Court Opinion

ID: 30993
Source: CourtListenerOpinion
Date Created: 2010-04-25 10:09:30+00
Date Added: 2024-06-11T09:00:42.972522
License: Public Domain

United States Court of Appeals
                                                                   Fifth Circuit
                                                                 F I L E D
                  UNITED STATES COURT OF APPEALS                 April 29, 2003
                       For the Fifth Circuit
                                                            Charles R. Fulbruge III
                             No. 02-31071                           Clerk

                   730 BIENVILLE PARTNERS, LTD.,

                                                Plaintiff - Appellant,

                                  VERSUS

                   ASSURANCE COMPANY OF AMERICA,

                                                 Defendant - Appellee.

           Appeal from the United States District Court
               For the Eastern District of Louisiana

                              (02-CV-106)

Before SMITH, DENNIS, and CLEMENT, Circuit Judges.

PER CURIAM:*

     Plaintiff-appellant 730 Bienville Partners, Ltd. (“Bienville”)

contests   dismissal   of   its   insurance   coverage   claim    against

defendant-appellee Assurance Company of America (“Assurance”) on

     *
      Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

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summary judgment.    For the following reasons, we AFFIRM.

                            I.   Background

      Bienville owns the New Orleans-based St. Louis Hotel and St.

Ann Hotel, for which it purchased a single commercial property

insurance policy for both properties from Assurance.         That policy

included a “Civil Authority Extension,” which provides coverage for

sustained    business   income   losses   due   to   the   actions   of   a

governmental authority.    This Extension reads:

            We will pay for the actual loss of “business
            income” you sustained and necessary “extra expense”
            caused by action of civil authority that prohibits
            access to your premises due to direct physical loss
            of or damage to property, other than that at the
            “covered premises” caused by or resulting from any
            Covered Cause of Loss. This coverage will apply
            for a period of up to 4 consecutive weeks from the
            date of that action.

      After the terrorist attacks in New York and Washington, D.C.

on September 11, 2001, the Federal Aviation Administration (“FAA”)

grounded all non-military aircraft and closed all non-military

airports.    The airports reopened two days later.           Because the

airports were closed, Bienville’s hotels received a significant

number of guest cancellations between September 11 and September

26.   The slowdown in business led Bienville to close the St. Ann

Hotel from September 18 to September 26. Although the hotels still

generated approximately $200,000 in revenue between September 11

and September 26, Bienville claims to have lost $202,940 in room

revenue and banquet facility food and beverage sales due to the

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airport shutdown. Bienville filed a claim with Assurance for these

losses, which Assurance denied.

      On December 3, 2001, Bienville filed suit against Assurance in

Louisiana state court for coverage under the policy.              Assurance

removed the suit to the Eastern District of Louisiana on January

14,   2002.   Both   parties    moved     for   summary   judgment,   and   on

September 30, 2002, the district court granted Assurance’s motion

and denied Bienville’s motion, ruling that Bienville was not

entitled to coverage under the Assurance policy.           Bienville timely

appealed.

                               II.   Analysis

      We review a district court’s grant of summary judgment de

novo, N.Y. Life Ins. Co. v. Travelers Ins. Co., 92 F.3d 336, 338

(5th Cir. 1996), and we apply Louisiana law to this diversity suit.

Under Louisiana law, the rules of interpretation for insurance

contracts are as follows:

           An insurance policy is a contract between the
      parties and should be construed employing the general
      rules of interpretation of contracts set forth in the
      Louisiana Civil Code. The parties' intent, as reflected
      by the words of the policy, determine the extent of
      coverage. Words and phrases used in a policy are to be
      construed using their plain, ordinary and generally
      prevailing meaning, unless the words have acquired a
      technical meaning. An insurance policy should not be
      interpreted in an unreasonable or a strained manner so as
      to enlarge or to restrict its provisions beyond what is
      reasonably contemplated by its terms or so as to achieve
      an absurd conclusion. Where the language in the policy
      is clear, unambiguous, and expressive of the intent of

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     the parties, the agreement must be enforced as written.
     However, if after applying the other rules of
     construction an ambiguity remains, the ambiguous
     provision is to be construed against the drafter and in
     favor of the insured.

Reynolds v. Select Properties, Ltd., 634 So. 2d 1180, 1183 (La.

1994) (citations omitted).

     The    main   issue    in   this   appeal   concerns   whether   the   FAA

prohibited access to the Bienville hotels by shutting down the

airports.    The Civil Authority Extension provides the insured with

coverage for business income losses “caused by action of civil

authority that prohibits access to your premises due to direct

physical loss of or damage to property, other than that at the

‘covered premises’ caused by or resulting from any Covered Cause of

Loss.” Therefore, the airport shutdown must have prohibited access

to the Bienville properties in order for us to find that its losses

are covered under the policy.

     Assurance     argues    that   the     policy   provision   unambiguously

excludes coverage because the FAA did not “prohibit access” to the

Bienville hotels.     It contends that the district court correctly

recognized that the generally prevailing meaning of “prohibit” is

“to forbid by authority or command,” and the FAA never forbade

guests from going to the Bienville hotels. Bienville’s guests were

allowed to and did stay at the hotels during the disputed period.

In fact, Bienville earned $200,000 during this period.

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     Bienville responds that the term “prohibit” is broader than

Assurance’s interpretation.      It argues that the policy can be

reasonably interpreted to encompass its business losses due to the

FAA shutdown.    It notes that alternative definitions of “prohibit”

are: “to prevent from doing or accomplishing something: effectively

stop” and “to make impossible.”    WEBSTER’S THIRD NEW WORLD INTERNATIONAL

DICTIONARY (1963).   Bienville asserts that under these definitions,

the policy covers the FAA’s actions because the airport shutdown

“prevented” or made it “impossible” for Bienville’s guests to get

to its hotels.

     Bienville’s argument is not persuasive.      Under Louisiana law,

we are required to give words their plain, ordinary, and generally

prevailing meaning. The generally prevailing meaning of “prohibit”

is, as noted by the district court, “to forbid by authority or

command.”   It is undisputed that the FAA did not forbid any person

to access the Bienville hotels.       The FAA did not “prevent” the

customers from going to the Bienville hotels because it was not

“impossible” for the guests to get there.       Despite assertions by

Bienville that customers can only access its hotels by plane, no

customer was actually prevented from getting to New Orleans. There

were viable transportation options, such as automobiles and trains,

even if customers chose not to use them.      That these options were

viable is evidenced by that fact that the hotels still operated at

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nearly   half      capacity    during    the     weeks   after      September   11.

Therefore, it is not reasonable to interpret the FAA’s actions as

prohibiting access to the Bienville hotels under this policy.

     Although       no     Louisiana    case     addresses     civil     authority

extensions,     the      district    court   decision    in   St.    Paul   Mercury

Insurance Co. v. Magnolia Lady, Inc., 1999 WL 335371191, at *1

(N.D. Miss. Nov. 4, 1999), supports this conclusion.                   In Magnolia

Lady, a casino-hotel sued for coverage for business losses after

the closure of a nearby bridge resulted in an eighty percent drop

in business.        Id.     The policy provision provided coverage for

business losses “when a Civil Authority ... denies access to the

described location because of direct physical loss or damage to

property by a covered cause of loss other than at the described

location.”        Id.     The court denied coverage because the civil

authority did not “deny access” as the “casino-hotel was accessible

during the period of time the bridge was under repair, and the

defendant continued operating business and accepting customers.”

Id. at *3.

     As in Lady Magnolia, the Bienville customers had access to the

hotels during the time the airports were closed, and Bienville

continued    to    operate     its    business    and    to   accept   customers.

Although Bienville notes that the policy language is cast in terms

of an action that “denies,” not “prohibits,” access, it does not

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explain   how   the   difference   in   terminology   would   affect   the

determination of coverage.    Consequently, Bienville has not proven

it is entitled to coverage under this policy.

                           III.    Conclusion

     Because the FAA’s action did not prohibit access to the

Bienville properties, it is not entitled to coverage under the

Assurance policy for business losses sustained due to the events of

September 11.    Therefore, we AFFIRM the district court’s grant of

summary judgment in favor of Assurance.

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