T&L Catering, Inc. v. Hanover Insurance Group, Inc.
| Decision Date | 14 July 2021 |
| Docket Number | Civil Action 3:20-cv-07934 (FLW) (ZNQ) |
| Court | U.S. District Court — District of New Jersey |
| Parties | T&L CATERING, INC. Plaintiff, v. THE HANOVER INSURANCE GROUP, INC. and CITIZENS INSURANCE COMPANY OF AMERICA, Defendants. |
NOT FOR PUBLICATION
Plaintiff T&L Catering, Inc. (“Plaintiff”) filed this insurance coverage putative class action seeking coverage from Defendants the Hanover Insurance Group, Inc. (“Hanover”)[1] and Citizens Insurance Company of America (“Citizens”) (collectively “Defendants”) for losses sustained as a result of the 2019 novel coronavirus (“COVID-19”) pandemic. Before the Court is a Motion for Judgment on the Pleadings filed by Citizens pursuant to Federal Rule of Civil Procedure 12(c). For the reasons set forth herein, Citizens' Motion for Judgment on the Pleadings is GRANTED.
Plaintiff is a catering business located in North Plainfield, New Jersey. (Compl. ¶ 14.) Citizens is a subsidiary of Hanover that is licensed to issue insurance policies in New Jersey. (Id. ¶ 17.) Citizens issued Policy number ZBY 8777623 09 to Plaintiff for the period of July 20 2019 through July 20, 2020 (the “Policy”). (Id. ¶ 18.) The Policy issued to Plaintiff by Citizens was an all-risk commercial property policy that covers loss or damage from all risks except those expressly excluded. (Id. ¶ 33.) In relevant part, the Policy provides as follows:
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 physical damage to property at the premises . . . [t]he loss or damage must be caused by or result from of a Covered Cause of Loss.
(Compl. ¶ 36.) The Policy also contains an endorsement form, titled “Exclusion of Loss Due to Virus or Bacteria, ” which applies to all coverages provided by the Policy (the “Virus Exclusion”). (Def.'s Mot., Ex. 2, CP 000111.) The Virus Exclusion states, “[w]e will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable [of] inducing physical distress, illness or disease.” (Compl. ¶ 43.)
On March 11, 2020, the World Health Organization declared COVID-19 a worldwide pandemic. (Id. ¶ 1.) On March 13, 2020, the federal government declared the COVID-19 pandemic to be a national emergency. (Id. ¶ 2.) The Center for Disease Control (“CDC”) recommended safety measures such as staying home and refraining from going to public places where people gather. (Id.) Following the CDC recommendations, many state governments, including New Jersey, executed closure orders (the “Closure Orders”) temporarily suspending in-person, non-essential business operations, including those of restaurants. (Id. ¶¶ 4, 5.) Plaintiff was forced to close its business, except for take-out service, in order to comply with New Jersey's Closure Orders. (Id. ¶ 15.) Subsequently, Plaintiff submitted a claim for business interruption losses to Citizens, but Citizens denied Plaintiff's claim. (Id. ¶ 44.) In response, Plaintiff, on behalf of itself and all others similarly situated, brought a class action suit against Defendants seeking (1) a declaratory judgment finding that Defendants are liable to Plaintiffs for losses incurred as a result of the COVID-19 pandemic and the corresponding civil authority orders, and (2) damages related to the Defendants' contractual breach of numerous insurance policies of the putative class members, including Plaintiff's Policy, when Defendants failed to compensate Plaintiff and others similarly situated for their losses. (Id. ¶¶ 9, 10.) In its Complaint, Plaintiff alleges that it and others similarly situated suffered losses and damages because they were unable to use their insured properties as intended. (Id. ¶ 41.) Plaintiff also asserts that those losses and damages were proximately caused by the precautionary measures taken to prevent the spread of COVID-19, not by the COVID-19 virus itself. (Id. ¶ 44.)
This Motion for Judgment on the Pleadings followed. Citizens argues that (1) Plaintiff did not sustain a direct physical loss of, or damage to, its insured premises, (2) Plaintiff failed to state a claim under the civil authority provision of the Policy, and (3) the Virus Exclusion bars coverage for all losses caused by COVID-19. In its Opposition, Plaintiff argues that (1) the Virus Exclusion does not bar its claim for relief under the Policy, and (2) the language of the Policy is ambiguous and should be construed in favor of Plaintiff.
Rule 12(c) of the Federal Rules of Civil Procedure allows a party to move for judgment on the pleadings “after the pleadings are closed but within such time as not to delay trial.” Fed.R.Civ.P. 12(c). “‘A motion for judgment on the pleadings based on the defense that the plaintiff has failed to state a claim is analyzed under the same standards that apply to a Rule 12 (b)(6) motion.'” Zimmerman v. Corbett, 873 F.3d 414, 417 (3d Cir. 2017) (quoting Revell v. Port Auth. of N.Y. & N.J., 598 F.3d 128, 134 (3d Cir. 2010)); see also Hoffman v. Nordic Naturals, Inc., 837 F.3d 272, 279 n.47 (3d Cir. 2016); Turbe v. Gov't of V.I., 938 F.2d 427, 428 (3d Cir. 1991); see also Spruill v. Gillis, 372 F.3d 218, 223 n.2 (3d Cir. 2004) (“There is no material difference in the applicable legal standards”).
In reviewing a motion to dismiss for failure to state a claim upon which relief may be granted, under Federal Rule of Civil Procedure 12(b)(6), “courts accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (internal quotation marks omitted). Although Federal Rule of Civil Procedure 8(a) does not require that a complaint contain detailed factual allegations, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (alteration in original); see also Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) () (internal quotation marks omitted). “Thus, to survive a Rule 12(b)(6) motion to dismiss or a Rule 12(c) motion asserting that Plaintiff has failed to plead a claim, a complaint must contain sufficient factual allegations to raise a plaintiff's right to relief above the speculative level, so that a claim is ‘plausible on its face.” Crawford v. Wheeler, No. 18-1735, 2019 WL 3759696, *2 (D.N.J. Aug. 9, 2019) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While the “plausibility standard is not akin to a ‘probability requirement,' ... it asks for more than a sheer possibility that defendant had acted unlawfully.” Id. When reviewing a motion made pursuant to Rule 12(c), a court must take all allegations in the relevant pleading as true, viewed in the light most favorable to the non-moving party. Gomez v. Toledo, 446 U.S. 635, 636 (1980); Mele v. FRB, 359 F.3d 251, 253 (3d Cir. 2004). All reasonable inferences must be made in the non-moving party's favor. See In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 314 (3d Cir. 2010). “The motion should not be granted ‘unless the moving party has established that there is no material issue of fact to resolve, and that it is entitled to judgment in its favor as a matter of law.'” Mele, 359 F.3d at 253 (quoting Leamer v. Fauver, 288 F.3d 532, 535 (3d Cir. 2002)). Accordingly, in order to survive a motion for judgment on the pleadings, the non-moving party's pleading must provide “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. This standard, like a motion to dismiss, requires the non-moving party to show “more than a sheer possibility that a defendant has acted unlawfully, ” but does not create as high of a standard as to be a “probability requirement.” Ashcroft, 556 U.S. at 678.
Under New Jersey law, the determination of “the proper coverage of an insurance contract is a question of law.” Buczek v. Cont'l Cas. Ins. Co., 378 F.3d 284, 288 (3d Cir. 2004) (citing Atl. Mut. Ins. Co v. Palisades Safety & Ins. Ass'n, 364 N.J.Super. 599, 604 (App. Div. 2003)). “An insurance policy is a contract that will be enforced as written when its terms are clear in order that the expectations of the parties will be fulfilled.” Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010). However, because insurance policies are contracts of adhesion, they “are subject to special rules of interpretation, ” Longobardi v. Chubb Ins. Co. of N.J., 121 N.J. 530, 537 (1990), and “courts must assume a particularly vigilant role in ensuring their conformity to public policy and principles of fairness.” Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 175 (1992); see Zacarias v. Allstate Ins. Co., 168 N.J. 590, 594 (2001) (...
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