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[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 21-13506
Non-Argument Calendar
____________________
AIKG, LLC,
Plaintiff-Appellant,
versus
THE CINCINNATI INSURANCE COMPANY,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Northern District of Georgia
D.C. Docket No. 1:20-cv-04051-TWT
____________________
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2 Opinion of the Court 21-13506
Before JORDAN, NEWSOM, and BRANCH, Circuit Judges.
PER CURIAM:
This appeal involves claims for insurance coverage
stemming from entertainment venue closures and reduced
capacity caused by the COVID-19 pandemic. The question is
whether, under Georgia law, the COVID-19 related business losses
suffered by AIKG—the owners and operators of entertainment
establishments in Georgia—constituted “direct ‘loss’ to property at
‘premises’” under a policy issued by the defendant, the Cincinnati
Insurance Company (Cincinnati). The district court held that it did
not and granted Cincinnati’s motion to dismiss. AIKG appealed.
This Court recently decided a case involving claims for
COVID-19 losses under a set of nearly identical insurance contract
provisions, concluding that, under Georgia law, “direct physical
loss of or damage to” property requires a “tangible change to a
property” and that COVID-19 caused only “intangible harm.”
Henry's Louisiana Grill, Inc. v. Allied Ins. Co. of Am.,
35 F.4th 1318,
1318 (11th Cir. 2022). Because the losses alleged here did not
involve a tangible change to AIKG’s entertainment venues, the
district court properly dismissed the case. Therefore, after careful
review, we affirm.
I. Background
AIKG, LLC operates an amusement business that offers
indoor go-karting, video arcades, full-service dining, and other
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21-13506 Opinion of the Court 3
attractions at locations in Georgia, Texas, and Florida. AIKG
purchased two property insurance policies (the “Policies”)—one
for its Georgia and Texas locations and another for its Florida
locations—from Cincinnati. The Policies were in effect between
June 1, 2019, and June 1, 2020, and insured against “direct ‘loss’” to
AIKG’s property. “Loss” is defined as “accidental physical loss or
accidental physical damage.” In the event of a covered loss, the
Policies provided Business Income, Extra Expenses, Extended
Business Income, Civil Authority, Ingress and Egress, and
Dependent Property coverage. 1
The COVID-19 pandemic upended AIKG’s business. As the
public health crisis rapidly unfolded across the United States in
March 2020, state officials in Georgia, Texas, and Florida ordered
non-essential businesses, including restaurants and amusement
operators, to cease in-person operations and later permitted them
to reopen only under strict occupancy restrictions and sanitation
requirements. Pursuant to these orders and health and safety
concerns, AIKG shut down all five of its locations on March 17,
2020. It then filed insurance claims under the Policies to recover
financial losses stemming from the closures, but Cincinnati denied
coverage.
AIKG sued Cincinnati in Georgia state court on August 31,
2020, asserting claims for breach of contract (Count I), statutory
1 These forms of coverage are defined in AIKG’s complaint and Building and
Personal Property Coverage Form.
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bad faith (Count II), and declaratory judgment (Count III).
Cincinnati removed the action to federal district court pursuant to
its diversity jurisdiction and moved to dismiss AIKG’s claims under
Federal Rule of Civil Procedure 12(b)(6). The district court granted
the motion, holding that “direct physical loss or damage” requires
“an actual change in insured property” and the virus does not
physically alter the property.
II. Standard of Review
We review de novo a district court’s order granting a
motion to dismiss for failure to state a claim under Rule 12(b)(6).
Lisk v. Lumber One Wood Preserving, LLC,
792 F.3d 1331, 1334
(11th Cir. 2015). “We take the factual allegations in the complaint
as true and construe them in the light most favorable to the
plaintiffs.” Edwards v. Prime, Inc.,
602 F.3d 1276, 1291 (11th Cir.
2010). Yet we need not accept the legal conclusions in the
complaint as true. Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009)
(“[T]he tenet that a court must accept as true all of the allegations
contained in a complaint is inapplicable to legal conclusions.”).
To avoid dismissal for failure to state a claim under Rule
12(b)(6), a complaint must contain sufficient factual matter that,
accepted as true, “state[s] a claim to relief that is plausible on its
face.”
Id. (quotation omitted).
III. Discussion
AIKG argues that it adequately pleaded facts sufficient to
survive a 12(b)(6) motion, such as that the presence of COVID-19
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on property caused physical damage. AIKG also argues that the
district court misread Georgia caselaw on this question.
For any of the plaintiffs’ insurance claims to be viable, they
had to stem from “direct loss to property at premises.” The
dispositive question, therefore, is whether losses from the
suspension of business operations, reduced capacity, and increased
cleaning and sanitation costs constitute “direct loss to property at
premises” under Georgia law when “loss” means “accidental
physical loss or accidental physical damage.”
Our recent decision in Henry’s Louisiana Grill resolves this
appeal. In that case, we addressed whether (under Georgia law),
“direct physical loss of or damage to” property included losses
stemming from the suspension of business operations and extra
costs incurred because of COVID-19. Henry’s Louisiana Grill, Inc.,
35 F.4th at 1318. Looking to the Georgia Court of Appeals’s
decision in AFLAC Inc. v. Chubb & Sons, Inc.,
581 S.E.2d 317 (Ga.
Ct. App. 2003), which read the phrase “direct physical loss of, or
damage to” to mean an “actual change in insured property,”
id. at
319, we held that “a tangible change to property” is required and
that the harm caused by COVID-19 is “intangible.” Henry’s
Louisiana Grill, Inc., 35 F.4th at 1318.
Here, the restaurants identify one alleged “direct physical
loss” caused by the COVID-19 pandemic: contamination of the
covered premises by COVID-19. But as we held in Henry’s
Louisiana Grill, the presence of COVID-19 is not a tangible harm.
Nor is reduced capacity caused by the pandemic and related
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government orders. See id. Because the restaurants failed to plead
a direct physical loss of or damage to property—a prerequisite to
recover under each of the Policy provisions at issue—Cincinnati
properly denied the restaurants’ claims. Accordingly, the district
court did not err in granting the Cincinnati’s motion to dismiss.
AFFIRMED.
