Court Opinion

ID: 6348389
Source: CourtListenerOpinion
Date Created: 2022-06-09 18:00:25.188169+00
Date Added: 2024-06-11T15:49:25.232155
License: Public Domain

Case: 21-11046    Document: 00516350492         Page: 1     Date Filed: 06/09/2022

           United States Court of Appeals
                for the Fifth Circuit
                                                                       United States Court of Appeals
                                                                                Fifth Circuit

                                                                              FILED
                                                                           June 9, 2022
                                 No. 21-11046                            Lyle W. Cayce
                                                                              Clerk

   Ferrer & Poirot, GP; Ferrer & Poirot, PC, doing business as
   Ferrer, Poirot, Wansbrough, Feller, Daniel, Abney;
   2603 Oak Lawn, L.P.,

                                                          Plaintiffs—Appellants,

                                     versus

   The Cincinnati Insurance Company,

                                                          Defendant—Appellee.

                 Appeal from the United States District Court
                     for the Northern District of Texas
                          USDC No. 3:20-CV-3286

   Before Higginbotham, Higginson, and Oldham, Circuit Judges.
   Per Curiam:
         Ferrer & Poirot, a law firm with offices in Dallas, Texas and Atlanta,
   Georgia, sued to recover lost income and expenses attending the COVID-19
   pandemic under an insurance policy issued by The Cincinnati Insurance
   Company. The district court dismissed Ferrer’s claims. We affirm.
                                       I.
         In the early stages of the COVID-19 pandemic, when state and local
   authorities issued orders requiring individuals to stay home except for
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                                             No. 21-11046

   essential trips, most of Ferrer’s workforce worked remotely. Ferrer also
   purchased equipment and supplies used to prevent the spread of the virus
   and facilitate remote work.
            Ferrer filed a claim with Cincinnati Insurance to recover the costs of
   equipment and supplies and lost income. Ferrer’s insurance policy provided
   property damage, business income, extra expense, and civil authority
   coverage. Cincinnati Insurance denied Ferrer’s claim.
            Ferrer sued, alleging that Cincinnati Insurance’s denial was a breach
   of contract. In its Amended Complaint, Ferrer alleged that the physical
   presence of the virus caused its loss and met the policy’s conditions.
            Cincinnati Insurance moved to dismiss Ferrer’s claims under Federal
   Rule of Civil Procedure 12(b)(6). The district court referred the motion to a
   magistrate judge, who analyzed the policy and concluded that no coverage
   was owed as there was no physical loss. The district court adopted its findings
   and conclusions, granted Cincinnati Insurance’s motion to dismiss, and
   dismissed Ferrer’s claims with prejudice. Ferrer timely appealed.
                                                  II.
            We review de novo a district court’s grant of a motion to dismiss under
   Federal Rule of Civil Procedure 12(b)(6). 1 To survive a motion to dismiss, a
   plaintiff must plead “enough facts to state a claim to relief that is plausible
   on its face.” 2 We accept all facts as pleaded and view them in the light most

            1
                Waste Mgmt. of Louisiana, L.L.C. v. River Birch, Inc., 920 F.3d 958, 963 (5th Cir.
   2019).
            2
                Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

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                                             No. 21-11046

   favorable to the plaintiff. 3 The district court’s interpretation of an insurance
   policy is a question of law that we also review de novo. 4
                                                  III.
           The COVID-19 pandemic has brought myriad claims of insurance
   coverage. 5 When this suit was filed in October 2020, we had not addressed
   the issue presented here. But this Court recently interpretated similar
   coverage provisions in Terry Black’s Barbecue, L.L.C. v. State Auto. Mut. Ins.
   Co., 6 and that analysis guides us here.
           We have diversity jurisdiction and Texas law applies. 7 “In Texas,
   insurance policies are interpreted by the same principles as contract
   construction.” 8 “The policy’s terms are given their ordinary and generally-
   accepted meaning unless the policy shows the words were meant in a
   technical or different sense.” 9 Where a policy’s terms can be given definite
   or certain legal meanings, it is unambiguous. 10 “The paramount rule is that

           3
               Guidry v. Am. Pub. Life Ins. Co., 512 F.3d 177, 180 (5th Cir. 2007).
           4
               Cody v. Allstate Fire & Cas. Ins. Co., 19 F.4th 712, 714 (5th Cir. 2021) (per curiam).
           5
             See, e.g., Vandelay Hosp. Grp. LP v. Cincinnati Ins. Co., No. 3:20-CV-1348-D, 2021
   WL 2936066 (N.D. Tex. July 13, 2021); Terry Black’s Barbecue, L.L.C. v. State Auto. Mut.
   Ins. Co., 22 F.4th 450, 456–57 (5th Cir. 2022) (listing 2021 decisions from the Second,
   Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits, including three cases
   involving Cincinnati Insurance).
           6
               22 F.4th 450.
           7
               28 U.S.C. §1332; Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).
           8
            Terry Black’s Barbecue, 22 F.4th at 454 (citing State Farm Lloyds v. Page, 315
   S.W.3d 525, 527 (Tex. 2010)).
           9
            Gilbert Texas Const., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 126
   (Tex. 2010).
           10
             Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517,
   520 (Tex. 1995) (per curiam).

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                                           No. 21-11046

   courts enforce unambiguous policies as written.” 11 Here, the policy’s terms
   are defined and unambiguous.
           Ferrer invokes three forms of its coverage: Business Income, Extra
   Expense, and Civil Authority coverage. Under the policy, Cincinnati
   Insurance was obligated to pay for lost business income and extra expenses
   caused by or resulting from a “Covered Cause of Loss.” Additionally,
   “[w]hen a Covered Cause of Loss causes damage to property,” Cincinnati
   Insurance was obligated to pay for lost business income and extra expenses
   “caused by action of civil authority that prohibits access to the ‘premises’,
   provided that . . . [t]he action of civil authority is taken in response to
   dangerous physical conditions resulting from the damage or continuation of
   the Covered Cause of Loss that caused the damage[.]”
           Under the policy, a “Covered Cause of Loss” is a “direct ‘loss’ unless
   the loss is excluded or limited in this Coverage Part,” and “loss” is an
   “accidental physical loss or accidental physical damage.” So, to recover
   under any of the three forms of coverage, there must be a physical loss or
   physical damage to the Ferrer’s property.
           Here, there was no Covered Cause of Loss as there was no underlying
   physical loss or damage to insured property. As in Terry Black’s Barbecue,
   there is no physical loss without “any tangible alteration or deprivation of
   [the insured’s] property.” 12 While COVID-19 has wrought great physical

           11
             Pan Am Equities, Inc. v. Lexington Ins. Co., 959 F.3d 671, 674 (5th Cir. 2020)
   (discussing Texas contract interpretation law for insurance policies).
           12
              Terry Black’s Barbecue, 22 F.4th at 456. See also 10A Couch on Ins. § 148:46 (3d
   ed.) (“The requirement that the loss be ‘physical,’ given the ordinary definition of that
   term, is widely held . . . to preclude any claim against the property insurer when the insured
   merely suffers a detrimental economic impact unaccompanied by a distinct, demonstrable,
   physical alteration of the property.” (footnotes omitted)).

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   harm to people, it does not physically damage property within the plain
   meaning of “physical.” 13 Ferrer was not deprived of its property nor was
   there a tangible alteration to its property, so there was no underlying “direct
   ‘loss’” to trigger coverage.
           Alternatively, Ferrer argues that amendments to the policy make it
   ambiguous so as to require interpretation of the policy in its favor. This is not
   so. The amendments state that, “Direct physical ‘loss’ is now described
   simply as direct ‘loss’, thereby dropping the unneeded word physical.” This
   did not create an ambiguity as to whether a “loss” needed to be physical.
   “Physical” was an unneeded word because “loss” was already defined as
   “accidental physical loss or accidental physical damage.” The amendment
   did not bring ambiguity to the relevant provisions of the policy.
                                               IV.
           As Ferrer’s alleged losses were not covered under the terms of the
   policy, it failed to allege a plausible claim. The district court’s judgment
   dismissing with prejudice Ferrer’s claims is AFFIRMED.

           13
              U.S. Metals, Inc. v. Liberty Mut. Grp., Inc., 490 S.W.3d 20, 25 (Tex. 2015) (“To
   give ‘physical’ its plain meaning, a covered injury must be one that is tangible.”); see Great
   Am. Ins. Co. of New York v. Compass Well Servs., LLC, No. 02-19-00373-CV, 2020 WL
   7393321, at *14 (Tex. App.—Fort Worth Dec. 17, 2020), rev. denied (Jan. 28, 2022) (“[A]n
   intangible or incorporeal loss that is unaccompanied by a distinct, demonstrable, physical
   alteration of the property is not considered a direct physical loss.”).

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