Court Opinion

ID: 9386312
Source: CourtListenerOpinion
Date Created: 2023-04-12 00:00:27.962651+00
Date Added: 2024-06-11T17:18:05.496209
License: Public Domain

Case: 22-30705         Document: 00516708001             Page: 1      Date Filed: 04/11/2023

              United States Court of Appeals
                   for the Fifth Circuit                                        United States Court of Appeals
                                                                                         Fifth Circuit
                                      ____________
                                                                                        FILED
                                                                                      April 11, 2023
                                       No. 22-30705
                                     Summary Calendar                             Lyle W. Cayce
                                     ____________                                      Clerk

   Exceptional Dental of Louisiana, L.L.C.; Bam
   Management Group, L.L.C.; Affordable Smiles of Baton
   Rouge, L.L.C.; Affordable Smiles of Hammond, L.L.C.,

                                                                   Plaintiffs—Appellants,

                                             versus

   Bankers Insurance Company,

                                                Defendant—Appellee.
                      ______________________________

                      Appeal from the United States District Court
                         for the Eastern District of Louisiana
                                USDC No. 2:22-CV-3
                      ______________________________

   Before King, Higginson, and Willett, Circuit Judges.
   Per Curiam: *
          This is a business-interruption coverage dispute arising from the
   coronavirus pandemic. The plaintiffs are a group of companies that offer
   dental services via a group of clinics that they own and operate in Louisiana
   (together, the “Dentists”). Each of the Dentists purchased a separate but

         _____________________
          *
              This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 22-30705      Document: 00516708001          Page: 2    Date Filed: 04/11/2023

                                    No. 22-30705

   identical insurance policy from the defendant, Bankers Insurance Company
   (“Bankers”). The policies cover losses due to business interruptions that
   ensue if the Dentists must suspend operations at their clinics due to a “direct
   physical loss of or damage to property.” The Dentists submitted claims for
   coverage under that provision on March 20, 2020. Bankers refused coverage
   in a series of denials that ended with a final letter on May 23, 2021.
          The Dentists filed this diversity suit in federal district court, seeking
   declaratory and other relief flowing from their allegation that “Bankers
   wrongfully and without justification refused to indemnify Plaintiffs for the
   losses Plaintiffs suffered as a result of the COVID-19 virus and the
   governmental restrictions that stemmed from the COVID-19 virus.” The
   district court granted summary judgment for Bankers. That court reasoned
   that our precedent “mandate[s] the conclusion that . . . COVID-19-related
   business closures—either due to government order or the presence of the
   virus on covered property—do not give rise to recoverable losses under the
   Bankers policies.”
          The Dentists now appeal, arguing that we should reverse because viral
   contamination can cause a “direct physical loss of or damage to property.”
   In the alternative, they ask us to certify the coverage question to the Supreme
   Court of Louisiana, or to stay this case until that court addresses the question
   in a pending but otherwise unrelated case.
          On March 17, 2023, the Supreme Court of Louisiana held that a
   “direct physical loss of or damage to property” occurs only when “the
   insured’s property sustain[s] a physical, meaning tangible or corporeal, loss
   or damage.” Cajun Conti, LLC v. Certain Underwriters at Lloyd’s, London,
   2022-01349 (La. 3/17/23), ___ So.3d___, 2023 WL 2549132, at *3. “The
   loss or damage must also be direct, not indirect.” Id. That court then applied
   these principles to “claims [of] significant income losses due to

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                                     No. 22-30705

   contamination by, and the continued presence of, COVID-19 at [an] insured
   location.” Id. at *2. Because the plaintiffs “never repaired, rebuilt or replaced
   any property that was allegedly lost or damaged,” the court held that
   “COVID-19 did not cause damage or loss that was physical in nature.” Id. at
   *5. That holding makes certification unnecessary, and it moots the Dentists’
   request for a stay pending the Supreme Court of Louisiana’s decision.
          Cajun Conti also refutes the Dentists’ view of the merits. The question
   there was whether contamination from COVID-19 can constitute a “direct
   physical loss of or damage to property.” Id. at *1. We have several times
   ventured an Erie guess that the answer is “no.” See, e.g., Coleman E. Adler &
   Sons, L.L.C. v. Axis Surplus Ins. Co., 49 F.4th 894, 897 (5th Cir. 2022); Q
   Clothier New Orleans, L.L.C. v. Twin City Fire Ins. Co., 29 F.4th 252, 257 (5th
   Cir. 2022). The Supreme Court of Louisiana has now ratified that guess:
   “direct physical loss of or damage to property” refers to “tangible or
   corporeal[] loss or damage.” Cajun Conti, 2023 WL 2549132, at *3. On the
   other hand, those words do not refer to the situation in which a “property
   remain[s] physically intact and functional, needing only to be sanitized.” Id.
          That leaves the Dentists with just one remaining argument. They say
   that while “direct physical loss of or damage to property” is undefined, their
   policies do define “property damage.” “Property damage,” in turn, includes
   “[l]oss of use of tangible property that is not physically injured.” Therefore,
   under the Dentists’ policies, “property damage” can occur even in the
   absence of a physical injury. And if that’s true, the Dentists argue, then
   “direct physical . . . damage to property” can likewise occur even without a
   physical injury—Cajun Conti notwithstanding.
          This argument relies on the premise that “property damage” and
   “direct physical . . . damage to property” are the same thing. But the Dentists
   offer no argument for why these separate phrases should have the same

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                                    No. 22-30705

   meaning. And indeed, no matter how the policies define the separate term
   “property damage,” Cajun Conti holds that “the plain, ordinary and
   generally prevailing meaning of ‘direct physical . . . damage to property’
   requires the insured’s property [to] sustain a physical, meaning tangible or
   corporeal, . . . damage.” Id. at *3. Therefore, there is no equivalence between
   “direct physical . . . damage to property” and “property damage.”
          Following Cajun Conti, and bound by our precedent, we AFFIRM.

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