguity exists, meaning that it would not
be reasonable for Wild Eggs to expect coverage under the policy here.8 The suspension was not
due to an order that resulted from an alleged exposure.

        For these reasons, no coverage exists under the Endorsement.                     It does not provide
coverage for general preventative measures that impacted Wild Eggs’s operations, but for orders
that responded to alleged exposures of Wild Eggs’s restaurants. No exposure caused the orders,

        8
          While we recognize that the reasonable expectations doctrine requires an “unequivocally conspicuous,
plain and clear manifestation of the company’s intent to exclude coverage” to defeat a reasonable expectation, see
Ellington, 459 S.W.3d at 883, we emphasize that this case involves a coverage provision, not one excluding
coverage. We conclude that such an unequivocal intent exists here given the lack of ambiguity in the Endorsement.
 No. 21-5962                     Wild Eggs Holdings, Inc., et al. v.                       Page 9
                                 State Auto Prop. & Cas. Ins. Co.

meaning that the Endorsement does not apply. Therefore, Wild Eggs is not entitled to coverage,
and its complaint stating otherwise failed to state a claim upon which relief could be granted.

                                                IV.

        Wild Eggs argues that, even if it does not prevail on its Endorsement contention, it could
still recover under the Business Income Coverage provision. That provision states:

        We will pay for the actual loss of Business Income you sustain due to the
        necessary “suspension” of your “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.

The definitions of suspension and operations are the same as for the Endorsement. The “period
of restoration” is the time that begins “72 hours after the time of direct physical loss or damage
for Business Income Coverage” or “[i]mmediately after the time of direct physical loss or
damage for Extra Expense Coverage . . . caused by or resulting from any Covered Cause of Loss
at the described premises.” That period ends when either the property should be “repaired,
rebuilt or replaced with reasonable speed and similar quality” or when “business is resumed at a
new permanent location.”

        We have already addressed how Kentucky courts have interpreted the phrase “direct
physical loss” in the context of COVID-19 Stay at Home orders, holding that business-income
losses resulting from those orders did not constitute such a loss. Estes, 23 F.4th at 699–700.
“The phrase ‘physical loss’ would convey to the ‘average person’ that a property owner has been
tangibly deprived of the property or that the property has been tangibly destroyed.” Id. at 700
(citation omitted). Thus, because “neither the pandemic nor the government shutdown orders
caused a ‘direct’ ‘physical loss’” to the insured’s property, the policy did not provide coverage.
Id. at 702.

        Estes governs our interpretation of the phrase “direct physical loss” under Kentucky law.
To the extent that this case turns on that phrase, the panel is bound by the prior decision. See
Salmi v. Sec’y of Health and Hum. Servs., 774 F.2d 685, 689 (6th Cir. 1985). Thus, unless the
 No. 21-5962                      Wild Eggs Holdings, Inc., et al. v.                        Page 10
                                  State Auto Prop. & Cas. Ins. Co.

insurance policy here justifies a departure from Estes, we must follow that case. Cf. Wilkerson v.
Am. Fam. Ins. Co., 997 F.3d 666, 669–70 (6th Cir. 2021) (noting that different policies may
interpret terms in different ways). And nothing in the insurance policy justifies a different result
than in Estes.

       For one, the policy language between the two cases is materially identical. The Estes
policy provided coverage for “direct loss,” defining “loss” as “accidental physical loss or
accidental physical damage.” 23 F.4th at 698. Though ‘accidental’ is not present in the policy
here, the language here is otherwise the same. And the context of the two policies confirms that
the phrase carries the same meaning. Like the policy in Estes, the Business Income Coverage
provision permits an insured to recover income for business suspensions only during the “period
of restoration”—a defined period that ends when the property should have been “repaired, rebuilt
or replaced with reasonable speed and similar quality[.]” The phrase “repaired, rebuilt, or
replaced” contemplates some tangible or physical problem at the property that requires fixing.
Without such a physical problem that required a tangible repair, there is no “period of
restoration.” Cf. Estes, 23 F.4th at 700–01.

       Wild Eggs’s other contentions similarly fail to identify anything that would justify a
different result than in Estes. To get around Estes, Wild Eggs argues that it did not suffer only
“direct physical loss” as in Estes, but also “direct physical . . . damage.”            It states that
microscopic damage occurred to its restaurants from COVID-19 exposure, thereby closing its
restaurants. It is true that Estes focused on the “loss” aspect, but much of its analysis turned on
the requirement that the harm be “physical,” which applied to both “loss” and “damage.”
Cf. Estes, 23 F.4th at 701 (“Estes’s reading . . . fails to explain how its reading gives any effect to
the word ‘physical’ in the phrase ‘physical loss.’”). But to the extent Estes’s holding does not
apply to “damage,” we conclude that Wild Eggs could not have suffered “direct physical . . .
damage.” “Damage” is defined as “loss or harm resulting from injury to person, property, or
reputation.”9 Here, it too is modified by “physical,” contemplating some tangible loss, harm, or
injury. And the policy requires that this physical, tangible damage be to “property.” After the

       9
          Damage, Merriam-Webster.com, https://www merriam-webster.com/dictionary/damage (last accessed
August 3, 2022).
 No. 21-5962                     Wild Eggs Holdings, Inc., et al. v.                      Page 11
                                 State Auto Prop. & Cas. Ins. Co.

beginning of the pandemic when Wild Eggs lost partial use of its property, Wild Eggs still had
all its property without any of it being harmed—it simply could not use it as it wished. This is
neither a physical loss of nor physical damage to property.

       The Kentucky cases cited by Wild Eggs—State Farm Fire & Cas. Co. v. Aulick,
781 S.W.2d 531 (Ky. Ct. App. 1989), and Ashland Hosp. Corp. v. Affiliated FM Ins. Co., No. 11-
16-DLB-EBA, 2013 WL 4400516 (E.D. Ky. Aug. 14, 2013)—do not warrant a different
conclusion. Both involved tangible losses of property. Aulick addressed odor damage from an
oil spill, but odor damage is still a tangible property loss.          See Estes, 23 F.4th at 702
(distinguishing Aulick for that reason). And Ashland addressed a data storage network’s loss of
reliability due to heat exposure, another tangible harm. 2013 WL 4400516, at *4–5. Here, by
contrast, COVID-19 did not alter or harm the restaurants in a perceptible way; instead, the Stay
at Home orders caused Wild Eggs to lose in part its ability to use the property.

       Wild Eggs concludes its arguments by again raising its ambiguity and reasonable
expectations position. But, as with the Endorsement, the policy is not ambiguous. It requires
tangible harm and damage to the property, but no such damage occurred here. Wild Eggs simply
lost its preferred use of its properties and incurred no property damage. For this reason, the
policy is not ambiguous, and, thus, reasonable expectations do not apply here either.
Bituminous, 240 S.W.3d at 638; Ellington, 459 S.W.3d at 883.

       In sum, no coverage exists under the Business Income Coverage provision. Wild Eggs
never incurred “direct physical loss of or damage to [its] property.” Rather, it lost its use of its
property from Stay at Home orders. Thus, as in Estes, the policy does not provide coverage.

                                                V.

       For these reasons, we affirm the judgment of the district court.
 No. 21-5962                       Wild Eggs Holdings, Inc., et al. v.                    Page 12
                                   State Auto Prop. & Cas. Ins. Co.

                                        _________________

                                             DISSENT
                                        _________________

          KAREN NELSON MOORE, Circuit Judge, dissenting. In March 2020, in response to
the COVID-19 pandemic, state and local governments across the country issued shutdown orders
that required nonessential businesses to close. Wild Eggs was among the impacted businesses
and, due to the public-health orders, it shuttered its restaurants during the early months of the
pandemic.

          Shortly after closing, Wild Eggs filed an insurance claim. Its insurer, State Auto, denied
the claim. Although the majority holds that State Auto’s denial of the claim was proper,
I respectfully disagree. Instead, I would hold that the insurance contract covers Wild Eggs’s
losses.

          When determining whether an insurance policy provides coverage, Kentucky law
provides for a two-step analysis. “First, we determine what the policy says and whether it
includes any ambiguity.” Ky. Emps. Mut. Ins. v. Ellington, 459 S.W.3d 876, 880 (Ky. 2015).
“Second, if there is any ambiguity, we must resort to the standard tools of interpretation to
determine what coverage the policy provides.” Id. Under Kentucky law, “a court will interpret
the contract’s terms by assigning language its ordinary meaning.” Frear v. P.T.A. Indus., Inc.,
103 S.W.3d 99, 106 (Ky. 2003).

          Because this is an insurance contract, the doctrine of reasonable expectations shapes our
analysis. “[T]he gist of the doctrine is that the insured is entitled to all the coverage he may
reasonably expect to be provided under the policy. Only an unequivocally conspicuous, plain
and clear manifestation of the company’s intent to exclude coverage will defeat that
expectation.” Bidwell v. Shelter Mut. Ins. Co., 367 S.W.3d 585, 589 (Ky. 2012) (quoting Simon
v. Cont’l Ins. Co., 724 S.W.2d 210, 213 (Ky. 1986)). “Where a person has paid a premium for a
policy, the policy should not be read technically to avoid paying benefits.” Ellington, 459
S.W.3d at 883. “This test looks to the reasonableness of what an insured may believe about
coverage, and necessarily relies heavily on the facts.” Id.
 No. 21-5962                        Wild Eggs Holdings, Inc., et al. v.                         Page 13
                                    State Auto Prop. & Cas. Ins. Co.

        Significantly, the doctrine of reasonable expectations impacts both parts of the two-step
analysis governing the interpretation of insurance contracts. First, the doctrine of reasonable
expectations is “[a]n essential tool in deciding whether an insurance policy is ambiguous.”
Bidwell, 367 S.W.3d at 589 (quoting Simon, 724 S.W.2d at 212).                   Second, if there is an
ambiguity:     the doctrine “resolves [that] ambiguity in favor of the insured’s reasonable
expectations.” Aetna Cas. & Sur. Co. v. Commonwealth, 179 S.W.3d 830, 837 (Ky. 2005). This
latter step is also sometimes called the doctrine of ambiguity: if policy language is ambiguous,
the construction “most favorable to the insured must be adopted.” Woodson v. Manhattan Life
Ins. Co. of N.Y., 743 S.W.2d 835, 838–39 (Ky. 1987) (quoting Wolford v. Wolford, 662 S.W.2d
835, 838 (Ky. 1984)).

        The key provision at issue here is the policy’s “Restaurant Extension Endorsement.”
This provision covers losses due to “[t]he ‘suspension’ of your ‘operations’ at the described
premises due to the order of a civil authority . . . resulting from the actual or alleged . . .
[e]xposure of the described premises to a contagious or infectious disease. R. 28-1 (Insurance
Policy at 104–05) (Page ID #1304–05). I agree with the majority that, for the provision to apply,
a business must shut down “due to” a government order, which, in turn, must have “result[ed]
from” exposure of the premises to an infectious disease.

        “Exposure” has a range of meanings. Its meanings include “the state or fact of being
subjected, to any external influence,”1 and “the condition of being subject to some effect or
influence.”2 All businesses, including Wild Eggs, were subjected to the external influence of
COVID-19, a pandemic that raged throughout the country and was transmitted through the air.
Wild Eggs was thus exposed to COVID-19, regardless of whether any specific individual
contracted COVID-19 at the facility.

        1
          Exposure,      Oxford       English     Dictionary     Online       (3d         ed.     2021),
https://www.oed.com/view/Entry/66730?rskey=22IgQ8&result=1&isAdvanced=false#eid (last accessed August 10,
2022).
        2
           Exposure, Merriam-Webster Dictionary Online, https://www.merriam-webster.com/dictionary/exposure
(last accessed August 10, 2022).
 No. 21-5962                    Wild Eggs Holdings, Inc., et al. v.                    Page 14
                                State Auto Prop. & Cas. Ins. Co.

       Recognizing this meaning of “exposure,” I would apply the doctrine of reasonable
expectations to hold that the policy’s Restaurant Extension Endorsement provision is ambiguous.
State Auto argues that this language requires that a specific occurrence at the covered premises
directly cause the government order that forces the business to shut down. The language could
bear that meaning. But the provision could also mean something more general, requiring only
that the civil authority order shuts down businesses because all businesses—including the
covered establishment—are exposed to a disease. Put differently, the language could apply
when the government shuts down all businesses—including Wild Eggs—because all
businesses—including Wild Eggs—are exposed to COVID-19.

       The majority emphasizes that the order must “result[] from” the exposure. Maj. Op. at 5.
The Fifth Circuit focused on this same language in Terry Black’s Barbecue, L.L.C. v. State
Automobile Mutual Insurance Co., 22 F.4th 450, 458–59 (5th Cir. 2022), a case that analyzed the
same policy language based on Texas state law. In the view of the majority (and the Fifth
Circuit), the “resulting from” language requires causation. Id. at 458–59. I agree that causation
is required. However, the causation requirement does not resolve the fundamental issue in this
case, which pertains to the degree of specificity required. In other words, must the government
order have been caused by the fact that this specific premises was exposed to a disease, or may
the government order have been caused by the fact that all premises—including this one—were
exposed to a disease? Either reading could be correct.

       The majority reasons that because the public health orders were preventative, they could
not have resulted from exposure to COVID-19. Maj. Op. at 6. But these preventative measures
stemmed from the COVID-19 exposure that businesses faced. The public-health order reasoned
that confirmed cases of COVID-19 existed “throughout the United States,” and that COVID-19
“can easily spread from person to person.” R. 28-2 (Executive Order at 1) (Page ID #1376).
People and places were exposed to COVID-19, and the public health order intended to prevent
future infection (and future exposure). In other words, the order’s goal of preventing future
exposure is entirely consistent with Wild Eggs’s understanding that the order “result[ed] from
. . . the exposure of” businesses (including Wild Eggs) to COVID-19.
 No. 21-5962                      Wild Eggs Holdings, Inc., et al. v.                  Page 15
                                  State Auto Prop. & Cas. Ins. Co.

       Both Wild Eggs and State Auto offer reasonable interpretations of the contract language.
Wild Eggs prevails unless there is “an unequivocally conspicuous, plain and clear manifestation
of the company’s intent to exclude coverage.” Bidwell, 367 S.W.3d at 589 (quoting Simon,
724 S.W.2d at 212). Because I believe that the contract contains no unequivocal, plain, or clear
manifestation of the intent to exclude coverage, I respectfully dissent.