Royal Palm Optical, Inc. v. State Farm Mutual Automobile Insurance Company

USCA11 Case: 21-11335 Date Filed: 05/25/2022 Page: 1 of 4

[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit

____________________

No. 21-11335
Non-Argument Calendar
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ROYAL PALM OPTICAL, INC.,
Plaintiff-Appellant,
versus
STATE FARM MUTUAL AUTOMOBILE INSURANCE
COMPANY,
STATE FARM FLORIDA INSURANCE COMPANY,

Defendants-Appellees.
USCA11 Case: 21-11335 Date Filed: 05/25/2022 Page: 2 of 4

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Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 9:20-cv-80749-AMC
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Before ROSENBAUM, GRANT, and ANDERSON, Circuit Judges.
PER CURIAM:
Royal Palm Optical (“Royal Palm”) appeals the district
court’s grant of State Farm Mutual Automobile Insurance Com-
pany’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
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21-11335 Opinion of the Court 3

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 unaccompa-
nied by a distinct, demonstrable, physical alteration of the prop-
erty.’” 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 F.App’x 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 interrup-
tion of operations and covered the resulting expenses and losses
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until the property was repaired, rebuilt, or replaced. “Any alterna-
tive meaning of the terms ‘physical loss’ or ‘physical damage’ that
does not require a material alternation of the property would ren-
der 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. Cer-
tain Underwriters at Lloyd’s London, No. 3D21-0671, __ So. 3d __,
2022 WL 1481776 (Fla. 3d DCA May 11, 2022), confirmed our pre-
diction 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 as-
pect, ‘direct physical loss’ requires some actual alteration to the in-
sured property.” Id. at *4.
Royal Palm’s arguments are foreclosed by the interpreta-
tions 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.