Disney Not the Happiest Place on Earth for Beer Distributor After Insurance Coverage Loss in Florida Federal Court

Author: Ross Dwyer

Guest Editor: Jenn N. Crittondon

November 2, 2020 3:00pm

Beer and wine distributor Harvest Moon Distributors, LLC (“Harvest Moon”) supplied beer to Walt Disney Parks and Resorts US (“Disney”). When Disney voluntarily closed the park to the public on March 15, 2020, due to the COVID-19 pandemic, Harvest Moon allegedly suffered a loss of business income and inventory after Disney refused to accept any further beer from Harvest Moon, and refused to compensate Harvest Moon for the loss.

Harvest Moon submitted a claim for the losses to its insurer, Southern-Owners Insurance Company (“SOIC”), but SOIC denied coverage. Harvest Moon then filed a lawsuit on May 22, 2020, against SOIC, requesting damages for breach of contract and a declaratory judgment that it is entitled to coverage under the SOIC policy. The case is Harvest Moon Distributors, LLC v. Southern-Owners Insurance Company (M.D. Fla., Oct. 9, 2020) 2020 WL 6018918.

Procedural Background

Harvest Moon filed its lawsuit in Florida state court, but SOIC successfully removed the litigation to the United States District Court for the Middle District of Florida. The case was heard by U.S. District Court Judge Paul G. Byron.

Upon removal, SOIC immediately filed a motion to dismiss pursuant to Federal Rule of Procedure 12(b)(6). To survive such a motion, a complaint must “state a claim to relief that is plausible on its face,” supported by sufficient factual matter accepted as true.  Ashcroft v. Iqbal (2009) 556 U.S. 662, 678.  While detailed factual allegations are not required, a complaint must do more than merely state legal conclusions or recite the elements of a claim. Bell Atl. Corp. v. Twombly (2007) 550 U.S. 544, 570.

Coverage under the SOIC Policy

In relevant part, the SOIC policy provided coverage to Harvest Moon for covered losses arising out of breach of contract and/or losses covered under the policy’s endorsements for Business Income and Extra Expenses and Accounts Receivable (“Business Loss Endorsements”).

Coverage for breach of contract is triggered by allegations of a “direct physical loss of or damage to covered property.” Coverage under the Business Loss Endorsements depends on whether Harvest Moon suspended its business operations or underwent a “period of restoration.”

Accordingly, to survive SOIC’s motion to dismiss, Harvest Moon had to allege direct physical loss of or damage to its beer, and/or it had to suspend its business operations or undergo a restoration period.

Harvest Moon’s Allegations

In response to SOIC’s motion to dismiss, Harvest Moon argued it did indeed allege “direct physical loss” to its beer. Notably, in its complaint, Harvest Moon alleged the beer it was supposed to sell to Disney spoiled after Disney closed to the public and refused to accept the beer. Harvest Moon argued this spoiled beer constituted a direct physical loss.

Further, Harvest Moon argued it suffered a loss of income arising out of the spoiled beer, and such losses are covered under the policy’s Business Loss Endorsements.

Holdings of the Court

Judge Byron sided with SOIC and dismissed Harvest Moon’s complaint in its entirety.

First, Judge Byron held Harvest Moon was not entitled to coverage under the Business Loss Endorsements because Harvest Moon failed to allege it had to suspend its business operations or undergo a restoration period. While Harvest Moon alleged Disney suspended its operations, there was no allegation Harvest Moon suspended its own beer operations.

To support this holding, Judge Byron focused on the fact Harvest Moon did not allege Disney is Harvest Moon’s only buyer, or Harvest Moon was unable to sell beer originally intended for Disney to other willing buyers. Therefore, the Court could not reasonably infer Harvest Moon had to suspend its operations because it could not sell the beer in question to Disney.

Judge Byron next addressed whether Harvest Moon sufficiently alleged a claim under the SOIC policy’s breach of contract coverage. This was a closer call. Judge Byron did find Harvest Moon alleged a viable breach of contract claim. Harvest Moon’s spoilation of beer claim constituted a plausible claim that “direct physical loss or damage” occurred to its product.

The Court, however, still ruled in favor of SOIC. Judge Byron held although Harvest Moon alleged direct physical loss to its beer, the cause of the loss was not a “covered cause of loss” under the policy. The SOIC policy explicitly excluded from coverage losses arising out of the acts or decisions of any person, group, organization or governmental body.

Judge Byron was persuaded that the ultimate cause of loss was Disney’s decision to close its park. Harvest Moon tried to frame the loss as being caused by the COVID-19 pandemic itself, arguing the policy does not exclude losses caused by a pandemic. Judge Byron disagreed. He pointed out Disney could have agreed to refrigerate the beer to keep it from spoiling, or could have simply agreed to purchase the beer notwithstanding the park closure. In either of these scenarios, Harvest Moon would not have suffered any harm, even though the pandemic was occurring.

Therefore, the actual cause of the loss was Disney’s decision to close its park and refusal to accept the beer. Judge Byron held Disney’s refusal of Harvest Moon’s product was not a covered cause of loss under the policy, and ordered Harvest Moon’s complaint dismissed.


This case presents a setback for businesses trying to recover pandemic-related damages from their insurance companies. We expect these types of claims will only increase as the pandemic continues and businesses struggle to deal with difficult losses. One thing we know is that the bar businesses must clear in order to obtain insurance coverage for COVID-19 claims is far from settled.  In this case, although Harvest Moon successfully alleged a direct physical loss to its product, it still came up short in the eyes of the court.

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