Santo's Italian Café LLC v. Acuity Ins. Co.
| Decision Date | 21 December 2020 |
| Docket Number | CASE NO. 1:20-cv-01192 |
| Parties | SANTO'S ITALIAN CAFÉ LLC dba Santosuossos Pizza Pasta Vino, Plaintiff, v. ACUITY INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Northern District of Ohio |
Colin P. Sammon, Sammon Law, Medina, OH, William J. Novak, Cleveland, OH, for Plaintiff.
John R. Chlysta, Kenneth A. Calderone, Hanna, Campbell & Powell, Akron, OH, for Defendant.
This matter comes before the Court upon the Motion to Dismiss Plaintiff's Complaint, filed by Defendant Acuity Insurance Company ("Acuity") on June 19, 2020. (Doc. No. 7.) Plaintiff Santo's Italian Café LLC dba Santosuossos Pizza Pasta Vino ("Santo's") filed a Brief in Opposition to Defendant Acuity's Motion on September 11, 2020. (Doc. No. 13.) Defendant Acuity filed a Reply in Support of its Motion on September 25, 2020. (Doc. No. 14.)
For the following reasons, Acuity's Motion to Dismiss (Doc. No. 7) is GRANTED.
Plaintiff Santo's Complaint stems from losses it suffered as a result of the global COVID-19 pandemic. (Doc. No. 1-1, ¶ 1.) Santo's operates a restaurant and bar in Medina, Ohio. (Id. ) Santo's derives its primary source of revenue from customers who dine inside the restaurant during regular business hours, compared to customers who call the restaurant to place take-out orders. (Doc. No. 1-1, ¶ 1.) It has been forced, by recent orders by the State of Ohio, to cease its dine-in operations—through no fault of its own—as part of the State's efforts to slow the spread of the COVID-19 global pandemic. (Id. )
On March 9, 2020, Governor Mike DeWine issued Executive Order 2020-01D Declaring a State of Emergency in Ohio. (Doc. No. 1-1, ¶ 3.) On March 11, 2020, the head of the World Health Organization declared COVID-19 a pandemic. (Doc. No. 1-1, ¶ 4.) On March 15, 2020, Governor DeWine and Amy Acton, M.D., M.P.H., Director of the Ohio Department of Health, issued a Public Health Order closing all bars and restaurants, except sales of carry-out beverages and food, in an effort to address the ongoing COVID-19 pandemic. (Doc. No. 1-1, ¶ 5.) On March 17, 2020 and March 20, 2020, Governor DeWine and Dr. Acton issued orders closing all polling locations and ceasing business operations at all hair salons, day spas, nail salons, barber shops, tattoo parlors, body piercing locations, tanning facilities and massage therapy locations. (Doc No. 1-1, ¶¶ 6,7.) On March 22, 2020 Governor DeWine and Dr. Acton issued an order that all persons stay at home unless engaged in essential work or activity. (Doc. No. 1-1, ¶ 8.) As a result of these orders identified in paragraphs 3 and 5-8 of the Complaint ("the Closure Orders"), Santo's was "forced to halt ordinary operations, including all dine-in operations which operations provide a substantial majority of its revenue, resulting in substantial lost revenues and forcing [Santo's] to shut down dine-in operations and lay off employees." (Id. at ¶ 9.)
Santo's obtained business interruption insurance from Defendant Acuity through Santo's insurance agent, The Fedeli Group. (Doc. No. 1-1, ¶¶ 1, 12.) Acuity issued Santo's a "Bis-Pak Business Policy," numbered L597021 , effective from April 21, 2019 to April 21, 2020. (Id. at ¶¶ 18, 19.)
Santo's alleges that the Closure Orders were issued because of property damage caused by the Covid-19 infection and global pandemic, and in response to dangerous physical conditions resulting from the Covid-19 infection and global pandemic. (Id. at ¶ 16.) According to Santo's, the "all risk" or "special perils" policy that Acuity sold to it in exchange for substantial premiums, indemnifies it for "actual loss of Business Income" Santo's sustains, as well as "necessary Extra Expense" caused by "action of civil authority that prohibits access to the described premises"; it does not exclude for losses of business income as a result of the property damage occasioned in Plaintiff's premises caused by, or as a result of compliance with government orders as a result of, the COVID-19 infection and/or a global pandemic. (Id. at ¶¶ 18, 21-24.) Further, Santo's alleges that "[i]n addition to property damage losses, Acuity agreed to "pay for the actual loss of Business Income" sustained by it "due to the necessary suspension" of Santo's operations during the period of business interruption caused "by direct physical loss of or damage to property" at its premises, and Acuity promised to pay "necessary Extra Expense" incurred during the interruption period that Santo's "would not have incurred if there had been no direct physical loss or physical damage to property at" its premises. (Id. at ¶¶ 25, 26.)
Santo's alleges that research on COVID-19 and recent CDC reports indicate that COVID-19 physically infect[s] and can remain viable on surfaces for at least 17 days, a characteristic that renders property exposed to the contagion potentially unsafe and dangerous and that it can linger on surfaces for up to four weeks in low temperatures. (Id. at ¶ 28.) In its Complaint, Santo's does not allege that COVID-19 was actually found in or on its premises, but alleges that "[t]he continuous presence of the pandemic and COVID-19 contagion resulted in the Closure Orders which themselves have mandated that Plaintiff's premises is unsafe, dangerous and unfit for its intended use and therefore caused direct physical property damage or physical loss under the [Acuity] Policy ." According to Santo's, the Closure Orders caused the necessary suspension of its dine-in business operations and triggered the Civil Authority coverage under the Acuity Policy and caused it to suffer substantial Business Income loss and to incur Extra Expense. (Id. at ¶ 32.)
Santo's alleges that it informed its agent at The Fedeli Group of a claim under the Property Coverage Form's Business Income and Extra Expense provision, as well as the Civil Authority provision. (Id. at ¶¶ 32-34.) However, Santo's alleges that it "was told that Acuity would not be paying such claims because the pandemic was an ‘act of God.’ " (Id. ) Santo's alleges that Acuity denied its claim because the "pandemic was an ‘act of God.’ " (Id. at ¶ 36.)
Santo's Complaint sets forth three causes of action. In Count I, Santo's seeks a declaratory judgment that its losses incurred in connection with the Closure Orders and the necessary interruption of its businesses stemming from the COVID-19 pandemic are insured losses under the Acuity policy, requiring Acuity to pay it the full amount of its losses, to include losses related to any future orders by Governor DeWine and the Ohio Department of Health, and there is no exclusion in the policy that applies to preclude its claim. (Id. at ¶ 43.) In Count II, Santo's asserts a breach of contract claim against Acuity because it denied coverage for its claim/losses. (Id. at ¶¶ 44-51.) In Count III, Santo's asserts a breach of the duty of good faith and fair dealing. (Id. at ¶¶ 52-57.)
The Acuity Policy is comprised of several forms and endorsements, including the "Deluxe Bis-Pak Property Coverage Form," number CB-0002(8-15) ("the Property Coverage Form"), which contains the relevant provisions at issue in this matter or applicable to the parties’ dispute regarding coverage. (Doc. No. 7-7, PageID# 125-51.) The insuring agreement of the Property Coverage Form reads as follows:
We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.
The term "Covered Cause of Loss" as used in the Property Coverage Form is defined in relevant part as "Risks of Direct Physical Loss unless the loss is: a. Excluded in Property Exclusions. (Emphasis added.) Id. at PageID# 127.) The "Property Definitions" set forth at pages 25 and 26 of the Property Coverage Form and applicable thereto do not include a definition of the phrase "direct physical loss of or damage to" as that phrase is used in the Property Coverage Form insuring agreement, and in the Business Income and Extra Expense provisions of the Property Coverage Form, pursuant to which Santo's seeks indemnification for its business income losses, business interruption and extra expense.
Moreover, the "Property Definitions" do not include a definition of "Direct Physical Loss" as that phrase is used in the "Covered Cause of Loss" definition. The "Property Definitions" do not include any definitions of the words "direct", "physical", "loss", or "damage".
The Business Income and Extra Expense coverage provisions are set forth in subsection g. under , and read in relevant part as follows:
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