The insured's claim for the cancellation of a beer order due to COVID-19, leading to its spoiling, was not covered for loss of business income. Harvest Moon Distributors, LLC v. Southern-Owners Ins. Co., 2020 U.S. Dist. LEXIS 189390 (M.D. Fla. Oct. 9. 2020).
Harvest Moon purchased beer under a contract with Walt Disney Parks and Resorts. Before the product shipped, Disney closed its operations to the COVID-19 pandemic and refused to accept the beer delivery. Harvest Moon submitted a claim to Southern for loss of business income caused by the pandemic. Southern denied the claim and Harvest Moon filed suit. Southern moved to dismiss.
The complaint alleged that the beer spoiled when Disney closed due to the pandemic, and that the spoliation of the product was a direct physical loss under the policy. The court agreed that these were sufficient allegations to plead a plausible claim that the spoiled beer constituted a covered loss because the beer was allegedly inedible.
The business income provision of the policy stated the insurer would pay for the suspension of operations during the "period of restoration." The complaint merely alleged that Disney suspended operations, not Harvest Moon. There were no allegations that Harvest Moon suspended its operations or underwent any period of restoration.
Policy exclusions also had to be considered. The policy did not cover losses or damages caused by delay, loss of use or loss of market. Nor did the policy cover losses caused by acts or decisions of any person, group, organization or governmental body. The court found that the Harvest Moon's loss arose from Disney's act of refusing the beer, not from the pandemic. COVID-19 itself did not damage the beer. The beer would not have been damaged but for Disney's decision, making Disney the cause of the alleged spoliation. Further, the complaint stated that Harvest Moon experienced "loss of use" of its product, which was expressly excluded from coverage.
Therefore, the complaint was dismissed without prejudice to allow Harvest Moon the opportunity to file an amended complaint.