Count Basie Theatre Inc. v. Zurich Am. Ins. Co.
| Decision Date | 24 August 2021 |
| Docket Number | 2:21-cv-00615 (BRM) (LDW) |
| Parties | COUNT BASIE THEATRE INC., Plaintiff, v. ZURICH AMERICAN INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
Before this Court is a Motion to Remand filed by Plaintiff Count Basie Theater, Inc. (“Count Basie”). (ECF No. 6.) Defendant Zurich American Insurance Company (“Zurich”) opposed the motion. (ECF No. 15.) Count Basie filed a reply. (ECF No. 17.) Having reviewed the submissions filed in connection with the motion and having heard oral argument on April 7, 2021, pursuant to Federal Rule of Civil Procedure 78(a) (ECF No. 18), [1] for the reasons set forth below and for good cause appearing, Count Basie's Motion to Remand is DENIED.
Count Basie owns, and/or operates out of, six insured premises in Red Bank, Monmouth County, New Jersey. (ECF No. 6-1 at 8.) Zurich is a commercial property and casualty insurance company, which issued a commercial package property insurance policy (the “Policy”) to Count Basie for the period between November 1, 2019, and November 1, 2020. (Id.) The Policy contains a Schedule of Locations for the six insured premises under the Policy. (Id at 7.)
The Policy sets forth the Business Income Coverage, which provides:
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 a “premises” at which a Limit of Insurance is shown on the Declarations for Business Income. The loss or damage must be directly caused by a “covered cause of loss.” We will not pay more than the applicable Limit of Insurance shown on the Declarations for Business Income at that “premises.”
(ECF No. 5-1 at 10.) The Policy defines a “covered cause of loss” as “a fortuitous cause or event not otherwise excluded, which actually occurs during this policy period.” (Id. at 11.) Apart from the Business Income Coverage, the Policy contains additional coverages, and one of them is the Civil Authority Coverage, which provides:
We will pay for the actual loss of “business income” you sustain for up to the number of days shown on the Declarations for Civil Authority resulting from the necessary “suspension, ” or delay in the start, of your “operations” if the “suspension” or delay is caused by order of civil authority that prohibits access to the “premises” or “reported unscheduled premises.” That order must result from a civil authority's response to direct physical loss of or damage to property located within one mile from the “premises” or “reported unscheduled premises” which sustains a “business income” loss. The loss or damage must be directly caused by a “covered cause of loss.”
(Id.) Another additional coverage at issue here is the Communicable Disease Business Income Coverage, which provides:
If the Business Income Coverage Form (Excluding Extra Expense) is included in this Commercial Property Coverage Part, the coverage provided at a “premises” or “reported unscheduled premises” will also cover the actual loss of “business income” you sustain resulting from the necessary “suspension” of your “operations” if the “suspension” is caused by an order of an authorized public health official or governmental authority that prohibits access to the “premises” or “reported unscheduled premises, ” or a portion of that “premises” or “reported unscheduled premises.” That order must result from the discovery or suspicion of a communicable disease or threat of the spread of a communicable disease at that “premises” or “reported unscheduled premises.”
(ECF No. 6-1 at 10-11.) The Policy considers microorganisms as “excluded causes of loss, ” and has an exclusion provision (the “Microorganism Exclusion”) that states:
We will not pay for loss or damage consisting of, directly or indirectly caused by, contributed to, or aggravated by the presence, growth, proliferation, spread, or any activity of “microorganisms, ” unless resulting from fire or lightning. Such loss or damage is excluded regardless of any other cause or event, including a “mistake, ” “malfunction, ” or weather condition, that contributes concurrently or in any sequence to the loss, even if such other cause or event would otherwise be covered.
(ECF No. 5-1 at 12.) The Policy defines “microorganism” as “any type or form of organism of microscopic or ultramicroscopic size including, but not limited to, ‘fungus,' wet or dry rot, virus, algae, or bacteria, or any by-product.” (Id.)
In March 2020, Governor Philip D. Murphy of the State of New Jersey issued a series of executive orders (the “Executive Orders”), which Count Basie alleges to have prohibited access to its business facilities.[2] (ECF No. 6-1 at 12.) One Executive Order explains “suspending operations at these businesses is part of the State's mitigation strategy to combat COVID-19 and reduce the rate of community spread.” (ECF No. 5-6 at 4.) Thereafter, Count Basie submitted a claim under the Policy to Zurich for lost business income caused by its compliance with the Executive Orders. (ECF No. 5-1 at 13.) Zurich determined Count Basie was entitled to recover under the Communicable Disease Business Income Coverage, and issued payment in the amount of $100, 000, allegedly representing the upper limit of the coverage. (Id.) Zurich also determined Count Basie was not entitled to coverage for its loss of business income under any other provision under the Policy. (Id.)
On December 3, 2020, Count Basie filed a Complaint in the Superior Court of New Jersey, Law Division, Monmouth County, against Zurich. (Id. at 14; ECF No. 6-1 at 7.) The Complaint seeks a declaratory judgment that Count Basie is entitled to recover: (1) under the Communicable Disease Business Income Coverage up to the Blanket Limits of Insurance in the amount of $1, 900, 001 for its business income losses at three insured premises, and $100, 000 per occurrence at each of the other three insured premises, (2) under the Business Income Coverage for its business income losses at three insured premises up to the Blanket Limits of Insurance of $1, 900, 001, and (3) under the Civil Authority Coverage up to the Policy limits for its business income losses and extra expenses at all of its insured properties. (ECF No. 1-1 ¶¶ 156-57.)
On January 12, 2021, Zurich removed this case from the Superior Court of New Jersey, Law Division, Monmouth County, to the United States District Court for the District of New Jersey. (ECF No. 1.) On February 2, 2021, Zurich filed a Motion to Dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).[3] (ECF No. 5.) On February 8, 2021, Count Basie filed a Motion to Remand this case back to the Superior Court of New Jersey, Law Division, Monmouth County. (ECF No. 6) On March 22, 2021, Zurich opposed Count Basie's motion. (ECF No. 15.) On March 31, 2021, Count Basie replied to Zurich's opposition. (ECF No. 17.) On April 7, 2021, the Court held oral argument on Count Basie's motion (ECF No. 18), and permitted simultaneous supplemental briefings, which were filed on April 21, 2021 (ECF Nos. 21, 22).
A district court has subject matter jurisdiction “of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. “[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court.” 28 U.S.C. § 1441(a). “[T]he party asserting federal jurisdiction in a removal case bears the burden of showing, at all stages of the litigation, that the case is properly before the federal court.” Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir. 2007) (citations omitted). “28 U.S.C. § 1441 is to be strictly construed against removal.” Samuel-Bassett v. Kia Motors Am., Inc., 357 F.3d 392, 396 (3d Cir. 2004) (citing Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990)).
“As a general rule, federal courts have a ‘virtually unflagging obligation' to ‘exercise jurisdiction given them,' and therefore, ‘the pendency of an action in a state court is no bar to proceedings concerning the same matter in a Federal court having jurisdiction.'” Hartford Life Ins. Co. v. Rosenfeld, Civ. A. No. 05-5542, 2007 U.S. Dist. LEXIS 55819, at *8-9 (D.N.J. Aug. 1, 2007) (quoting Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817-18 (1983)). “Nevertheless, under certain circumstances, a district court may abstain from exercising jurisdiction in favor of state court proceedings.” Id. at *9. (citing NYLife Distrib., Inc. v. The Adherence Grp., Inc., 72 F.3d 371, 376 (3d Cir. 1995)). “Relevant here are two abstention doctrines that are ‘aimed at avoiding duplicative litigation' and ‘premised on considerations which concern the efficient administration of judicial resources and the comprehensive disposition of cases.'” Id. (quoting NYLife Distrib., 72 F.3d at 376).
“First Colorado River abstention permits a district court to decline jurisdiction where a parallel state court action is ongoing, and where ‘exceptional circumstances' exist.” Id. (citing Colorado River, 424 U.S. at 817-18); see also Golden Gate Nat'l Senior Care, LLC v. Minich, 629 Fed.Appx. 348, 349 (3d Cir. 2015) ...
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