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11th Circuit Addresses “Direct Physical Loss” Requirement Arising in Property Policies


The policyholder, Mama Jo’s Inc. d/b/a Berries (“Berries”) owns and operates a restaurant located in Miami.   The policyholder’s policy provided standard all risk language providing coverage arising from a “direct physical loss of or damage to Covered Property … caused by or resulting from any Covered Cause of Loss.”  The policy defined “Covered Causes of Loss” as “Risks of Direct Physical Loss” unless the loss is excluded or limited.

On December 12, 2014, Berries submitted a claim to Sparta Ins., who underwrote the policy, asserting a claim related to dust and debris generated by near roadway construction.  The restaurant used a retractable awning that exposes the patrons to the elements.  Berries alleged damage to building such as  cleaning of the floors, walls, tables, chairs and counter-tops including a $16,275.58 estimate to clean and paint the restaurant.  The insured also sought business income claim in the amount of $292,550.84 based  lower sales during the coverage period.   The insurer denied the loss as it was “not covered under the policy.”  There was no physical damage to the insured property.

The policyholder filed suit and was promptly removed by the insurer to Federal Court.  An engineer opined on behalf of the policyholder that “…migration of the dust and its resulting paste was a sudden and accidental occurrence that damaged the equipment, awning, windows, railings, and stucco.”


 The District Court entered an omnibus order granting Sparta’s Daubert and summary judgment motions. The court found the methodologies on the issue of causation were unreliable or nonexistent, and their testimony was speculative. Thus, Berries could not prove that construction dust and debris generated in 2014 caused the “new” damages to Berries’ awnings, retractable roof, and AV system.  Further, the Court found that  a  claim for cleaning was not covered because property that must be cleaned, but is not damaged, has not sustained a “direct physical loss.”  Direct physical loss refers to tangible damage to property, which causes it to become unsatisfactory for future use or requires repairs.


The policyholder appealed.  The 11th Circuit reasoned that an expert must be qualified to testify competently regarding the matter he or she intends to address’; second, the expert’s ‘methodology .must be reliable as determined by a Daubert inquiry’; and third, the expert’s ‘testimony must assist the trier of fact through the application of expertise to understand the evidence or determine a fact in issue” pursuant to F.R.E. 702, Daubert, and Kumho  Under Daubert, a “district judge asked to admit scientific evidence must determine whether the evidence is genuinely scientific, as distinct from being unscientific speculation.”  The policyholder’s expert was speculative and not proper under the FRE.  Further, the policyholder did not show direct physical loss of or damage to its property during the policy period.

The 11th Circuit affirmed the trial Court. 

Author’s Notes

This opinion is notable as to the process and definitions used by the 11th Circuit. Most notably, the Court used the words ‘direct’ and ‘physical’ as necessary to modify the loss and impose the requirement that the damages be actual to the property.  This holding is much more restrictive than state courts on the same issue that utilize a much lower standard such as usability

Direct Physical Loss Property Insurance CPCU Lawyer


A different summary may be found here: https://www.natlawreview.com/article/dust-obscures-eleventh-circuit-s-ruling-direct-physical-loss.

In a different matter, a Michigan Court granted the insurer’s Motion for Summary Judgment requiring direct physical loss to mean something that is tangible that alters the physically integrity of the underling properly. The restaurants could not recover because of damages arising from the coronavirus lockdown absent physical damages.

See, https://www.businessinsurance.com/article/20200706/NEWS06/912335478/Court-rules-for-insurer-in-Michigan-restaurant-owner%E2%80%99s-COVID-19-claim-Gavrilides#


The transcript was publicly available at: https://propertycasualtyfocus.com/wp-content/uploads/2020/08/Ex-A-to-memo-Hearing-Transcript.pdf

The “suspension must be caused 1 by direct physical loss of or damage to property.”

think this would be harbinger for Florida litigation on COVID cases for “direct physical loss.” P18: 10-14.


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