Court Opinion

ID: 8484447
Source: CourtListenerOpinion
Date Created: 2022-11-17 16:01:54.607674+00
Date Added: 2024-06-11T16:49:53.643522
License: Public Domain

USCA11 Case: 21-14215      Date Filed: 11/17/2022   Page: 1 of 8

                                            [DO NOT PUBLISH]
                            In the
         United States Court of Appeals
                 For the Eleventh Circuit

                   ____________________

                         No. 21-14215
                   Non-Argument Calendar
                   ____________________

ZURICH AMERICAN INSURANCE COMPANY,
                                     Plaintiff-Counter Defendant-
                                                        Appellee,
versus
TAVISTOCK RESTAURANTS GROUP, LLC,

                                  Defendant-Counter Claimant-
                                                   Appellant.

                   ____________________

          Appeal from the United States District Court
               for the Middle District of Florida
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2                      Opinion of the Court               21-14215

             D.C. Docket No. 6:20-cv-01295-PGB-EJK
                   ____________________

Before JILL PRYOR, NEWSOM, and BRASHER, Circuit Judges.
PER CURIAM:
       This appeal presents the question of whether the COVID-
19-related business losses suffered by Tavistock Restaurants
Group, LLC—a restaurant owner and operator—constituted “di-
rect physical loss of or damage” to its property under a policy is-
sued by Zurich American Insurance Company. In a recently-de-
cided a case involving an insured’s claim for COVID-19 losses un-
der a similar insurance contract provision, we held that, under
Georgia law, “direct physical loss of or damage to” property re-
quires a “tangible change to a property.” Henry’s La. Grill, Inc. v.
Allied Ins. Co. of Am., 35 F.4th 1318, 1320–21 (11th Cir. 2022) (in-
ternal quotation marks omitted). Because none of Tavistock’s al-
leged COVID-19-related losses involved a tangible change to its
property, we conclude that the district court properly granted judg-
ment on the pleadings to Zurich and dismissed Tavistock’s coun-
terclaim. We thus affirm.
                     I.     BACKGROUND
      As of March 2020, Tavistock owned and operated approxi-
mately 80 restaurants. Tavistock had an “All Risk” commercial
property insurance policy from Zurich. Under the policy, Zurich
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21-14215                   Opinion of the Court                             3

agreed to insure “against direct physical loss of or damage” to
Tavistock’s property. Doc. 82-1 at 14. 1
       At the beginning of the COVID-19 pandemic, state and local
governments across the country, including in the communities
where Tavistock operated restaurants, issued stay-at-home orders
that prohibited in-person dining in restaurants. As a result, some of
Tavistock’s restaurants offered only take-out services, and others
were forced to close for a period of time. Later, Tavistock was per-
mitted to resume in-person dining operations. Concerned about
the presence of COVID-19 particulates in the air and on surfaces at
its restaurants, Tavistock took steps to mitigate the spread of
COVID-19 by, among other things, installing new barriers and re-
moving some furniture and workstations at its restaurants.
       Tavistock submitted a claim to Zurich for the losses it sus-
tained because of the pandemic. Zurich denied the claim, conclud-
ing there was no coverage under the policy because Tavistock had
not sustained a “direct physical loss of or damage to [its] property.”
Doc. 82-2 at 3.
        Zurich filed this lawsuit seeking a declaration that the policy
did “not provide coverage for Tavistock’s claimed losses arising out
of the spread of the COVID-19 [v]irus.” Doc. 1 at ¶ 15. Tavistock
filed an answer to the complaint and brought a counterclaim, seek-
ing a declaratory judgment that it was entitled to coverage under

1 “Doc.” numbers refer to the district court’s docket entries.
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4                      Opinion of the Court                 21-14215

the policy because it had “sustained direct physical loss of or dam-
age to” its restaurants due to COVID-19. Doc. 82 at ¶ 169.
        Zurich moved to dismiss Tavistock’s counterclaim, arguing
that Tavistock failed to state a claim that COVID-19 losses were
covered under the policy. The district court granted Zurich’s mo-
tion. As a preliminary matter, the court concluded that Georgia law
governed the parties’ dispute because the parties had executed the
insurance contract in Georgia. The court explained that to establish
a direct physical loss under Georgia law, Tavistock had to show
that the presence of the COVID-19 virus “cause[d] a physical
change to [its] restaurants.” Doc. 112 at 9. The court concluded that
the allegations in the counterclaim failed to establish that Tavistock
experienced any physical change to its restaurants due to COVID-
19. Because none of Tavistock’s alleged losses qualified as a direct
physical loss, the district court concluded that Tavistock had failed
to state a claim for declaratory relief. The district court dismissed
the counterclaim with prejudice.
        After the district court dismissed the counterclaim, Zurich
moved for judgment on the pleadings on its claim seeking a declar-
atory judgment that there was no coverage under the policy. The
district court granted the motion, relying on its earlier determina-
tion that there was no coverage under the policy for Tavistock’s
alleged losses. The court then entered a judgment in favor of Zur-
ich and against Tavistock. This is Tavistock’s appeal.
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21-14215                Opinion of the Court                         5

                II.    STANDARDS OF REVIEW
       “We review de novo an order granting judgment on the
pleadings.” Perez v. Wells Fargo N.A., 774 F.3d 1329, 1335 (11th
Cir. 2014). “Judgment on the pleadings is appropriate where there
are no material facts in dispute and the moving party is entitled to
judgment as a matter of law.” Id. (internal quotation marks omit-
ted). “In determining whether a party is entitled to judgment on
the pleadings, we accept as true all material facts alleged in the non-
moving party’s pleading, and we view those facts in the light most
favorable to the non-moving party.” Id.
        We review de novo an order granting a motion to dismiss a
counterclaim for failure to state a claim. See Lisk v. Lumber One
Wood Preserving, LLC, 792 F.3d 1331, 1334 (11th Cir. 2015). “We
take the factual allegations in the [counterclaim] as true and con-
strue them in the light most favorable to the [non-movant].” Ed-
wards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir. 2010). Yet we
need not accept the legal conclusions in the counterclaim as true.
See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“[T]he tenet that a
court must accept as true all of the allegations contained in a com-
plaint is inapplicable to legal conclusions.”). To avoid dismissal for
failure to state a claim under Federal Rule of Civil Procedure
12(b)(6), a counterclaim must contain sufficient factual matter that,
accepted as true, “state[s] a claim to relief that is plausible on its
face.” Id. (internal quotation marks omitted).
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6                          Opinion of the Court                       21-14215

                           III.    DISCUSSION
        The policy language at issue here provides that there is cov-
erage only if Tavistock suffered a “direct physical loss of or damage
. . . to” its property. Doc. 82-1 at 14. Although the phrase “direct
physical loss of or damage . . . to” property is not defined in the
policy, we recently interpreted under Georgia law identical lan-
guage in another insurance policy. See Henry’s La. Grill, 35 F.4th
at 1320–21. 2
       In Henry’s Louisiana Grill, we reviewed whether a district
court erred in dismissing a restaurant’s claim that there was cover-
age under its insurance policy for COVID-19-related losses. See id.
at 1319. As in this case, the policy afforded covered when the res-
taurant sustained “direct physical loss of or damage to” its prop-
erty. See id. (internal quotation marks omitted). Applying Georgia
law, we explained that this term meant there was coverage only if
the restaurant experienced “a tangible change to [its] property.” Id.
at 1320–21.
     Tavistock disagrees with this interpretation, arguing that
Georgia law does not require an insured to demonstrate a tangible

2 The district court concluded that Georgia law applied to the insurance pol-
icy. Because Tavistock does not challenge this determination on appeal, we
assume that Georgia law applies and deem abandoned any challenge to the
district court’s choice-of-law determination. See Timson v. Sampson, 518 F.3d
870, 874 (11th Cir. 2008) (“[I]ssues not briefed on appeal . . . are deemed aban-
doned.”).
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21-14215               Opinion of the Court                         7

change to property to establish direct physical loss of or damage to
property. But this argument is foreclosed by our precedent.
“[W]hen we have issued a precedential decision interpreting . . .
state law, our prior precedent rule requires that we follow that de-
cision, absent a later decision by the state appellate court casting
doubt on our interpretation of that law.” EmbroidMe.com, Inc. v.
Travelers Prop. Cas. Co. of Am., 845 F.3d 1099, 1105 (11th Cir.
2017). Because there is no decision from a Georgia appellate court
casting doubt on our interpretation of Georgia law, we are bound
by Henry’s Louisiana Grill.
        Notably, Tavistock does not argue on appeal that the district
court erred in concluding that it had not alleged a tangible change
to its property. Even assuming Tavistock preserved this issue, we
cannot say that the district court erred in concluding that it failed
to allege a tangible change. Although Tavistock alleged that the vi-
rus was present on surfaces and in the air of its restaurants, we rec-
ognized in Henry’s Louisiana Grill that the introduction of the
COVID-19 virus into a place did not result in any tangible change
to the property. 35 F.4th at 1321. We explained that the presence
of the virus in a place did not “effect[] any actual, physical change”
on the property because the “mere presence of the virus . . . did not
destroy or ruin” it. Id.
       Tavistock also alleged that it was forced to shutter its dining
rooms due to government orders. But we concluded in Henry’s
Louisiana Grill that a government order requiring a restaurant to
cease in-person dining operations had “no physical effect on the
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8                        Opinion of the Court                    21-14215

property” because it “did not destroy, ruin, or even damage any
part of the restaurant.” Id.
       Because Tavistock failed to identify direct physical loss of or
damage to a property—a prerequisite to recover under the pol-
icy—Zurich properly denied its claim. 3 Accordingly, the district
court did not err when it granted Zurich’s motion for judgment on
the pleadings or when it dismissed Tavistock’s counterclaim.
                         IV.    CONCLUSION
       For the above reasons, we affirm.
       AFFIRMED.

3 Because the policy provides no coverage, we need not consider the parties’
arguments about whether any of the policy’s exclusions would have barred
coverage.