In a 78-page brief filed Tuesday, SA Palm Beach LLC claimed that it has adequately alleged a "direct physical loss" after its property suffered a loss of use caused by state closure orders related to the pandemic, asking the Eleventh Circuit to reverse the lower court's judgment ruling in favor of its insurer, Lloyd's of London.
The owner operates a restaurant in Palm Beach called Sant Ambroeus Palm Beach and sued Lloyd's last April alleging that the insurer wrongfully denied coverage and breached the insurance contract. The district court tossed the suit last December, siding with Lloyd's that SA's property did not sustain any physical damage, a precondition for coverage.
SA said the district court ignored Florida case laws, which held that "direct physical loss" includes more than structural alterations or physical damage. At least two Florida intermediate courts have held that a property's loss of use is "direct physical loss," which also occurs "even where there is no damage to the structure."
Both the Eleventh Circuit and Florida federal courts are "bound to" follow an intermediate state appellate court's ruling unless the state's highest court has ruled otherwise, and the Florida Supreme Court has not weighed in on this issue, it said.
SA also urged the court to ask the Florida Supreme Court to certify whether an "all-risk" policy that covers business interruption losses requires actual "physical damage" and whether "direct physical loss" can mean more than just structural loss of property?
On Tuesday, SA said the lower court failed to interpret the policy as an ordinary "man-on-the-street" as required by Florida law but relied on a "hyper-technical definition" of "physical loss" that an ordinary layperson would not think of.
"The reasonable interpretation of the policy, when viewed through the lens of an average person, conflicts with the interpretation advanced by Lloyd's and accepted by the district court," it said. "The district court's ruling threatens to cause grave and in many cases irreparable harm to Florida's small business community already suffering from the pandemic's impact. "
In the brief, SA cited media reports that more than 100,000 small businesses that shut down at the beginning of the pandemic were shuttered permanently before the surge of more COVID-19 cases this winter.
Counsel for the parties could not be immediately reached for comment Wednesday.
Palm Beach LLC is represented by Paul Geller and Stuart Davidson of Robbins Geller Rudman & Dowd LLP and James E. Cecchi and Lindsey H. Taylor of Carella Byrne Cecchi Olstein Brody & Agnello PC.
Counsel information for Lloyd's was not immediately available.
The case is SA Palm Beach LLC et al. v. Certain Underwriters at Lloyd's London et al., case number 20-14812, in the U.S. Court of Appeals for the Eleventh Circuit.
--Editing by Andrew Cohen.
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