Firenze Ventures LLC v. Twin City Fire Ins. Co.
| Decision Date | 10 December 2021 |
| Docket Number | 20 C 4226 |
| Parties | FIRENZE VENTURES LLC, d/b/a FIRENZE- ITALIAN STREET FOOD, on behalf of itself and all others similarly situated, Plaintiff, v. TWIN CITY FIRE INSURANCE COMPANY, d/b/a THE HARTFORD, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Firenze Ventures LLC, a food court vendor in Chicago, alleges in this putative class action that Twin City Fire Insurance Company its insurer, wrongfully denied coverage for losses it suffered due to government-ordered shutdowns arising from the COVID-19 pandemic. Doc. 85. Earlier this year, the court dismissed the initial complaint without prejudice, Docs 83-84 (reported at 532 F.Supp.3d 607 (N.D. Ill. 2021)), and granted Firenze leave to file an amended complaint, which it has done, Doc. 85. As did the initial complaint, the amended complaint alleges breach of Twin City's insurance policy improper insurance claims practices under § 155 of the Illinois Insurance Code, 215 ILCS 5/155, and deceptive practices under the Illinois Consumer Fraud Act (“ICFA”), 815 ILCS 505/2. Twin City moves to dismiss the amended complaint under Civil Rule 12(b)(6). Doc 88. The motion is granted, and judgment will be entered in Twin City's favor.
In resolving a Rule 12(b)(6) motion, the court assumes the truth of the operative complaint's well-pleaded factual allegations, though not its legal conclusions. See Zahn v. N. Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). The court must also consider “documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice, ” along with additional facts set forth in Firenze's brief opposing dismissal, so long as those additional facts “are consistent with the pleadings.” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th Cir. 2013) (internal quotation marks omitted). The facts are set forth as favorably to Firenze as those materials allow. See Pierce v. Zoetis, Inc., 818 F.3d 274, 277 (7th Cir. 2016). In setting forth the facts at the pleading stage, the court does not vouch for their accuracy. See Goldberg v. United States, 881 F.3d 529, 531 (7th Cir. 2018).
Firenze operates a deli in the food court at the Metra rail station at Ogilvie Transportation Center in downtown Chicago. Doc. 85 at ¶ 7. In March 2020, in response to the “widespread presence of COVID-19 throughout the Chicago metropolitan area, ” the Governor of Illinois issued executive orders requiring restaurants in Illinois to suspend in-person dining. Id. at ¶¶ 70-71, 87; see Doc. 85-1 at pp. 132, 140. The closure orders closed the seating area of the food court, Doc. 85 at ¶ 72, and “forced [Firenze] to halt ordinary operations, resulting in substantial lost revenues, ” id. at ¶ 76. The orders did allow restaurants to prepare and serve food for off-premises consumption by means of pickup and delivery. Id. at ¶¶ 70-71; see Doc. 85-1 at pp. 132, 140.
COVID-19 virus particles were present at “[n]umerous business premises in the Chicago metropolitan area, ” including Metra railcars and stations, the Ogilvie food court, and Firenze's deli. Doc. 85 at ¶¶ 63-67. COVID-19 particles “adhere[] to surfaces and objects, harming and physically changing and physically altering those objects by becoming a part of their surface and making physical contract with them unsafe for their ordinary and customary use.” Id. at ¶ 55.
Specifically, “[t]he presence of COVID-19 transforms everyday surfaces and objects into fomites, causing a tangible change of the property into a transmission vehicle for disease.” Id. at ¶ 54. “‘Fomites' are physical objects or materials that carry[] and are capable of transmitting infectious agents.” Id. at ¶ 50.
Firenze held a commercial business owner's policy issued by Twin City, id. at ¶ 17, the pertinent terms of which are set forth below. Firenze submitted an insurance claim for the lost business income and extra expenses it incurred due to the closure orders, which Twin City denied. Id. at ¶¶ 76, 78, 91-93.
Firenze seeks a declaratory judgment that the Twin City policy provides coverage and damages for Twin City's alleged breach of contract. Id. at ¶¶ 103-109. Firenze also seeks a penalty for Twin City's alleged vexatious and unreasonable denial of coverage under 215 ILCS 5/155, id. at ¶¶ 110-115, and actual and punitive damages for Twin City's alleged deceptive conduct under ICFA, id. at ¶¶ 116-119.
The meaning of a written contract “is generally a question of law for the court.” Stampley v. Altom Transp., Inc., 958 F.3d 580, 586 (7th Cir. 2020) (alterations omitted). The parties agree that Illinois law governs interpretation of the Twin City policy. Doc. 88 at 5 n.3; Doc. 90 at 4.
Under Illinois law, an insurance policy, like any contract, “is to be construed as a whole, giving effect to every provision, if possible, because it must be assumed that every provision was intended to serve a purpose.” Valley Forge Ins. Co. v. Swiderski Elecs., Inc., 860 N.E.2d 307, 314 (Ill. 2006). “[The court's] primary function is to ascertain and give effect to the intention of the parties, as expressed in the policy language.” Founders Ins. Co. v. Munoz, 930 N.E.2d 999, 1003 (Ill. 2010). “Although policy terms that limit an insurer's liability will be liberally construed in favor of coverage, this rule of construction only comes into play when the policy is ambiguous.” Rich v. Principal Life Ins. Co., 875 N.E.2d 1082, 1090 (Ill. 2007) (quoting Hobbs v. Hartford Ins. Co. of the Midwest, 823 N.E.2d 561, 564 (Ill. 2005)). “While [the court] will not strain to find an ambiguity where none exists, neither will [it] adopt an interpretation which rests on gossamer distinctions that the average person, for whom the policy is written, cannot be expected to understand.” Munoz, 930 N.E.2d at 1004 (internal quotation marks and citation omitted).
Firenze asserts coverage under four provisions of the Twin City policy: the “Business Income” provision; the “Extended Business Income” provision; the “Extra Expense” provision; and the “Civil Authority” provision. Doc. 85 at ¶¶ 40-41; Doc. 90 at 10-16; Doc. 85-1 at pp. 37-38, § A.5.o, .p, .q, .r. Twin City contends that none of those provisions applies, Doc. 88 at 12-16, and adds that even if any does apply, the policy's Virus Exclusion defeats coverage, id. at 6-12; Doc. 85-1 at p. 95, § A.2.i. Because none of the coverage provisions applies, there is no need to address the virus exclusion.
The policy states that Twin City “will pay for direct physical loss of or physical damage to Covered Property at [Firenze's] premises … caused by or resulting from a Covered Cause of Loss.” Doc. 85-1 at p. 28, § A. As noted, Firenze seeks coverage under the policy's Business Income provision, which states in relevant part:
[Twin City] will pay for the actual loss of Business Income [Firenze] sustain[s] due to the necessary suspension of [its] “operations” during the “period of restoration.” The suspension must be caused by direct physical loss of or physical damage to property at [Firenze's premises] … caused by or resulting from a Covered Cause of Loss.
Id. at p. 37, § A.5.o(1) (emphasis added). “Business Income, ” in turn, is defined as the “[n]et [i]ncome … that would have been earned or incurred if no direct physical loss or physical damage had occurred, ” plus normal operating expenses that continue to accrue. Id. at p. 37, § A.5.o(4).
Twin City contends that Firenze's suspension of operations was caused not by physical loss or damage to its property, but by the Governor's statewide closure orders. Doc. 88 at 13-14. Firenze agrees that it suspended operations due to the closure orders, Doc. 85 at ¶¶ 76, 88, 91; Doc. 90 at 8-9, but advances two theories for why the suspension was nonetheless caused by direct physical loss of or physical damage to its property. First, Firenze contends that the closure orders' prohibition on in-person dining caused a “direct physical loss of use of [its] facilities.” Doc. 90 at 9. Second, Firenze posits that the orders were implemented due to the presence of COVID-19 particles at its property, id. at 8, 11, 16, which, according to Firenze, qualifies as “physical property damage, ” Doc. 85 at ¶ 68; Doc. 90 at 6-8. Neither theory succeeds.
Firenze contends that the Governor's closure orders “specifically prohibited any use of certain property (like seating in dining areas) resulting in the physical loss of”-though not “damage to”-“that property for a period of time.” Doc. 90 at 7. Twin City takes the contrary view, arguing that closure orders causing the loss of use of covered property “do not trigger coverage under policies that require direct physical loss or damage.” Doc. 88 at 13 (citing Chief of Staff LLC v. Hiscox Ins. Co., 532 F.Supp.3d 598, 601-05 (N.D. Ill. 2021)); Doc. 91 at 9-10. Twin City's reading is correct.
True enough, the noun “loss, ” standing alone, can refer to “depriv[ation] of … a possession.” Loss, Oxford English Dictionary (2d ed. 1989) (def. 2a); see also Loss, Webster's Third New International Dictionary (1961) (def. 1a) (“the act or fact of losing, ” “failure to keep possession, ” “deprivation”). But the noun “loss” in the policy is modified by the adjective “physical, ” which in context means “tangible, concrete.” Physical, Oxford English Dictionary (3d ed. updated Mar. 2006) (def. 6); see also Physical, Black's Law Dictionary (11th ed. 2019) (def. 2) (“pertaining to real, tangible objects”); Physical, Webster's Third New International Dictionary, supra (def. 2b) (“of or...
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