Farmington Vill. Dental Assocs., LLC v. Cincinnati Ins. Co.

• Decision Date: 19 July 2021
• Docket Number: No. 3:20-cv-01647 (VAB),3:20-cv-01647 (VAB)
• Citation: 549 F.Supp.3d 249
• Parties: FARMINGTON VILLAGE DENTAL ASSOCIATES, LLC, Plaintiff, v. CINCINNATI INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Connecticut

549 F.Supp.3d 249

FARMINGTON VILLAGE DENTAL ASSOCIATES, LLC, Plaintiff,

v.CINCINNATI INSURANCE COMPANY, Defendant.

No. 3:20-cv-01647 (VAB)

United States District Court, D. Connecticut.

Signed July 19, 2021

Calum B. Anderson, R. Cornelius Danaher, Jr., Thomas N. Lyons, Thomas John Plumridge, Danaher Lagnese & Neal, P.C., Hartford, CT, Allan Kanner, Cynthia St. Amant, Kanner and Whiteley, L.L.C., New Orleans, LA, for Plaintiff.

Kathleen F. Adams, Litchfield Cavo LLP, Simsbury, CT, for Defendant.

RULING AND ORDER ON MOTION TO DISMISS

VICTOR A. BOLDEN, UNITED STATES DISTRICT JUDGE

Farmington Village Dental Associates, LLC ("Farmington" or "Plaintiff") has sued Cincinnati Insurance Company ("Cincinnati" or "Defendant") for Cincinnati's alleged refusal to pay Farmington for losses suffered due to the COVID-19 Pandemic. Compl., ECF No. 1 (Oct. 30, 2020).

Cincinnati has moved to dismiss the Complaint in its entirety. Def. the Cincinnati Ins. Co.’s Mot. to Dismiss, ECF No. 13 (Dec. 18, 2020) ("Def. Mot.").

For the reasons stated below, Defendant's motion to dismiss is GRANTED.

To the extent something more than the presence of COVID-19 alone can be alleged as a loss and a basis for insurance coverage, Farmington may file an Amended Complaint by August 20, 2021 . If they cannot do so by this date, the dismissal of this Complaint will be with prejudice.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Allegations

On or around March 22, 2018, "Cincinnati [allegedly] issued Policy No. ECPCP 047 90 05 to [Farmington], for a policy period of March 22, 2018 to March 22, 2021," "[i]n return of the payment of a premium." Compl. ¶ 14; see Policy No. ECPCP 047 90 05, Ex. A to Compl., ECF No. 1-1 (Oct. 30, 2020) (the "Policy").

"SARS-CoV-2 [or "COVID-19"] is [allegedly] a highly contagious virus that has rapidly spread and continues to spread across the United States." Compl. ¶ 35. "The presence of any SARS-CoV-2 particles [allegedly] renders items of physical property unsafe and the premises unsafe[, and] ... impairs value, usefulness and/or normal function." Id. ¶¶ 42-43. "The [alleged] imminent threat of SARS-CoV-2 particles on physical property [allegedly] impairs value, usefulness and/or normal function." Id. ¶ 44. Furthermore, the "presence" and alleged "imminent threat of particles of SARS-CoV-2 particles [allegedly] causes direct physical harm, direct physical damage, and direct physical loss to property." Id. ¶¶ 45-46.

"The effects of COVID-19 have resulted in the World Health Organization declaring the existence of a Pandemic. The Pandemic is a public health crisis that has [allegedly] profoundly impacted American society, [allegedly] including the public's ability to safely obtain dental care." Id. ¶¶ 50-51.

Farmington allegedly "suffered direct loss from the probable presence of a deadly virus that also damages property; or the imminent risk of such on-site contamination; or government orders limiting the use of Plaintiff's property; and stay at home orders or some combination of the foregoing." Id. ¶ 20. The Policy allegedly "require[s,] in the event of a loss[,] that the policyholder take all reasonable steps to protect the Covered Property from further covered damages, and keep a record of the expenses necessary to protect the Covered Property, for consideration in the settlement of the claim." Id. ¶ 33. Farmington allegedly "submitted a notice of loss to [Cincinnati] under the Policy due to the probable presence of SARS-CoV-2 and the COVID-19 Pandemic," and Cincinnati allegedly "denied those claims by letter dated April 27, 2020." Id. ¶ 70.

This dispute stems from the parties’ interpretations of the "Business Income, Extra Expense, Civil Authority, Ingress and Egress and Sue and Labor provisions" of the Policy. Id. ¶ 34. These clauses and their respective definitions are as follows.

i. Definitions

Importantly, the Policy provides the following definitions for key terms:

" ‘Covered Causes of Loss’ means direct ‘loss’ unless the ‘loss’ is excluded or limited in this Coverage Part." Policy, Building & Personal Property Coverage Form, at 5 § A(3)(a).¹

" ‘Business Income’ means the: a) Net Income (net profit or loss before income taxes) that would have been earned or incurred; and b) Continuing normal operating expenses sustained, including payroll." Id. at 38 § G(2).

" ‘Loss’ means accidental physical loss or accidental physical damage." Id. at 38 § G(8).

"Period of restoration" means the period of time that: a) Begins at the time of direct "loss". b) Ends on the earlier of: 1) The date when the property at the "premises" should be repaired, rebuilt or replaced with reasonable speed and similar quality; or 2) The date when business is resumed at a new permanent location.

Id. at 38-39 § G(11).

ii. The Business Income Provision

According to the Policy, Cincinnati

will pay for the actual loss of "Business Income" and "Rental Value" [the insured] sustain[s] due to the necessary "suspension" of [its] "operation" during the "period of restoration". The "suspension" must be caused by direct "loss" to property at a "premises" caused by or resulting from any Covered Cause of Loss.

Id. at 18 § E(b)(C)(1).

iii. The Extra Expense Provision

According to the Policy, Cincinnati

will pay for Extra Expense [the insured] sustain[s] during the "period of restoration". Extra Expense means necessary expenses [the insured] sustain[s] ... during the "period of restoration" that [it] would not have sustained if there had been no direct "loss" to property caused by or resulting from a Covered Cause of Loss.

Id. at 19 § E(b)(C)(2)(a). Subparagraph (b) of the Extra Expense provision states,

If these expenses reduce the otherwise payable "Business Income" "loss", we will pay expenses ... to: 1) Avoid or minimize the "suspension" of business and to continue "operations" either: At the "premises"; or At replacement "premises" or temporary locations, including relocation expenses and costs to equip and operate the replacement location or temporary location; or 2) Minimize the "suspension" of business if [the insured] cannot continue "operations".

Id. at 19 § E(b)(C)(2)(b).

The Policy also states that Cincinnati "will also pay expenses to: 1) Repair or replace property; or 2) Research, replace or restore the lost information on damaged ‘valuable papers and records’; but only to the extent this payment reduces the otherwise payable ‘Business Income’ ‘loss’." Id. at 19 § E(b)(C)(2)(c).

iv. The Civil Authority Provision

The Policy provides that

[w]hen a Covered Cause of Loss causes damage to property other than Covered Property at a "premises", [Cincinnati] will pay for the actual loss of "Business Income" and necessary Extra Expense [the insured] sustain[s] caused by action of civil authority that prohibits access to the "premises", provided that both of the following apply: (a) Access to the area immediately surrounding the damaged property is prohibited by civil authority as a result of the damage; and (b) 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.

Id. at 19 § E(b)(C)(3).

v. The Ingress and Egress Provision

According to the Policy, Cincinnati

will pay for the actual loss of "Business Income" [the insured] sustain[s] and necessary Extra Expense [the insured] sustain[s] caused by the prevention of existing ingress or egress at a "premises" shown in the Declarations due to direct "loss" by a Covered Cause of Loss at a location contiguous to such "premises".

However, coverage does not apply if ingress or egress from the "premises" is prohibited by civil authority.

Policy, Business Income (and Extra Expense) Form, at 5 § A(5)(e).²

vi. The Sue and Labor Provision³

According to the Policy,

[i]n the event of "loss" to Covered Property, [the insured] must ... [t]ake all reasonable steps to protect the Covered Property from further damage. If feasible, set the damaged property aside and in the best possible order for examination. Keep a record of [the insured]’s expenses necessary to protect the Covered Property for consideration in the settlement of the claim. This will not increase [the insured]’s limit of insurance. However, in no event will we pay for any subsequent "loss" resulting from a cause of loss that is not a Covered Cause of Loss.

Policy, Building & Personal Property Coverage Form, at 30-31 § D(3)(a)(4).

B. Procedural History

On October 30, 2020, Farmington filed its Complaint against Cincinnati. Compl.

On December 18, 2020, Cincinnati filed a motion to dismiss Farmington's Complaint. Def. Mot.; Def. Mem.

On January 14, 2021, Farmington filed an opposition to Cincinnati's motion to dismiss. Mem. of L. in Opp'n to the Def.’s Mot. to Dismiss, ECF No. 19 (Jan. 14, 2021) ("Pl. Opp'n").

On January 28, 2021, Cincinnati filed a reply to Farmington's opposition to its motion to dismiss. Reply in Supp. of Def. the Cincinnati Ins. Co.’s Mot. to Dismiss, ECF No. 21 (Jan. 28, 2021) ("Def. Reply").

On February 10, 2021, Farmington filed a sur-reply. Pl.’s Sur-reply in Opp'n to Mot. to Dismiss, ECF No. 25 (Feb. 10, 2021).

On February 24, 2021, Cincinnati filed the first of several notices of supplemental authorities in support of its motion to dismiss. Cincinnati Ins. Co.’s Mot. to File Suppl. Auth., ECF No. 28 (Feb. 24, 2021); see also ECF No. 35 (Mar. 10, 2021); ECF No. 38 (Mar. 26, 2021); ECF No. 41 (Apr. 2, 2021); ECF No. 50 (June 22, 2021); ECF No. 51 (July 2, 2021).

On March 2, 2021, Farmington filed the first of two notices of supplemental authorities in support of its opposition to Cincinnati's motion to dismiss. Mot. to Cite Additional Auth., ECF No. 33 (Mar. 2, 2021); see also ECF No. 37 (Mar. 25, 2021).

On July 7, 2021, a motion hearing was held by videoconference to address the pending motion to dismiss. Min. Entry, ECF No. 53 (July 7, 2021).

II. STANDARD OF...