Terry Black's Barbecue, LLC v. State Automobile Mutual Insurance Co., No. 21-50078 (5th Cir. 2022)
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TBB filed suit seeking to recoup losses stemming from the limitations on the operations of nonessential businesses during the COVID-19 pandemic through its commercial property insurance policy which covers business interruption losses caused by "direct physical loss of or damage to property."
The Fifth Circuit concluded that the suspension of dine-in services during the COVID-19 pandemic is not a direct physical loss of or damage to property. Applying Texas law, the court concluded that the district court correctly determined that TBB's losses are not covered by either the business income and extra expense coverage (BI/EE) or the restaurant extension endorsement (REE) provision. Without coverage, the court need not address whether any policy exclusions also apply. In regard to TBB's extra-contractual claims, the court concluded that they were properly dismissed as abandoned. Finally, the court found no err in the district court's decision to deny TBB leave to amend. Accordingly, the court affirmed the district court's grant of judgment on the pleadings in favor of the insurer.
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