U.S. District Judge Kevin Michael Moore on Thursday freed Zurich American Insurance Co. from having to cover Spottswood Cos. Inc.'s alleged losses, saying the policyholder failed to show how the coronavirus and the pandemic physically affected its covered properties.
"Federal district courts in Florida and throughout the Eleventh Circuit have held, uniformly, that losses arising from the 'presence' of COVID-19, and related public health orders in response to the pandemic which limit access to properties, are not a 'direct and physical loss,'" the judge said.
According to the suit, the investment company owns multiple hotels, restaurants and other commercial properties throughout Monroe County, Florida. Spottswood has argued that it suffered a suspension of business operations and loss of revenue due to the presence of COVID-19 on and near its properties.
The company sent Zurich an insurance claim in May 2020, saying its properties incurred a physical loss from the coronavirus. After the insurer denied coverage by saying the virus and pandemic do not cause property damage, Spottswood sued Zurich in July.
"Plaintiff has failed to plausibly allege a direct physical loss of or damage to covered property," Judge Moore said on Thursday.
Spottswood's "conclusory assertion" that COVID-19 damaged its properties does not demonstrate how the pandemic and its relating orders created "a direct physical loss or damage" required by every provision of the policy, he added.
Additionally, Judge Moore said, because the investment firm "has made no request to amend the complaint" and "there is no way to plausibly allege the physical manifestation of economic headwinds caused by the COVID-19 pandemic," any amendment of the suit would be futile.
The judge said he based his decision on the influential Florida precedent Mama Jo's v. Sparta Insurance, which found that "direct physical loss of or damage" means that the loss must be "actual." Mama Jo's ruling was upheld by the Eleventh Circuit, and the U.S. Supreme Court declined to disturb that holding in March.
Counsel for the parties could not be immediately reached for comment.
Spottswood is represented by Jay Mitchell Levy of Jay M. Levy P.A. and Max Nathaniel Panoff of Law Offices of Diana Santa Maria P.A.
Zurich is represented by Gary John Guzzi of Akerman LLP
The case is Spottswood Companies Inc. v. Zurich American Insurance Company, case number: 4:20-cv-10077, in the U.S. District Court for the Southern District of Florida.
--Editing by Rich Mills.
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