Case: 21-11046 Document: 00516350492 Page: 1 Date Filed: 06/09/2022
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
June 9, 2022
No. 21-11046 Lyle W. Cayce
Clerk
Ferrer & Poirot, GP; Ferrer & Poirot, PC, doing business as
Ferrer, Poirot, Wansbrough, Feller, Daniel, Abney;
2603 Oak Lawn, L.P.,
Plaintiffs—Appellants,
versus
The Cincinnati Insurance Company,
Defendant—Appellee.
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:20-CV-3286
Before Higginbotham, Higginson, and Oldham, Circuit Judges.
Per Curiam:
Ferrer & Poirot, a law firm with offices in Dallas, Texas and Atlanta,
Georgia, sued to recover lost income and expenses attending the COVID-19
pandemic under an insurance policy issued by The Cincinnati Insurance
Company. The district court dismissed Ferrer’s claims. We affirm.
I.
In the early stages of the COVID-19 pandemic, when state and local
authorities issued orders requiring individuals to stay home except for
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No. 21-11046
essential trips, most of Ferrer’s workforce worked remotely. Ferrer also
purchased equipment and supplies used to prevent the spread of the virus
and facilitate remote work.
Ferrer filed a claim with Cincinnati Insurance to recover the costs of
equipment and supplies and lost income. Ferrer’s insurance policy provided
property damage, business income, extra expense, and civil authority
coverage. Cincinnati Insurance denied Ferrer’s claim.
Ferrer sued, alleging that Cincinnati Insurance’s denial was a breach
of contract. In its Amended Complaint, Ferrer alleged that the physical
presence of the virus caused its loss and met the policy’s conditions.
Cincinnati Insurance moved to dismiss Ferrer’s claims under Federal
Rule of Civil Procedure 12(b)(6). The district court referred the motion to a
magistrate judge, who analyzed the policy and concluded that no coverage
was owed as there was no physical loss. The district court adopted its findings
and conclusions, granted Cincinnati Insurance’s motion to dismiss, and
dismissed Ferrer’s claims with prejudice. Ferrer timely appealed.
II.
We review de novo a district court’s grant of a motion to dismiss under
Federal Rule of Civil Procedure 12(b)(6). 1 To survive a motion to dismiss, a
plaintiff must plead “enough facts to state a claim to relief that is plausible
on its face.” 2 We accept all facts as pleaded and view them in the light most
1
Waste Mgmt. of Louisiana, L.L.C. v. River Birch, Inc., 920 F.3d 958, 963 (5th Cir.
2019).
2
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
2
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No. 21-11046
favorable to the plaintiff. 3 The district court’s interpretation of an insurance
policy is a question of law that we also review de novo. 4
III.
The COVID-19 pandemic has brought myriad claims of insurance
coverage. 5 When this suit was filed in October 2020, we had not addressed
the issue presented here. But this Court recently interpretated similar
coverage provisions in Terry Black’s Barbecue, L.L.C. v. State Auto. Mut. Ins.
Co., 6 and that analysis guides us here.
We have diversity jurisdiction and Texas law applies. 7 “In Texas,
insurance policies are interpreted by the same principles as contract
construction.” 8 “The policy’s terms are given their ordinary and generally-
accepted meaning unless the policy shows the words were meant in a
technical or different sense.” 9 Where a policy’s terms can be given definite
or certain legal meanings, it is unambiguous. 10 “The paramount rule is that
3
Guidry v. Am. Pub. Life Ins. Co., 512 F.3d 177, 180 (5th Cir. 2007).
4
Cody v. Allstate Fire & Cas. Ins. Co., 19 F.4th 712, 714 (5th Cir. 2021) (per curiam).
5
See, e.g., Vandelay Hosp. Grp. LP v. Cincinnati Ins. Co., No. 3:20-CV-1348-D, 2021
WL 2936066 (N.D. Tex. July 13, 2021); Terry Black’s Barbecue, L.L.C. v. State Auto. Mut.
Ins. Co., 22 F.4th 450, 456–57 (5th Cir. 2022) (listing 2021 decisions from the Second,
Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits, including three cases
involving Cincinnati Insurance).
6
22 F.4th 450.
7
28 U.S.C. §1332; Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).
8
Terry Black’s Barbecue, 22 F.4th at 454 (citing State Farm Lloyds v. Page, 315
S.W.3d 525, 527 (Tex. 2010)).
9
Gilbert Texas Const., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 126
(Tex. 2010).
10
Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517,
520 (Tex. 1995) (per curiam).
3
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courts enforce unambiguous policies as written.” 11 Here, the policy’s terms
are defined and unambiguous.
Ferrer invokes three forms of its coverage: Business Income, Extra
Expense, and Civil Authority coverage. Under the policy, Cincinnati
Insurance was obligated to pay for lost business income and extra expenses
caused by or resulting from a “Covered Cause of Loss.” Additionally,
“[w]hen a Covered Cause of Loss causes damage to property,” Cincinnati
Insurance was obligated to pay for lost business income and extra expenses
“caused by action of civil authority that prohibits access to the ‘premises’,
provided that . . . [t]he action of civil authority is taken in response to
dangerous physical conditions resulting from the damage or continuation of
the Covered Cause of Loss that caused the damage[.]”
Under the policy, a “Covered Cause of Loss” is a “direct ‘loss’ unless
the loss is excluded or limited in this Coverage Part,” and “loss” is an
“accidental physical loss or accidental physical damage.” So, to recover
under any of the three forms of coverage, there must be a physical loss or
physical damage to the Ferrer’s property.
Here, there was no Covered Cause of Loss as there was no underlying
physical loss or damage to insured property. As in Terry Black’s Barbecue,
there is no physical loss without “any tangible alteration or deprivation of
[the insured’s] property.” 12 While COVID-19 has wrought great physical
11
Pan Am Equities, Inc. v. Lexington Ins. Co., 959 F.3d 671, 674 (5th Cir. 2020)
(discussing Texas contract interpretation law for insurance policies).
12
Terry Black’s Barbecue, 22 F.4th at 456. See also 10A Couch on Ins. § 148:46 (3d
ed.) (“The requirement that the loss be ‘physical,’ given the ordinary definition of that
term, is widely held . . . to preclude any claim against the property insurer when the insured
merely suffers a detrimental economic impact unaccompanied by a distinct, demonstrable,
physical alteration of the property.” (footnotes omitted)).
4
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harm to people, it does not physically damage property within the plain
meaning of “physical.” 13 Ferrer was not deprived of its property nor was
there a tangible alteration to its property, so there was no underlying “direct
‘loss’” to trigger coverage.
Alternatively, Ferrer argues that amendments to the policy make it
ambiguous so as to require interpretation of the policy in its favor. This is not
so. The amendments state that, “Direct physical ‘loss’ is now described
simply as direct ‘loss’, thereby dropping the unneeded word physical.” This
did not create an ambiguity as to whether a “loss” needed to be physical.
“Physical” was an unneeded word because “loss” was already defined as
“accidental physical loss or accidental physical damage.” The amendment
did not bring ambiguity to the relevant provisions of the policy.
IV.
As Ferrer’s alleged losses were not covered under the terms of the
policy, it failed to allege a plausible claim. The district court’s judgment
dismissing with prejudice Ferrer’s claims is AFFIRMED.
13
U.S. Metals, Inc. v. Liberty Mut. Grp., Inc., 490 S.W.3d 20, 25 (Tex. 2015) (“To
give ‘physical’ its plain meaning, a covered injury must be one that is tangible.”); see Great
Am. Ins. Co. of New York v. Compass Well Servs., LLC, No. 02-19-00373-CV, 2020 WL
7393321, at *14 (Tex. App.—Fort Worth Dec. 17, 2020), rev. denied (Jan. 28, 2022) (“[A]n
intangible or incorporeal loss that is unaccompanied by a distinct, demonstrable, physical
alteration of the property is not considered a direct physical loss.”).
5