Edison Kennedy, LLC v. Scottsdale Ins. Co.

Citation510 F.Supp.3d 1116
Decision Date04 January 2021
Docket NumberCase No. 8:20-cv-1416-T-02SPF,Consolidated Case No. 8:20-cv-1417-T-02AAS
Parties EDISON KENNEDY, LLC, Plaintiff, v. SCOTTSDALE INSURANCE COMPANY, Defendant. Counter Culture Hospitality, LLC, Plaintiff, v. Scottsdale Insurance Company, Defendant.
CourtUnited States District Courts. 11th Circuit. United States District Court of Middle District of Florida

Clifton Conrad Curry, Jr., Daniel William King, Robin S. Trupp, The Curry Law Group, PA, Brandon, FL, for Plaintiff.

Patricia A. McLean, Phelps Dunbar, LLP, Thomas Wiley Hodges, III, Thomas A. Keller, Butler Weihmuller Katz Craig LLP, Tampa, FL, for Defendant.

ORDER

WILLIAM F. JUNG, UNITED STATES DISTRICT JUDGE

These consolidated cases come before the Court on Defendant's motion to dismiss the amended complaint with prejudice in the case filed by Plaintiff Edison Kennedy, LLC ("Edison") (Ed. Dkt. 35),1 Defendant's motion to dismiss the amended complaint with prejudice in the case filed by Plaintiff Counter Culture Hospitality, LLC ("Counter Culture") (CC Dkt. 33), and the responses, replies, and supplemental authorities. The amended complaints address similar insurance policies and contain similar allegations with the exception of one additional count in the Edison amended complaint (Ed. Dkt. 31 ¶¶ 154–60 – Count XIII reformation). After hearing oral argument of counsel on December 1, 2020, and carefully considering the allegations of the amended complaints (Ed. Dkt. 31; CC Dkt. 30), the insurance policies, and the applicable law, the Court grants the motions with prejudice as to all counts.

Background

In these removed actions, Plaintiffs, as insured restaurant owners, ask for a declaration that their "all risks" commercial property policies cover their business losses suffered after state and local governments issued orders placing regulations and restrictions on restaurants.2 The several orders of the state, county, and city cite to the spread of coronavirus disease 2019 ("COVID-19"), which is caused by the coronavirus SARS-CoV-2. In addition to a coverage determination, both actions plead damages for breach of contract based on Defendant Scottsdale Insurance Company's ("Scottsdale") denial of their claims. Edison additionally seeks redress under the alternative theory of reformation of the insurance contract, which pertains only to the extent of coverage for one of its two restaurants.

Plaintiffs pursue coverage for business income losses by invoking the additional coverage provision applicable to actions taken by civil authorities such as state and local governments. Ed. Dkt. 31-1at 43; CC Dkt. 30-1 at 43. The "civil authorities" provision, which is set forth below, applies when the "covered cause of loss" causes damage to property other than the insured premises. Ed. Dkt. 31-1 at 43; CC Dkt. 30-1 at 43. Applying this section, Plaintiffs argue, avoids the ever-growing number of cases denying coverage based on the lack of direct physical loss to the insureds’ property. See cases cited at Ed. Dkt. 35 at 14–15 n.4 and CC Dkt. 33 at 14 n.4. To that end, Plaintiffs rely on damages caused to another restaurant located no more than 4 miles from any of their insured properties.

The Policies

The Edison policy was in effect from October 29, 2019 through October 29, 2020, and the Counter Culture policy from November 15, 2019 through November 15, 2020. Ed. Dkt. 31 ¶ 13; CC Dkt. 30 ¶ 13. The policies provide coverage under the "Building and Personal Property Coverage Form" for the "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." Ed. Dkt. 31-1 at 26; CC Dkt. 30-1 at 26 (emphasis added). In addition to damage to the building and personal property, the policies provide under the "Business Income (and Extra Expense) Coverage Form" for coverage for loss of business income, extra expense, extended business income, and loss of access incurred for suspension of business operations during the restoration period.3

The policies’ Business Income Form contains six separate sections (A–F) under "Coverage." Section A.1. titled "Business Income" defines business income4 and provides in pertinent part:

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 premises which are described in the Declarations .... The loss or damage must be caused by or result from a Covered Cause of Loss.

Ed. Dkt. 31-1 at 42; CC Dkt. 30-1 at 42 (emphasis added). Section A.2. titled "Extra Expense" defines extra expense as:

necessary expenses you incur during the "period of restoration" that you 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.

Id. (emphasis added). Extra Expense coverage is "provided at the premises described in the Declaration" if the declarations show business income coverage applies there. Id.

Section A.3. refers to the "Causes of Loss Form" to determine what encompasses "Covered Causes of Loss, Exclusions and Limitations." Ed. Dkt. 31-1 at 43; CC Dkt. 30-1 at 43. Under the "Causes of Loss – Special Form" the "Covered Causes of Loss means direct physical loss unless the loss is excluded or limited in this policy. " Ed. Dkt. 31-1 at 56; CC Dkt. 30-1 at 56 (emphasis added).

Section A.5.a. titled "Civil Authority" permits additional coverage when the action of a civil authority prohibits access to the insured property provided two conditions are met:

When a Covered Cause of Loss causes damage to property other than property at the described premises, we will pay for the actual loss of Business Income you sustain and necessary Extra Expense caused by action of civil authority that prohibits access to the described premises, provided that both of the following apply:
(1) Access to the area immediately surrounding the damaged property is prohibited by civil authority as a result of the damage, and the described premises are within that area but are not more than one mile from the damaged property; and
(2) The action of civil authority is taken in response to dangerous physical conditions resulting from the damage or continuation of the Covered Cause of Loss that caused the damage, or the action is taken to enable a civil authority to have unimpeded access to the damaged property.

Ed. Dkt. 31-1at 43; CC Dkt. 30-1 at 43.5 Section A.5.c. titled "Extended Business Income" requires the loss of business income be "caused by direct physical loss or damage at the described premises caused by or resulting from any Covered Cause of Loss. " Ed. Dkt. 31-1 at 44; CC Dkt. 30-1 at 44 (emphasis added).

Endorsements to the policies exclude from coverage loss due to a virus, an exclusion specifically applicable to actions of civil authorities:

EXCLUSION OF LOSS DUE TO VIRUS OR BACTERIA
...
A. The exclusion set forth in Paragraph B. applies to all coverage under all forms and endorsements that comprise this Coverage Part or Policy, including but not limited to forms or endorsements that cover property damage to buildings or personal property and forms or endorsements that cover business income, extra expense or action of civil authority.
B. We 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.

Ed. Dkt. 31-1 at 52; CC Dkt. 30-1 at 52 (emphasis added).

Allegations of the Amended Complaints 6

The Tampa restaurants known as Counter Culture and Edison are owned and operated by each Plaintiff respectively. Edison has two locations, one on Kennedy Boulevard and the other on Channelside Drive. Counter Culture is located on Bay to Bay Boulevard. Each restaurant lost business after the state, county, and city governments ("the civil authorities") closed restaurants in response to the outbreak of COVID-19. All three civil authorities entered orders initially closing restaurants for indoor dining in March 2020 and later slowly reopening them to 25 percent indoor capacity in May and 50 percent indoor capacity in June. Ed. Dkts. 31-2 through 31-34; CC Dkts. 30-2 through 30-34. Other measures imposed by the authorities included curfews at various times, special cleaning procedures, and face mask mandates. Id.

Plaintiffs maintain that the direct causes of their losses were the orders of the civil authorities. Ed. Dkt. 31 ¶¶ 63–65; CC Dkt. 30 ¶¶ 63–65. Despite this assertion,7 the allegations recognize the pandemic and rapid spread of COVID-19 precipitated the issuance of the orders. For example, Plaintiffs were forced to suspend or reduce business at their restaurants "due to Civil Authority Orders in response to COVID-19. " Ed. Dkt. 31 ¶ 9; CC Dkt. 30 ¶ 9 (emphasis added). Most notably, all of the orders described in and attached to the amended complaints state they are premised on the outbreak of COVID-19 and the need to protect the safety and welfare of all residents and visitors. Ed. Dkts. 31 ¶¶ 23–61, 31-2 through 31-34; CC Dkts. 30 ¶¶ 22–60, 30-2 through 30-34.

To fall within the additional coverage provision related to civil authorities in section A.5.a. located in the Business Income Form of the policies, Plaintiffs allege damage to property other than the covered property. Ed. Dkt. 31-1 at 43; CC Dkt. 30-1 at 43.8 Plaintiffs name Cena, a restaurant located on Kennedy Boulevard, as an example of property that was damaged by the "presence of [the coronavirus.]" Ed. Dkt. 31 ¶ 23; CC Dkt. 30 ¶ 22. Cena was "allegedly closed down because staff contracted COVID-19 and the premises had to be fully disinfected." Id. Plaintiffs assert the civil authorities’ orders "caused a direct loss to" Cena and such damage to other property (Cena) ostensibly fits within the policies’ requirement that the damage result from a "covered cause of loss" thereby triggering coverage...

To continue reading

Request your trial
13 cases
  • Lansdale 329 Prop, LLC v. Hartford Underwriters Ins. Co.
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • April 28, 2021
    ...; N&S Rest. LLC v. Cumberland Mut. Fire Ins. Co., 499 F.Supp.3d 74, 81 (D.N.J. 2020) ; Edison Kennedy, LLC v. Scottsdale Ins. Co., No. 20-cv-1416, 510 F.Supp.3d 1116, 1125–26 (M.D. Fl. Jan. 4, 2021).I decline to add yet another voice to the already-saturated chorus of jurisprudence on the i......
  • Hair Studio 1208, LLC v. Hartford Underwriters Ins. Co.
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • May 14, 2021
    ...10, 2021) ; N&S Rest. LLC v. Cumberland Mut. Fire Ins. Co., 499 F.Supp.3d 74, 81 (D.N.J. 2020) ; Edison Kennedy, LLC v. Scottsdale Ins. Co., 510 F.Supp.3d 1116, 1125–26 (M.D. Fl. 2021).I decline to weigh in on the impact of this exclusion given the plethora of jurisprudence that has opined ......
  • Captain Skrip's Office LLC v. Conifer Holdings, Inc.
    • United States
    • U.S. District Court — Eastern District of Michigan
    • June 28, 2021
    ...Mena Catering, Inc. v. Scottsdale Ins. Co. , 512 F. Supp. 3d 1309, 1322 n.4 (S.D. Fla. 2021) ; Edison Kennedy, LLC v. Scottsdale Ins. Co. , 510 F. Supp. 3d 1116, 1125 n.12 (M.D. Fla. 2021) ; Founder Instit. Inc. v. Hartford Fire Ins. Co. , 497 F. Supp. 3d 678, 679 (N.D. Cal. 2020) ; Lisette......
  • Skillets, LLC v. Colony Ins. Co.
    • United States
    • U.S. District Court — Eastern District of Virginia
    • March 10, 2021
    ...Authority provision." Raymond H Nahmad DDS PA , 499 F.Supp.3d at 1188 ; see also Edison Kennedy, LLC v. Scottsdale Ins. Co. , No. 8:20CV1416-T-02SPF, 510 F.Supp.3d 1116, 1123-25 (M.D. Fla. Jan. 4, 2021) (finding no coverage under a civil authority provision when the plaintiffs did not alleg......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT