In Wild Eggs Holdings v. State Auto and Property Casualty Ins. Co, No. 21-5962 (6th Cir., Sept. 9, 2022), the Sixth Circuit affirmed the dismissal of the coverage suit. Restaurant chain Wild Eggs notified defendant State Auto of its claim for business losses under the Restaurant Extension Endorsement, which provides for 30 days of lost business income for the suspension of restaurant operations due to the order of a civil authority that resulted from an actual or alleged exposure of a restaurant to a disease. It also claimed coverage for all lost business income resulting from “direct physical loss of or damage to property” under the “Business Income Coverage” provision. State Auto denied coverage and Wild Eggs filed a breach-of-contract suit.
Contending that neither the Business Income Coverage provision nor the Endorsement provided coverage, State Auto filed a motion to dismiss. The district court granted the motion, agreeing with State Auto that (1) the Endorsement did not apply because the closures of Wild Eggs’s restaurants did not result from an exposure to COVID-19 at the restaurants themselves; and (2) the Business Income Coverage provision did not apply because Wild Eggs did not suffer tangible damage to its property.
On appeal, the Sixth Circuit agreed, but in a 2-1 decision, finding that The Endorsement did not apply because the closures of Wild Eggs’s restaurants did not result from exposure to COVID-19 at the restaurants themselves. The Business Income Coverage provision did not apply because Wild Eggs did not suffer tangible damage to its property.
This case is in line with other decisions from the Sixth Circuit and others denying COVID business interruption coverage claims.