Eleventh Circuit Finds for Insurer in COVID-19 Case of First Impression in Georgia


FMG partners Phil Savrin and Shawn Bingham successfully represented Allied Insurance Company of America (a Nationwide entity) in resisting a claim by a restaurant (Henry’s Louisiana Grill) seeking coverage for business income lost after it suspended its operations after the COVID-19 outbreak. The central question, which had not been decided previously under Georgia law, was whether the closure of the restaurant following an executive order by the Georgia governor resulted in a “direct physical loss” of the property. After analyzing the policy language, the district court granted Allied’s motion to dismiss finding that the policy required there to be a physical change in the property that prevented the restaurant from operating. Even if the executive order required the closure, therefore, there was no coverage as a result for the loss of business income that ensued.

Henry’s appealed to the Eleventh Circuit which heard argument on the issue, both from the parties and from the advocacy group Restaurant Law Center that appeared in the case as an amicus. In a published opinion issued on June 3, 2022, the appellate court soundly rejected Henry’s arguments. The appeals court agreed with the lower court’s finding that the term “direct physical loss” under Georgia law requires a physical to the property that is “tangible or concrete.” Here, at most, the governor’s order caused “intangible” harm as “it did not destroy, ruin, or even damage any part of the restaurant.” The appeals court noted that its reasoning is in line with “every federal and state appellate court” that applied the same policy language in the COVID-19 context.

The case is styled Henry’s Louisiana Grill, Inc. v. Allied Insurance Company of America, United States Court of Appeals for the Eleventh Circuit, Case No. 20-14156.

For more information on this topic, contact Phil Savrin or Shawn Bingham.