Fla. Bar Owner's COVID-19 Coverage Suit Shown The Door

By Melissa Angell
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Law360 (May 13, 2021, 6:33 PM EDT) -- A Florida federal judge ruled in favor of Colony Insurance Co. on Wednesday in a COVID-19 insurance dispute, finding that the tavern owner behind the suit is not entitled to coverage under its policy because it failed to show any physical loss or damage to the insured property.

U.S. District Judge Mary Scriven found that the policy held by MCML Holding Co. LLC, which owns Florida tavern Galaxy Bar, requires a direct physical loss to the property to trigger insurance coverage.

The judge added that financial losses stemming from the virus alone are not enough to qualify for coverage.

"The court notes this is not the first case in this district where an insured has attempted to receive coverage for financial losses caused by COVID-19, and in every case, coverage has been denied based on similar, or identical, language contained the insurance policies," the judge wrote in her order.

MCML argued that it suffered financially following state and local shutdown orders aimed at curbing the spread of the novel coronavirus. As a result of the shutdown orders, the tavern suspended its business operations.

By halting its operations, the company said it incurred business losses, and so it filed a claim with its insurer to be reimbursed. MCML had purchased a one-year insurance policy from Colony that ended in August 2020, according to court documents.

But last May, the insurer purportedly denied the claim.

MCML then sued Colony in August in state court, arguing that the insurer breached its contract by wrongfully denying its claim.

Colony removed the suit to a federal venue and maintained that the tavern owner must have encountered actual damage to its property in order to qualify for coverage. MCML disagreed with this contention, insisting that it did not need to sustain physical damage to the insured property.

This question of whether businesses are incurring physical damage from the pandemic worthy of loss coverage has fueled widespread debate, as businesses face off with insurers in court over pandemic-related loss claims across the country.

In ruling in favor of the insurer on Wednesday, the judge joined a flurry of other court rulings on COVID-19-related coverage disputes finding that losses tied to the coronavirus do not entitle coverage.

Judge Scriven continued that Florida law dictates that a direct physical loss "requires an actual diminution of value of the property," noting that the tavern owner failed to sufficiently plead a claim that falls under the policy's coverage.

"Plaintiff made no allegations that the shut-down orders or COVID-19 caused physical tangible damage to the property," the judge wrote. "Plaintiff further failed to make any allegations that the property suffered an actual diminution of value."

Counsel for the parties did not immediately respond to Law360's requests for comment Thursday.

Galaxy Bar is represented by Jonathan Seth Kerr of Morgan & Morgan PA.

Colony Insurance Co. is represented by Sara Blackwell of Goodman McGuffey LLP.

The case is MCML Holding Co. LLC v. Colony Insurance Co., case number 8:20-cv-02016, in the U.S. District Court for the Middle District of Florida.

--Editing by Daniel King.

For a reprint of this article, please contact reprints@law360.com.

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Case Information

Case Title

MCML Holding Company, LLC v. Colony Insurance Company

Case Number



Florida Middle

Nature of Suit



Mary S. Scriven

Date Filed

August 28, 2020

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