In Commstop v. Travelers Indem. Co. of Connecticut, 2012 WL 1883461 (W.D. La. May 17, 2012), the court denied business income recovery to the owner of a convenience store (Commstop) after the State of Louisiana began a “road renewal program” in front of the convenience store. The road work continued for more than 9 months. The inconvenience caused drivers to take alternate routes and traffic ultimately diminished “until few vehicles used the road.” Commstop filed a claim with Travelers and alleged that it suffered business income losses and/or extra expenses totaling approximately $75,000.00 as a result of the diminished traffic attributed to the road replacement project (Civil Authority) and as a result of dust generated by the project, which allegedly damaged Commstop’s air conditioning compressor (BI/EE).

Traveler’s denied the claim under the Civil Authority provision, stating that access to the insured premises was not prohibited. Commstop filed suit against Travelers, but the court did not find coverage for the business income loss or extra expenses incurred during the road restoration work

Commstop’s policy read as follows:

a. Civil Authority
We will pay for the actual loss of Business Income you sustain and reasonable and necessary Extra Expenses you incur caused by action of civil authority that prohibits access to the described premises. The civil authority action must be due to direct physical loss or damage to a Covered Cause of Loss to property at locations, other than the described premises, that are within 100 miles of the described premises [ … ]

Under this provision Travelers argued, and the court agreed, that pursuant to the express language of the policy, coverage for business losses is afforded only where civil authority “prohibits access to the described premises.” In concluding there was no coverage, the court cited 730 Bienville Partners, No. 02-106, 2002 WL 31996014 (E.D. La. Sept. 30, 2002), and reasoned:

The terms of the policy [730 Bienville Partners] are unambiguous. To recover for business losses under the Civil Authority Extension, the loss of business income and necessary expenses must be “caused by action of civil authority that prohibits access to your premises …” While the FAA’s closure of the airports and cancellation of flights may have prevented many guests from getting to New Orleans and ultimately to plaintiff’s hotels, the FAA hardly “prohibited” access to the hotels.

In the instant case, to survive Traveler’s motion for summary judgment on the issue of coverage under the policy’s “Civil Authority” provision, Commstop is required to put forward evidence showing access to its convenience store was totally and completely prevented—i.e., made impossible—by the road replacement program.

Under Louisiana law, Commstop may not merely deny access to its business premises was prohibited, or argue access was “diminished” or “limited.” Rather, Commstop has the burden to prove access to the premises was completely blocked, and must come forward with evidence showing same in order to defeat summary judgment. Because Commstop fails to provide evidence of a complete blockage of access to the insured premises, Commstop fails to carry its summary judgment burden.

Commstop’s policy further provided that :

1. Business Income

c. 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 premises which are described in the Declarations and for which a Business Income Limit of Insurance is shown in the Declarations. The loss or damage must be caused by or result from a Covered Cause of Loss. With respect to loss of or damage to property in the open or property in a vehicle, the described premises includes the area within 1,000 feet of the building at which the described premises is located.

“Suspension” means:

a. The partial or complete cessation of your business activities; or
b. That a part or all of the described premises is rendered untenantable, if coverage for Business Income including “Rental Value” or “Rental Value” applies.

The term “operations” is defined as “[y]our business activities occurring at the described premises”

In support of its claim for business income loss and extra expenses, Commstop argued that the dust generated by the project damaged the store’s air conditioning compressor. The court denied the convenience store’s claim for coverage under the above cited provision and held that there was no partial or complete cessation of the business activities:

Under the “Business Income” provision of the policy, coverage is provided “for the actual loss of Business Income [the insured] sustain[s] due to the necessary ‘suspension’ of [its] ‘operations” ’ during the ‘period of restoration.’ “The focus of Commstop’s argument in this regard is that the dust generated by the road renewal program damaged the business’s air conditioning compressor, which caused physical loss or damage to property at the insured premises.

However, although Commstop focuses on the provision of the policy that requires that the suspension of operations be caused by direct physical loss of or damage to property at the described premises, Commstop fails to address or put forth evidence showing there was an actual suspension of operations at the business premises during the time period in question. Indeed, Commstop does not address the manner in which the business premises either partially or completely closed during the road renewal program, or the manner in which the premises were “not capable of being occupied.” Commstop asserts in its “Statement of Uncontested Facts” the “ever present clouds of dust deterred persons from frequenting plaintiff’s convenience store,” and “[t]he roadwork hindered the ability of potential customers to physically access plaintiffs convenience store at all.”

However, the policy’s express language requires a cessation of business, that is, a situation where business activities have ceased in whole or in part for some period of time. Although Commstop argues potential or existing customers were hindered in their efforts to enter the business premises, there has been no evidence put forth by Commstop showing customers were prevented from entering the premises because business operations had ceased for any period of time. The photographs provided by Commstop—taken during what appear to be daytime, business hours—show the presence of vehicles in the store’s parking lot during business hours, with an illuminated sign showing the price for gas. Far from showing a business that has ceased operations, the evidence presented by Commstop appears to show a premises that remained open for business during the time period in question.