Dickie Brennan v. Zurich American Ins ( 2022 )

Case: 21-30776 Document: 00516414519 Page: 1 Date Filed: 08/01/2022
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
August 1, 2022
No. 21-30776
Summary Calendar Lyle W. Cayce
Clerk
Dickie Brennan and Company, L.L.C.; Cousins
Restaurants, Incorporated; 716 Iberville, L.L.C.,
Plaintiffs—Appellants,
versus
Zurich American Insurance Company; American
Guarantee; Liability Insurance Company,
Defendants—Appellees.
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:21-CV-434
Before Wiener, Dennis, and Haynes, Circuit Judges.
Per Curiam:*
Plaintiff-Appellant, Dickie Brennan, owns and operates several full-
service, dine-in restaurants in New Orleans, Louisiana. Dickie Brennan sued
Defendant-Appellee, American Guarantee & Liability Insurance Company
*
Pursuant to 5th Circuit Rule 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opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
Case: 21-30776 Document: 00516414519 Page: 2 Date Filed: 08/01/2022
No. 21-30776
(“AGLIC”), to recover economic losses stemming from the closure of its
restaurants during the COVID-19 pandemic. The district court dismissed
Dickie Brennan’s claims, and we AFFIRM.
I.
Dickie Brennan purchased an insurance policy from AGLIC to cover
its restaurants. The policy was in effect from March 1, 2020, through March
1, 2021, and provided coverage against “direct physical loss or damage”
caused by a “Covered Cause of Loss to Covered Property.” The policy
defined “Covered Cause of Loss” as “[a]ll risks of direct physical loss of or
damage from any cause unless excluded” or otherwise limited.
The policy also covered losses due to suspended business activities in
a couple of circumstances: (1) if those losses were “due to direct physical loss
of or damage” to covered property (the “Extra Expense” and “Time
Element” provisions) and (2) if the suspended business activities were
caused by an “order of civil or military authority that prohibited access to”
the covered property and the order “result[ed] from a civil authority’s
response to direct physical loss or damage” to nearby property (the “Civil
Authority” provision).
In March 2020, the Governor of Louisiana and the Mayor of New
Orleans issued orders requiring closure of certain businesses to prevent the
spread of the COVID-19 virus. Dickie Brennan closed its restaurants after an
employee tested positive and in response to the government orders. After
suffering business income losses, Dickie Brennan sought coverage under the
policy, but AGLIC declined, asserting that COVID-19 did not cause “direct
physical loss of or damage to” Dickie Brennan’s restaurants.
Dickie Brennan sued AGLIC in federal court in the Eastern District
of Louisiana. It sought a declaratory judgment that COVID-19 was a
“Covered Cause of Loss” under the policy and that COVID-19 caused
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“direct physical loss and/or damage” to its restaurants, and therefore, its
business income losses were covered by the policy. It also sought damages
for breach of contract and breach of the duty of good faith and fair dealing.
AGLIC filed a motion to dismiss, which the district court granted. This
appeal timely followed.
II.
We review de novo a district court’s ruling on a Rule 12(b)(6) motion
to dismiss, accepting all well-pleaded facts as true and viewing them in the
light most favorable to the plaintiff. Singleton v. Elephant Ins. Co., 953 F.3d
334, 337 (5th Cir. 2020) (per curiam). We similarly review de novo a district
court’s interpretation of an insurance policy. Id.Because this is a diversity action regarding the interpretation of
insurance policies issued in Louisiana, Louisiana’s substantive law controls.
Am. Int’l Specialty Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254, 260 (5th
Cir. 2003). Under Louisiana law, an insurance policy is a “contract between
the parties” and is therefore “construed by using the general rules of
interpretation” that guide contract interpretation. LeBlanc v. Aysenne, 921
So. 2d 85, 89 (La. 2006). In interpreting the relevant policy, the court must:
(1) determine the parties’ common intent by examining the words of the
insurance contract itself; (2) give plain meaning to the policy’s words and
phrases; and (3) construe the policy as a whole by evaluating each provision
in light of all other provisions. See La. Civ. Code. Ann. arts. 2045–47,
2050; Hill v. Shelter Mut. Ins. Co., 935 So. 2d 691, 694 (La. 2006).
“When the words of an insurance contract are clear and explicit and
lead to no absurd consequences, courts must enforce the contract as written
and may make no further interpretation in search of the parties’ intent.”
Gorman v. City of Opelousas, 148 So. 3d 888, 892 (La. 2014) (quotation
omitted); La. Civ. Code Ann. art. 2046. Conversely, if a true ambiguity
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exists, courts construe the policy in favor of the insured. See Bonin v. Westport
Ins. Corp., 930 So. 2d 906, 911 (La. 2006). A policy provision is ambiguous if
it “is susceptible to two or more reasonable interpretations.” Id. (citing
Cadwallader v. Allstate Ins. Co., 848 So. 2d 577, 580 (La. 2003)).
III.
Guided by this framework, we now turn to the merits. The district
court concluded that there was no covered cause of loss because there was no
underlying physical loss or damage to Dickie Brennan’s restaurants. We
agree. Although the Louisiana Supreme Court has not yet opined on the
question of whether COVID-19 causes “direct physical loss or damage,” to
property, we are bound by our analysis in Q Clothier New Orleans, L.L.C. v.
Twin City Fire Insurance Co., 29 F.4th 252 (5th Cir. 2022). In that case, we
evaluated near-identical policy language and interpreted it as requiring
“tangible alterations of, injuries to, and deprivations of property.” Id. at 257.
We concluded that business closures and suspensions related to the COVID-
19 pandemic did not trigger coverage under this policy language because
COVID-19 did not cause a tangible alteration or deprivation of the property.
Id. at 257–58; cf. La. Bone & Joint Clinic, L.L.C. v. Transp. Ins. Co., No. 21-
30300, 2022 WL 910345, at *2 (5th Cir. Mar. 29, 2022) (unpublished); Terry
Black’s Barbecue, L.L.C. v. State Auto. Mut. Ins. Co., 22 F.4th 450, 458 (5th
Cir. 2022) (applying Texas law); Ferrer & Poirot, GP v. Cincinnati Ins. Co., 36
F.4th 656, 658 (5th Cir. 2022) (per curiam) (same).
So too, here. Dickie Brennan seeks coverage under the Time
Element, Extra Expense, and Civil Authority provisions—yet each provision
requires “physical loss or damage.” Because COVID-19 did not cause a
“tangible alteration to, injury to, or deprivation of” Dickie Brennan’s
restaurants, there was no coverage-triggering physical loss. See Q Clothier,
29 F.4th at 260. Dickie Brennan fails to establish any sufficient distinction
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from Q Clothier; thus, we are bound by our prior precedent under the rule of
orderliness. See Jacobs v. Nat’l Drug Intel. Ctr., 548 F.3d 375, 378 (5th Cir.
2008). 1
Dickie Brennan’s alleged losses were not covered under the terms of
the policy, so it therefore has failed to allege a plausible claim. We
accordingly AFFIRM the district court’s judgment dismissing Dickie
Brennan’s claims. We also DENY the motion to certify questions to the
Louisiana Supreme Court.
1
Dickie Brennan directs us to the Louisiana Fourth Circuit Court of Appeals’
recent decision in Cajun Conti LLC v. Certain Underwriters at Lloyd’s, No. 2021-CA-0343,
2022 WL 2154863 (La. Ct. App. June 15, 2022), holding that an insurance policy containing
similar language was “ambiguous and capable of more than one reasonable interpretation.”
Id. at *1–2. We have utilized state intermediate appellate court decisions in making an Erie
guess as to how the state supreme court would decide the issue. Weatherly v. Pershing,
L.L.C., 945 F.3d 915, 920 (5th Cir. 2019). But we are not bound by those intermediate
decisions, only those from the Louisiana Supreme Court. See Lozovyy v. Kurtz, 813 F.3d
576, 580 (5th Cir. 2015); Am. Int’l Specialty Lines Ins. Co., 352 F.3d at 261. Put another
way, the issuance of an intermediate appellate court decision does not alter our duty to
apply the rule of orderliness, so we must follow the sound reasoning of Q Clothier. See 29
F.4th at 257. Therefore, because the Louisiana Supreme Court has not rejected Q Clothier,
we conclude that Cajun Conti does not alter our analysis.
5