Mamma Jo's Inc., d.b.a Berries (Berries), is a restaurant located in Miami, Florida. It has an adjustable awning, wall and roof system that allows for partial open-air dining. From December 2013 to June 2015, roadway construction took place in the restaurant's general vicinity. In December 2014, Berries submitted a claim to their insurer, Sparta Insurance (Sparta), for damage to their property and loss of income caused by dust and debris from roadway construction.

During construction, the restaurant remained open, and access was not impeded. The damages claimed included the cost to clean the restaurant of $16,235.58 and loss of income of $292,550.84. Sparta denied the claim stating no physical damage was incurred, and therefore coverage did not exist.

Berries filed suit and presented new damages for an additional $319,688.57. Replacement of the restaurant's awning and retractable roof system, HVAC repairs, and replacement of the audio and lighting system were included in the additional damage.

Three witnesses testified on behalf of Berries, but the court found them unreliable and their testimony speculative. It stated that without expert testimony, there was no proof that the road construction caused the damages claimed. Further, since cleaning the restaurant is necessary regardless of road construction, it found no direct physical loss. Direct physical damage is described as tangible damage to property that causes it to become unsatisfactory for use or requires repair. Further, for the business income claim, since direct physical loss was not established for the suspension of operations, there was no coverage. Therefore, the court issued summary judgment to Sparta. Berries appealed.

The appellate court agreed with the district court, ruling that it properly granted Sparta summary judgment. Berries failed to provide proof of direct physical loss or damage to their building. Additionally, the higher court agreed that business income coverage does not apply since any suspension of operations must be caused by a direct physical loss to covered property, which creates a period for making repairs. The lower court ruling in favor of Sparta was affirmed.

Editor's Note: It's important to understand that for coverage to apply, tangible and eligible damage must be present.

United States Court of Appeals, Eleventh Circuit. Mama Jo's Inc., d.b.a. Berries, Plaintiff - Appellant, v. Sparta Insurance Company, Defendant - Appellee. No. 18-12887. August 18, 2020