Atma Beauty, Inc. v. HDI Global Specialty SE
| Decision Date | 13 September 2021 |
| Docket Number | CASE NO.: 1:20-cv-21745-GAYLES |
| Citation | 559 F.Supp.3d 1311 |
| Parties | ATMA BEAUTY, INC., Plaintiff, v. HDI GLOBAL SPECIALTY SE, Axis Specialty Europe SE, Underwriters at Lloyd's London Subscribing to Policy Number RSK003959, and Underwriters at Lloyd's London Known as Syndicates AFB 2623, AFB 623, APL 1969, ARG 2121, BRT 2987, BRT 2988, HIS 33, KLN 510, MMX 2010, MSP 318, NVA 2007, TRV 5000, and XLC 2003, Defendants. |
| Court | U.S. District Court — Southern District of Florida |
Pablo Rojas, Aaron Samuel Podhurst, Lea Pilar Bucciero, Podhurst Orseck, P.A., Kristina Marie Infante, Matthew Weinshall, Steven Craig Marks, Podhurst Orseck PA, Miami, FL, for Plaintiff.
Armando Pedro Rubio, Fields Howell, Miami, FL, for Defendants.
THIS CAUSE comes before the Court on Defendants’, HDI Global Specialty SE, Axis Specialty Europe SE, Underwriters at Lloyd's London Subscribing to Policy Number RSK003959, and Underwriters at Lloyd's London Known as Syndicates AFB 2623, AFB 623, APL 1969, ARG 2121, BRT 2987, BRT 2988, HIS 33, KLN 510, MMX 2010, MSP 318, NVA 2007, TRV 5000, and XLC 2003 (collectively, "Defendants"), Motion to Dismiss the Amended Class Action Complaint (the "Motion") [ECF No. 50]. The Court has reviewed the Motion and the record and is otherwise fully advised. For the reasons that follow, Defendants’ Motion is granted.
Plaintiff Atma Beauty, Inc. owns and operates a full-service salon and medical spa in Miami Beach, Florida. On December 19, 2019, Defendants issued an all-risk insurance policy (the "Policy") that insured the physical premises of Plaintiff's salon and income generated from the salon. The Policy's coverage period was from December 19, 2019, to December 19, 2020. Plaintiff paid monthly premiums in exchange for Defendants covering certain losses and expenses, including loss of business income due to suspension of the salon's operations, expenses incurred during the salon's suspension, and loss resulting from actions of a civil authority that prohibited access to the salon.
The general coverage provision of the Policy states that Defendants "will pay for direct physical loss of or damage to Covered Property at the premises ... caused by or resulting from any Covered Cause of Loss." [ECF No. 47-1 at 16] (emphasis added). A "Covered Cause of Loss" under the Policy means "Risks of Direct Physical Loss" unless the loss is excluded or limited. Id. at 45. The Policy includes a standard form titled "Business Income (and Extra Expense) Coverage Form" that outlines coverage for various losses and expenses. Id. at 32.
The Policy provides coverage for loss of business income resulting from a Covered Cause of Loss and states in pertinent part that Defendants:
[W]ill 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 [covered] premises .... The loss or damage must be caused by or result from a Covered Cause of Loss.
Id. at 32 (emphasis added). The Policy defines "business income" as "[n]et income ... that would have been earned or incurred; and ... [c]ontinuing normal operating expenses incurred, including payroll." Id. Moreover, the Policy defines "suspension" as "[t]he slowdown or cessation of ... business activities" or "a part or all of the [covered] premises [that] is rendered untenantable ...." Id. at 40.
The Policy provides payment for "necessary expenses [Plaintiff] incur[s] during the ‘period of restoration’ " that it "would not have incurred if there had been no direct physical loss or damage to property caused by or resulting from a Covered Cause of Loss."2 Id. at 32 (emphasis added).
This "Extra Expense" payment is designed to "[a]void or minimize the ‘suspension’ of business and to continue operations at the [covered] premises" or at an alternative location or to "[m]inimize the ‘suspension’ of business if [Plaintiff] cannot continue ‘operations’." Id. at 32–33. The Policy will also provide payment under this provision "to repair or replace property, but only to the extent it reduces the amount of loss" during the period of restoration. Id. at 33.
The Policy provides coverage for loss of business income caused by the actions of a civil authority and states in pertinent part that:
Id. (emphasis added).
In response to the SARS CoV-2 virus ("COVID-19") pandemic, businesses across the United States were forced to close, severely limit and/or change their operations, and reconfigure their premises to mitigate, prevent, and contain the spread of COVID-19 on their properties. On March 12, 2020, the City of Miami Beach declared a State of Emergency in response to the COVID-19 pandemic and, on April 23, 2020, extended the State of Emergency through April 30, 2020. The State of Emergency required the closure of all non-essential retail and commercial establishments in Miami Beach—including Plaintiff's salon. On March 19, 2020, Miami-Dade County issued Emergency Order 07-20, which also required that all non-essential businesses close. On March 30, 2020, the Governor of Florida signed Executive Order 20-89, which ordered counties in Florida—including Miami-Dade County—to restrict public access to non-essential businesses.
Plaintiff states that the presence of COVID-19 caused direct physical loss of and/or damage to the salon in two ways. First, it physically contaminated the air and surfaces of Plaintiff's property, which eliminated, impaired, or limited the use of the property. Plaintiff made efforts to mitigate, prevent, contain, and reduce the contamination but could not do so permanently or reliably. Second, Plaintiff had to physically alter its property, including: (1) installing physical barriers throughout its property; (2) using harsh cleaning agents that cause surfaces to deteriorate faster; (3) significantly reducing the occupancy of its property; and (4) reducing the number of stations at which beauty services are provided. Plaintiff also states that the presence of COVID-19 caused all or part of the property to be uninhabitable by customers and caused the property's physical function to be nearly eliminated, destroyed, and/or severely limited.
Although Plaintiff implemented decontamination protocols, it could not eliminate the presence of COVID-19 or fully mitigate its losses. First, the cleaning protocols could not eliminate COVID-19 contamination because of the possibility of recurring contamination. Second, the physical alterations Plaintiff made to its property caused a loss of business income. Third, Plaintiff's cleaning protocols caused loss and damage to the property because the use of harsh cleaning agents deteriorated surfaces more rapidly.
Additionally, the actions of civil authorities prohibiting public access to the salon and surrounding areas in response to the COVID-19 pandemic caused Plaintiff's business operations to suspend. In response, Plaintiff provided notice to Defendants of Plaintiff's losses and expenses, as required by the Policy. However, Defendants refused to provide coverage under the Policy.
On April 27, 2020, Plaintiff filed this action against Defendants for declaratory relief and monetary damages pursuant to the Policy. [ECF No. 1]. On July 14, 2020, Defendants moved to dismiss Plaintiff's Complaint, [ECF No. 18], which the Court granted on December 30, 2020, [ECF No. 44]. On January 25, 2021, Plaintiff filed its Amended Class Action Complaint (the "Amended Complaint") which brings claims for: (1) declaratory judgment as to the Business Income, Extra Expense, and Civil Authority Coverage provisions (Counts I, III, and V); and (2) breach of contract of the Business Income, Extra Expense, and Civil Authority Coverage provisions (Counts II, IV, and VI). [ECF No. 47]. On February 16, 2021, Defendants filed the instant Motion seeking dismissal of the Amended Complaint with prejudice. [ECF No. 50].
To survive a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6), a claim "must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face,’ " meaning that it must contain "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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). While a court must accept well-pleaded factual allegations as true, "conclusory allegations ... are not entitled to an assumption of truth—legal conclusions must be supported by factual allegations." Randall v. Scott , 610 F.3d 701, 709–10 (11th Cir. 2010). "[T]he pleadings are construed broadly," Levine v. World Fin. Network Nat'l Bank , 437 F.3d 1118, 1120 (11th Cir. 2006), and the allegations in the complaint are viewed in the light most...
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