Opinion
21-11335
05-25-2022
ROYAL PALM OPTICAL, INC., Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, STATE FARM FLORIDA INSURANCE COMPANY, Defendants-Appellees.
DO NOT PUBLISH
Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 9:20-cv-80749-AMC
Before Rosenbaum, Grant, and Anderson, Circuit Judges.
OPINION
PER CURIAM:
Royal Palm Optical ("Royal Palm") appeals the district court's grant of State Farm Mutual Automobile Insurance Company's motion to dismiss. On appeal, Royal Palm argues that the district court erred when it held that under Florida law, "direct physical loss" required "actual physical damage to the [Property] itself" and that Royal Palm did not allege it had suffered that type of loss.
This Court recently addressed the very issue in this case: the meaning of "direct physical loss of or damage to" property in an insurance policy under Florida law. SA Palm Beach, LLC v. Certain Underwriters at Lloyd's London, No. 20-14812, 2022 WL 1421414 (11th Cir. May 5, 2022). Noting that there were no Florida state court cases on point, we cited the principle used by federal courts sitting in diversity jurisdiction that "presume[s] that [state] courts would adopt the majority view on a legal issue in the absence of indications to the contrary." Id. at 8 (quoting Bobo v. Tenn. Valley Auth., 855 F.3d 1294, 1304 (11th Cir. 2017)). That majority view is that intangible or incorporeal losses are excluded from coverage so as 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.'" Id. (quoting Steven Plitt et al., 10A Couch on Insurance § 148.46 (3d ed. & Dec. 2021 update)). We also noted that every state and federal appellate court to decide the meaning of the phrase in the Covid-19 context had reached the same decision. Id. Because there were no indications that Florida would decide otherwise, the opinion presumes Florida would adopt the majority view. Id. at 9.
Next, we examined two Florida cases-Homeowners Choice Property & Casualty v. Maspons, 211 So.3d 1067 (Fla. 3d DCA 2017), and Azalea, Ltd. v. American States Insurance Co., 656 So.2d 600 (Fla. 1st DCA 1995)-that support the presumption or "at the very least [are] not inconsistent with that position." Id. Maspons explained that direct physical loss required the damage be actual and Azalea "dealt with tangible harm to the covered property," which provided little support for the insureds' position. Id. at 9-10. We examined this Court's decision in Mama Jo's, Inc. v. Sparta Ins. Co., 823 Fed.Appx. 868, 879 (11th Cir. 2020), and held that its reliance on Maspons provided a correct statement of Florida law that a property that needed mere cleaning did not suffer a qualifying loss or damage and lost income could not be claimed without physical loss or damage. Id. at 10. Then we turned to the policies' "Period of Restoration" clauses, which required a suspension or interruption of operations and covered the resulting expenses and losses until the property was repaired, rebuilt, or replaced. "Any alternative meaning of the terms 'physical loss' or 'physical damage' that does not require a material alternation of the property would render meaningless this pre-condition to coverage for business income loss." Id. at 10-11 (quoting Uncork & Create LLC v. Cincinnati Ins. Co., 27 F.4th 926, 932-33 (4th Cir. 2022)).
Shortly after we issued SA Palm Beach, the Third District Court of Appeal of Florida issued an opinion addressing the very issue in this case and in SA Palm Beach: the meaning of "direct physical loss of or damage to" property. Commodore, Inc. v. Certain Underwriters at Lloyd's London, No. 3D21-0671, So. 3d, 2022 WL 1481776 (Fla. 3d DCA May 11, 2022), confirmed our prediction in SA Palm Beach of how Florida courts would rule. The Commodore court rejected the insured's interpretation of loss as deprivation because it ignored the qualifying adjective physical: "because the ordinary meaning of 'physical' carries a tangible aspect, 'direct physical loss' requires some actual alteration to the insured property." Id. at *4.
Royal Palm's arguments are foreclosed by the interpretations of the phrase "direct physical loss of or damage to" in SA Palm Beach and Commodore. Because there is no coverage for the type of purely economic damages that Royal Palm sought under its cited policy provisions, we affirm the decision of the district court.
AFFIRMED.