Digital Age Mktg. Grp., Inc. v. Sentinel Ins. Co.

• Decision Date: 08 January 2021
• Docket Number: CASE NO. 20-61577-CIV-DIMITROULEAS
• Parties: DIGITAL AGE MARKETING GROUP, INC., Plaintiff, v. SENTINEL INSURANCE COMPANY LIMITED, d/b/a the Hartford, Defendant.
• Court: U.S. District Court — Southern District of Florida

512 F.Supp.3d 1270

DIGITAL AGE MARKETING GROUP, INC., Plaintiff,

v.SENTINEL INSURANCE COMPANY LIMITED, d/b/a the Hartford, Defendant.

CASE NO. 20-61577-CIV-DIMITROULEAS

United States District Court, S.D. Florida.

Signed January 8, 2021

Brian William Smith, Smith & Vanture, LLP, West Palm Beach, FL, Lloyd Justin Heilbrunn, Law Office of Lloyd J. Heilbrunn, Juno Beach, FL, for Plaintiff.

Samera Beshir, Butler Weihmuller Katz Craig LLP, Tracy Ann Jurgus, Butler Pappas, Miami, FL, Caitlin R. Tharp, Pro Hac Vice, John J. Kavanagh, Pro Hac Vice, Sarah D. Gordon, Pro Hac Vice, Steptoe & Johnson LLP, Washington, DC, for Defendant.

ORDER GRANTING MOTION TO DISMISS

WILLIAM P. DIMITROULEAS, United States District Judge

THIS CAUSE is before the Court on Defendant Sentinel Insurance Company Limited d/b/a The Hartford ("Sentinel")’s August 11, 2020 Motion to Dismiss [DE-5] ("Motion"). The Court has considered the Motion, Plaintiff's September 24, 2020 Response [DE-26], Defendant's October 1, 2020 Reply [DE-32] and Notices of Supplemental Authority [DE-35, 38] and is otherwise fully advised in the premises.

I. FACTUAL AND PROCEDURAL BACKGROUND

This is an action regarding insurance coverage for business income loss arising from local and state stay-at-home and shelter-in-place orders intended to stop or slow the spread of the novel coronavirus that causes the disease COVID-19. Compl. [DE-1-2, pp. 37-46] ¶¶ 11–16. On May 15, 2020, Plaintiff brought this action against Sentinel in the Seventeenth Judicial Circuit, in and for Broward County, Florida arising out of the policy of insurance ("Policy") between Sentinel and Plaintiff. Compl. ¶ 3. Plaintiff is seeking a declaratory judgment, damages for breach of contract, interest, costs and attorney's fees pursuant to Fla. Stat. § 627.428. Compl. ¶¶ 31, 33, 35, 46. Plaintiff's complaint seeks coverage under the policy for "property damage, suspension of business operations, sustained losses of business income, extended loss of business income, business income dependent properties, and incurred extra expenses." Compl. ¶ 31. Plaintiff also invoked the Business Income, Extra Expense, Extended Business Income, and Civil Authority provisions of the Policy in its Complaint. Compl. ¶¶ 4–8.

On August 4, 2020, Sentinel removed this case from the Circuit Court of the Seventeenth Judicial Circuit, Broward County. [DE-1]. On December 1, 2020, this Court denied Plaintiff's Amended Motion to Remand. [DE-36].

The Complaint alleges several types of coverage provided by the Policy for loss of business income (often called business interruption insurance), for which an additional premium was charged. This coverage is specifically provided for in a section of the Spectrum Business Owner's Policy titled "5. Additional coverages ... o. Business Income Coverage". Pursuant to this coverage, Defendants promised to pay for "Loss of Business Income" caused by a covered cause of loss. The particular covered loss in play is "direct physical loss or physical damage to" the Plaintiff's property.

The Complaint also alleges that there are additional coverages for other damages that may be in play for this loss including "Extra Expense" and "Extended Business Interruption". The Complaint also alleges that there was a whole different type of coverage titled "5. Additional coverages ... q. Civil Authority" coverage that has been triggered by the various actions of the State of Florida and Broward County due to the effect of the pandemic, which resulted in the closure and limitation or reduction of the Plaintiff's business. Civil Authority coverage also provides payment for the various elements of damages including but not limited to Loss of Business Income, and Extra Expense. In addition to all these coverages, the Complaint alleges the policy provides a special endorsement which provides coverage, including but not limited to Business Interruption Coverage, Extended Business Interruption and Extra Expense Coverage, for loss or damage caused by "fungi", wet rot, dry rot, bacteria or virus.

The Complaint alleges that the Defendant has denied coverage under the policy in its entirety on the various purported grounds set forth in its denial letter. [DE-1-2, pp. 246-251].

II. STANDARD OF LAW

Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a claim for failure to state a claim upon which relief can be granted. "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Conclusory statements, assertions or labels will not survive a 12(b)(6) motion to dismiss. Id. "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." Id. ; see also Edwards v. Prime, Inc. , 602 F.3d 1276, 1291 (11th Cir. 2010) (setting forth the plausibility standard). "Factual allegations must be enough to raise a right to relief above the speculative level[.]" Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (citation omitted).

Additionally, although it must accept well-pled facts as true, the court is not required to accept a plaintiff's legal conclusions. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (noting "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions"). In evaluating the sufficiency of a plaintiff's pleadings, we make reasonable inferences in Plaintiff's favor, "but we are not required to draw plaintiff's inference." Aldana v. Del Monte Fresh Produce, N.A., Inc. , 416 F.3d 1242, 1248 (11th Cir. 2005). Similarly, "unwarranted deductions of fact" in a complaint are not admitted as true for the purpose of testing the sufficiency of plaintiff's allegations. Id. ; see also Iqbal , 556 U.S. at 681, 129 S.Ct. 1937 (stating conclusory allegations are "not entitled to be assumed true"). Sinaltrainal v. Coca-Cola , 578 F.3d 1252, 1260 (11th Cir. 2009), abrogated on other grounds by Mohamad v. Palestinian Auth. , 566 U.S. 449, 453 n.2, 132 S.Ct. 1702, 182 L.Ed.2d 720 (2012). The Eleventh Circuit has endorsed "a ‘two-pronged approach’ in applying these principles: 1) eliminate any allegations in the complaint that are merely legal conclusions; and 2) where there are well-pleaded factual allegations, ‘assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.’ " American Dental Ass'n v. Cigna Corp. , 605 F.3d 1283, 1290 (11th Cir. 2010) (quoting Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ).

III. DISCUSSION

The Defendant has moved to dismiss Plaintiff's State Court Complaint [DE-1-2, pp. 37-46] with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.

Defendant claims that Plaintiff's claims fail for a number of reasons and that the virus exclusion in the Policy bars any recovery. Defendant contends that the plain terms of the policy exclude from coverage losses caused directly or indirectly by a virus. Plaintiff's claims, as characterized by Defendant, are both premised on the policy providing coverage for its alleged virus-related business losses; as such, Defendant argues that Plaintiff cannot state a claim for relief.

When interpreting insurances contracts, under Florida law, the contract is construed according to its "plain meaning." Mills v. Foremost Ins. Co. , 511 F.3d 1300, 1304 (11th Cir. 2008). The insurance contract is ambiguous if its language lends itself to more than one interpretation. Id. "Ambiguous policy provisions ... should be construed liberally in favor of coverage of the insured and strictly against the insurer." Dickson v. Econ. Premier Assur. Co. , 36 So. 3d 789, 790 (Fla. 5th DCA 2010). Ambiguous "exclusionary clauses are construed even more strictly against the insurer than coverage clauses." Auto-Owners Ins. Co. v. Anderson , 756 So. 2d 29, 34 (Fla. 2000). However, "strict construction does not mean ... that clear words may be tortured into uncertainty so that new meanings can be added. State Farm Fire & Cas. Ins. Co. v. Deni Assocs. of Fla., Inc., 678 So. 2d 397, 401 (Fla. 4th DCA 1996), on reh'g (Aug. 20, 1996), approved , 711 So. 2d 1135 (Fla. 1998). "Only when a genuine inconsistency, uncertainty, or ambiguity in meaning remains after resort to the ordinary rules of construction is the rule apposite." Excelsior Ins. Co. v. Pomona Park Bar & Package Store , 369 So. 2d 938, 942 (Fla. 1979).

A. Virus Endorsement and Virus Exclusion Policy Provisions

Defendant's primary argument is that the virus exclusion provision in the Policy bars all recovery in the present case. Defendant argues that there is no coverage under the Policy for Plaintiff's losses, despite the existence of a specific virus endorsement, due to the virus exclusion provision. In response, Plaintiff contends that the very existence of a virus endorsement with a virus exclusion would appear to create ambiguity in the Policy on its face, especially in reference to this fairly unusual endorsement which would also appear to contain an exception to the exclusion. Plaintiff says there is a clear ambiguity, at the very least, in regards to what losses are covered when you compare the Policy's virus exclusion with its virus endorsement, listed under "Additional Coverage."

The endorsement regarding Limited Fungi, Bacteria, or Virus Coverage, which amends the Policy adds an exclusion and a limited coverage regarding fungi, bacteria, and viruses. The endorsement includes the following provisions regarding coverage of damages directly or indirectly cause by viruses:

A. Fungi, Bacteria or Virus Exclusions

***

1. ...

2. The following exclusion is

...