Cajun Conti Llc, Cajun Cuisine 1 Llc, And Cajun Cuisine Llc D/b/a Oceana Grill v. Certain Underwriter At Lloyd's, London And Governor John B. Edwards In His Capacity As Governor Of The State Of Louisiana, And The State Of Louisiana (Parish of Orleans

FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #015
FROM: CLERK OF SUPREME COURT OF LOUISIANA
The Opinions handed down on the 17th day of March, 2023 are as follows:
BY Crain, J.:
2022-C-01349 CAJUN CONTI LLC, CAJUN CUISINE 1 LLC, AND CAJUN CUISINE
LLC D/B/A OCEANA GRILL VS. CERTAIN UNDERWRITER AT
LLOYD'S, LONDON AND GOVERNOR JOHN B. EDWARDS IN HIS
CAPACITY AS GOVERNOR OF THE STATE OF LOUISIANA, AND
THE STATE OF LOUISIANA (Parish of Orleans Civil)
COURT OF APPEAL JUDGMENT REVERSED; TRIAL COURT
JUDGMENT REINSTATED. SEE OPINION.
Hughes, J., dissents and assigns reasons.
Griffin, J., dissents for the reasons assigned by Justice Hughes.

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SUPREME COURT OF LOUISIANA
No. 2022-C-01349
CAJUN CONTI LLC, CAJUN CUISINE 1 LLC, AND CAJUN CUISINE
LLC D/B/A OCEANA GRILL
VS.
CERTAIN UNDERWRITERS AT LLOYD'S, LONDON AND GOVERNOR
JOHN B. EDWARDS IN HIS CAPACITY AS GOVERNOR OF THE STATE
OF LOUISIANA, AND THE STATE OF LOUISIANA
On Writ of Certiorari to the Court of Appeal, Fourth Circuit, Parish of Orleans
Civil
CRAIN, J.
Plaintiff seeks insurance coverage under an all -risks commercial insurance
policy for business income losses during the COVID -19 pandemic. Finding no
“direct physical loss of or damage to property” caused by COVID -19, we reverse
the appeal court and reinstate the trial court judgment denying coverage.
FACTS AND PROCEDURAL HISTORY
Oceana Grill is a restaurant in the French Quarter of New Orleans. During
normal operations before the COVID -19 pandemic, the restaurant could
accommodate 500 guests at any one time. On March 16, 2020, responding to the
emerging COVID-19 virus, an emergency proclamation was issued by the mayor of
New Orleans prohibiting most public and private social gatherings. Restaurant
operations were limited to take -out and delivery services , and Oceana Grill closed
to all but those services.
Complying with government -imposed capacity restrictions and social
distancing requirements, the restaurant reopened at 25% capacity on May 16, 2020.
Although restrictions loosened to 50%, then 75% by October, 2020, due to social
distancing guidelines Oceana Grill remained at 60% or less capacity throughout the

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pandemic. Expenses were also incurred to sanitize the space . Due to the capacity
limitations and incidental expenses, t he restaurant could not generate pre-COVID-
19 income.
The owners of the restaurant maintained an all -risks commercial insurance
policy with loss of business income coverage through Certain Underwriters at
Lloyd’s, London. They sought a declaratory judgment that the “policy provides
business in come coverage from the contamination of the insured premises by
COVID-19.”1
Lloyd’s responded by seeking a summary judgment arguing there is no
coverage under the policy because COVID -19 does not cause “direct physical loss
of or damage to property.” The trial court denied summary judgment, and the matter
proceeded to trial. Following a three -day bench trial, the trial court denied
declaratory relief without providing reasons.
The court of appeal reversed. Cajun Conti LLC v. Certain Underwriters at
Lloyd’s, London , 21-0343 (La. App. 4 Cir. 6/15/22), --- So.3d ---, 2022 WL
2154863. The court found the policy ambiguous , reasoning that “direct physical
loss” could mean loss of use of the property. Because the COVID-19 virus prevented
the full use of the property due to capacity limitations, coverage was triggered. Two
dissenting judges found no ambiguity in the policy language and no coverage. We
granted certiorari to interpret “direct physical loss of or damage to property” in the
context of business income losses due to the COVID-19 pandemic.
DISCUSSION
Lloyd’s argues the policy covers only risks caus ing tangible alteration to
property. They contend that while the COVID-19 virus may be tangible, because it

1 Oceana also sought a declaration that the policy provides coverage “for any civil authority orders shutting down or
limiting the operations of restaurants in the New Orleans area due to physical loss from COVID -19 within one mile
from the plaintiffs’ busi ness.” This civil authority claim was voluntarily dismissed a t the beginning of trial, with
Oceana choosing to focus solely on the theory of physical loss or damage from COVID-19 contamination.

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does not cause damage that can be seen or touched, it does not directly physically
alter property.
Oceana claims significant income losses due to contamination by, and the
continued presence of , COVID-19 at its insured location . It argues th at
contamination by the virus created a dangerous situation that eliminated the use of
50% to 100% of the insured property . Oceana contends e ither C OVID-19
contamination caused direct physical loss of or damage to property or the policy is
ambiguous, and either event results in coverage. See La. Civ. Code art. 2056.
The policy provides, in pertinent part:
We will pay for the actual loss of Business Income you sustain due to
the necessary “suspension” of your “operations” during the “period of
restoration.” The “suspension” must be caused by direct physical loss
of or damage to property at [the] premises….

“Operations” are defined as:

a. Your business activities occurring at the described premises…

“Period of restoration” means the period of time that:

a. Begins 72 hours after the time of direct physical loss or damage
caused by or resulting from any Covered Cause of Loss at the
described premises; and
b. Ends on the earlier of:

(1) The date when the property at the described premises should be
repaired, rebuilt or replaced with reasonable speed and similar
quality; or
(2) The date when business is resumed at a new permanent
location.

“Suspension” means:

a. The slowdown or cessation of your business activities…

Thus, to recover lost business income, the insured must experience a suspension of
operations “caused by direct physical loss of or damage to property. ” The
suspension may be a “slowdown” or a “cessation” of business activities , and the
claimant may recover lost business income during the “period of restoration,” but all
are conditioned upon “direct physical loss of or damage to property.” To determine

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coverage, we are tasked with interpreting “direct physical loss of or damage t o
property.”
Oceana relies on a theory of COVID-19 contamination to establish coverage.
To establish contamination, Dr. Lemuel Moye was plaintiff’s expert in medicine,
biostatistics, and epidemiology, and calculated the scientific probability that at least
one infected person entered the restaurant per day. He testified that probability was
“overwhelming.” He further testified that an infected individual spreads the virus
by breathing, and virus particles stay airb orne before finally settling onto surfaces
where they remain virulent. He said the virus is very difficult to clean completely,
especially if infected people continue to enter the environment. Finally, Dr. Moye
opined that “when the virus lands on proper ty it transforms that property from
noninfectious, safe, to infectious. Nobody wants to touch or wants to be near
property that is infectious. So that is damage.”
Dr. Allison Stock was defendant’s expert in epidemiology. She opined that
proper mitigation strategies and adherence to CDC guidelines prevent transmission
of the virus, especially on surfaces . She believed COVID-19 could be eliminated
through proper cleaning , thus allowing the restaurant to operate safely during the
pandemic.
Dr. Brian Flinn was defendant’s expert in material science. He testified it is
possible the virus can be cleaned with a disinfectant, like bleach, and does not cause
physical damage to inanimate surfaces.
“Direct physical loss of or damage to property” is neither defined in the policy
nor has it acquired a technical meaning. As a contract between the parties, an
insurance policy should be construed using the general rules of contract
interpretation set forth in the Louisiana Civil Code. Cadwallader v. Allstate I ns.
Co., 02-1637 (La. 6/27/03), 848 So.2d 577, 580. The judiciary’s role in interpreting
insurance contracts is to ascertain the common intent of the parties. Id. See La. Civ.

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Code art. 2045. Words and phrases used in an insurance policy are to be construed
using their plain, ordinary and generally prevailing meaning, unless the words have
acquired a technical meaning. Id. See La. Civ. Code art. 2047.
We find the plain, ordinary and generally prevailing meaning of “direct
physical loss of or damage to property” requires the insured’s property sustain a
physical, meaning tangible or corporeal, loss or damage. The loss or damage must
also be direct , not indirect. Applying these meanings to the facts and arguments
presented, COVID-19 did not cause direct physical loss of or damage to Oceana’s
property.
Dr. Moye’s testimony that the virus infects and damages property actually
conflicts with the fact Oceana cleaned the property with a disinfectant and continued
its use. That fact supports Lloyd’s experts, who opined the virus does not “damage”
surfaces and can be cleaned with a disinfectant. While the restaurant did increase its
cleaning practices during the pandemic, the property remained physically intact and
functional, needing only to be sanitized.
Oceana also claims “direct physical loss ” is broader than “damage,” and
encompasses the inability to use covered property. The argument derives from
Oceana’s inability to fully use its dining room during the pandemic. However, loss
of use alone is not “physical loss.” Otherwise, the modifier “physical” before “loss”
would be superfluous. While government restrictions on dining capacity and public
health guidance regarding social distancing reduced Oceana’s in -person dining
capacity and restricted its use , again, Oceana’s property was not physically lost in
any tangible or corporeal sense. Even when in -person dining was prohibited,
Oceana’s kitchen continued to provide take -out and delivery service , and the
restaurant’s physical structure was neither lost nor changed . The appellate court
erred by focusing on the loss of use rather than on whether a direct physical loss
occurred. We find Oceana did not suffer a direct physical loss.

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We also find support for our interpretation in the definition of “period of
restoration.” The insured can recover lost business income during a “period of
restoration.” That period begins 72 hours after a “direct physical loss of or damage
to property.” The restoration period ends when the property should be “repaired,
rebuilt or replaced with reasonable speed and similar quality ” or “business is
resumed at a new permanent location.”
No evidence suggests the words “repaired, rebuilt or replaced” have a
technical meaning . See Civil Code art. 2047. Giving t hem their ordinary and
generally prevailing meaning, Oceana never had to repair, rebuild, or replace
anything. Social distancing and increased cleaning practices were implemented, but
the structure of the property did not physically change. An insurance contract should
not be interpreted in an unreasonable or strained manner under the guise of
contractual interpretation to enlarge or restrict its provisions beyond what is
reasonably contemplated by unambiguous terms. See Cadwallader, 848 So.2d at
580. A layperson would not say that cleaning or sterilizing tables, plates or
silverware is a “repair.” That interpretation is strained. The fact that Oceana was
not required to repair, rebuild or replace anything supports our conclusion that no
“direct physical loss of or damage to property” occurred.
The appellate court found the policy ambiguous. We disagree. Ambiguous
policy provisions are construed against the insurer and in favor of coverage. La.
Civ. Code art. 2056. But, where two or more policy interpretations exist, each must
be reasonable. Cadwaller, 848 So.2d at 580; Carrier v. Reliance Ins. Co., 99-2573
(La. 4/11/00), 759 So.2d 37, 43-44. Inventive powers cannot be used to create
ambiguity where none exists. Cadwaller, 848 So.2d at 580; Succession of Fannaly
v. Lafayette Ins. Co. , 01 -1355 (La. 1/15/02), 805 So.2d 1134, 1138. Whether a
contract is clear or ambiguous is a question of law. Cadwaller, 848 So.2d at 580;

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Louisiana Ins. Guar. Ass’n v. Interstate Fire & Cas. Co., 93-0911 (La. 1/14/94), 630
So.2d 759, 764.
The court of appeal found the term “repair” in the definition of “period of
restoration” ambiguous. Merriam-Webster defines “repair” as:
a: to restore by replacing a part or putting together what is torn
or broken: FIX
repair a shoe
b: to restore to a sound or healthy state: RENEW
repair his strength
Using definition b, the appellate court reasoned cleaning and sanitizing constitutes
repair. However, the synonym “renew” and the example given by the dictionary,
“repair his strength,” refer to something intangible. In contrast, the first definition
of “repair” uses the synonym “fix” and the example is to “repair a shoe,” which refer
to something tangible. We find the first definition applies when considering loss or
damage to property, especially when “repair” is linked in the policy with “rebuild”
and “replace,” which again suggest s fixing a physical defect. While the word has
more than one definition, there is only one reasonable definition in the context of
this policy. In context, we find no ambiguity in this provision.
The appe al court also found ambiguity in the term “suspension,” which is
defined to include both a slowdown and a cess ation of business activities. Again,
we find this definition clear. It clarifies that a compensable claim exists for loss of
or damage to property that is either partial or total. In either event, the property loss
or damage must be physical in nature.
Widder v. Louisiana Citizens Prop. Ins. Corp. , 11 -0196 (La. App. 4 Cir.
8/10/11), 82 So.3d 294, 296, writ denied, 11-2336 (La. 12/02/11), 76 So.3d 1179, is
cited in support of coverage. In Widder, plaintiff’s home was contaminated by lead
dust. Id. at 295. The lead rendered the home “unusable” and “uninhabitable,” which
the court of appeal considered a direct physical loss. Id. at 296. Ms. Widder was
forced to move in order to gut and remediate her home, thus she suffered physical

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loss. Id. The Widder property was physically altered to remove the lead dust. While
arguably the physical alteration was not direct, Widder is nevertheless distinguished
because a physical alteration occurred.
COVID-19 contamination is also distinguished from the Chinese -drywall
cases cited in Widder. Again, remediation of the contaminated drywall required that
the drywall be removed and replaced, thus, a direct physical loss. See In re Chinese
Manufactured Drywall Products Liability Litigations , 759 F. Supp.2d 822, 831
(E.D.La. 2010) (“[T]he Chinese -manufactured drywall has caused a ‘distinct,
demonstrable, physical alteration’ of the Plaintiffs’ homes (the covered properties)
by corroding the silver and copper elements in the homes, often to the point o f
causing total or partial failure in electrical wiring and devices installed in the homes,
as well as by emitting odorous gases.”). See also Ross v. C. Adams Construction &
Design, 10-852 (La. App. 5 Cir. 6/14/11), 70 So.3d 949, 952 (“[Plaintiffs ’] home
contained Chinese-drywall which emitted sulfuric gases that caused corrosion of the
electrical wiring, plumbing components, and other household items.” “[T]he
inherent qualities of the Chinese-drywall did create a physical loss to the home and
required that the drywall be removed and replaced.”).
While their opinions are not binding on this court, numerous state supreme
courts have reached a similar result when analyzing comparable policy language.
E.g., Neuro-Commc’n Servs., Inc. v. Cincinnati Ins. Co., --- N.E.3d ---, ---, 2022 WL
17573883 (Ohio 12/12/22) (“The definition of the term ‘loss’ is clear: for coverage
to be provided, there must be loss or damage to Covered Property that is physical in
nature. Such loss or damage does not include a loss of the ability to use Covered
Property for business purposes.”); Sullivan Mgmt., LLC v. Fireman’s Fund Ins. Co.,
879 S.E.2d 742, 746 (S.C. 8/10/22) (“Because neither the presence of the
coronavirus nor the government order prohibiting indoor dining constitutes ‘direct
physical loss or damage,’ the policy’s triggering language is not met.”); Tapestry,

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Inc. v. Factory Mut. Ins. Co., 286 A.3d 1044, 1061 (Md. 12/15/22) (“[T]he presence
of Coronavirus in the air and on surfaces at [plaintiff’s] properties did not cause
‘physical loss or damage’ as that phrase is used in the Policies.”); Hill & Stout, PLLC
v. Mut. Of Enumclaw Ins. Co. , 515 P.3d 525, 528 (Wash. 8/25/22) (“It is
unreasonable to read ‘direct physical loss of … property’ in a property insurance
policy to include constructive loss of intended use of property. Such a loss is not
‘physical.’”); Colectivo Coffee Roasters, Inc. v. Soc’y Ins. , 974 N.W.2d 442, 447
(Wis. 6/1/22) (“[T]he presence of COVID-19 does not constitute a physical loss of
or damage to property because it does not ‘alter the appearance, shape, color,
structure, or other material dimension of the property.’”); Verveine Corp. v.
Strathmore Ins. Co., 184 N.E.3d 1266, 1274 (Mass. 4/21/22) (“We conclude that no
reasonable interpretation of direct physical loss of or damage to property supports
the plaintiffs’ claims.”). In fact, to date no state supreme court that has addressed
this issue has finally decided the presence of COVID-19 constitutes a physical loss
of or damage to property.
Last, Oceana argues for coverage because an available virus exclusion was
not included in the policy . At the time the subject policy was issued and the
pandemic occurred, an exclusion for virus and bacteria was available from the
Insurance Services Office, who publishes standardized policy forms to the insurance
industry. We find its existence irrelevant to this case. A contract must be interpreted
within its “four corners” whenever the words are clear, explicit and lead to no absurd
consequences. Peterson v. Schimek, 98-1712 (La. 3/2/99), 729 So.2d 1024 , 1031.
When these conditions are met, a court is prohibited from taking parol evidence to
explain or contradict the clear meaning of the contract. Id. Because we find the
contract clear, it is unnecessary to consider parol evidence relative to a virus
exclusion not included in the policy.
CONCLUSION

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The subject policy provides business income coverage during a suspension of
operations that is “caused by direct physical loss of or damage to property.” COVID-
19 required Oceana to decrease its capacity, spread out its guests and allocate greater
attention to cleaning and sanitation. However, COVID-19 did not cause damage or
loss that was physical in nature. Oceana never repaired, rebuilt or replaced any
property that was allegedly lost or damaged. While we are sympathetic to the
immense economic challenges faced in responding to the pandemic, we cannot alter
the terms of an insurance contract under the guise of contractual interpretation when
the policy uses unambiguous terms. Cadwallader, 848 So.2d at 580; citing Peterson,
729 So.2d at 1029. This insurance contract is clear and must be enforced as written.
COURT OF APPEAL JUDGMENT REVERSED; TRIAL COURT
JUDGMENT REINSTATED.

S
UPREME COURT OF LOUISIANA
No
. 2022-C-01349
CAJ
UN CONTI LLC, CAJUN CUISINE 1 LLC, AND CAJUN CUISINE
LLC D/B/A OCEANA GRILL
VS.
CERTAIN UNDERWRITER AT LLOYD'S, LONDON AND GOVERNOR
JOHN B. EDWARDS IN HIS CAPACITY AS GOVERNOR OF THE STATE
OF LOUISIANA, AND THE STATE OF LOUISIANA
O
n Writ of Certiorari to the Court of Appeal, Fourth Circuit,
Parish of Orleans Civil
H
ughes, J., dissenting.
I
respectfully dissent. While Oceana did not suffer any physical damage, it did
suffer physical loss of its property due to the physical contamination of the property
by the Covid virus, a physical thing.
Like smoke from a fire next door that did no physical damage to the premises,
but caused the business to be closed until the odor could be removed and the business
cleaned, a physical loss occurred.