Govinda, LLC v. Columbia Mut. Ins. Co.

• Decision Date: 28 June 2021
• Docket Number: No. CIV-20-542-R,CIV-20-542-R
• Parties: GOVINDA, LLC, d/b/a Hampton Inn Midwest City, Plaintiff, v. COLUMBIA MUTUAL INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Western District of Oklahoma

545 F.Supp.3d 1167

GOVINDA, LLC, d/b/a Hampton Inn Midwest City, Plaintiff,

v.COLUMBIA MUTUAL INSURANCE COMPANY, Defendant.

No. CIV-20-542-R

United States District Court, W.D. Oklahoma.

Signed June 28, 2021

J. Revell Parrish, Jordan R. Dennis, Michael Burrage, Reggie N. Whitten, Whitten Burrage, Oklahoma City, OK, for Plaintiff.

Grace E. Dawkins, J. Logan Johnson, Jami R. Antonisse, Robert Bradley Miller, Miller Johnson Jones Antonisse & White, PLLC, Oklahoma City, OK, for Defendant.

ORDER

DAVID L. RUSSELL, UNITED STATES DISTRICT JUDGE

Before the Court are cross-motions for summary judgment filed by the parties.

(Doc. Nos. 40 and 41). Each party responded to the motion filed by the opposition and filed a reply in support of its position. (Doc. Nos. 44, 45, 46 and 47). Upon consideration of the parties’ submissions, the Court finds as follows.

Summary judgment is appropriate if the moving party demonstrates there is "no genuine dispute as to any material fact" and it is "entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; Callahan v. Unified Gov't of Wyandotte County , 806 F.3d 1022, 1027 (10th Cir. 2015). The analysis is the same in an insurance case. Interpreting insurance policies and determining policy rights and obligations "are questions of law, appropriate grist for the summary judgment mill." Merchants Ins. Co. v. U.S. Fidelity & Guar. Co. , 143 F.3d 5, 8 (1st Cir. 1998) ; Winters v. Charter Oak Fire Ins. Co. , 4 F.Supp.2d 1288, 1291 (D.N.M. 1998) (construction of an insurance policy is a matter of law that can be decided through summary judgment). When facts are undisputed, and the only issue is the application of an insurance policy, all that remains is a question of law for the court. See Benns v. Continental Cas. Co ., 982 F.2d 461, 462 (10th Cir. 1993).

Here, the parties have filed cross-motions for summary judgment, but this does not change the standard of review. Burrows v. Cherokee County Sheriff's Officers , No. CIV-A 00-3333-GTV, 2005 WL 1185620 (D. Kan. May 18, 2005) (unpublished opinion) (citing Taft Broadcasting Co. v. U.S. , 929 F.2d 240, 249 (6th Cir. 1991) ). Furthermore, cross-motions for summary judgment are treated separately; "the denial of one does not require the grant of another." Buell Cabinet Co., Inc. v. Sudduth , 608 F.2d 431, 433 (10th Cir. 1979). Accordingly, the Court will consider each motion in turn, although the outcome of one motion in this case dictates the outcome of the other.

Plaintiff's Motion for Summary Judgment

Plaintiff, which owns and operates a hotel, filed this declaratory judgment action seeking a determination of whether Policy No. CMPOK0000030002 ("the Policy"), issued to it by Defendant and covering the period from November 8, 2019 to November 8, 2020, covers certain losses, specifically "losses and expenses related to of (sic) the slowdown of its business activities as a result of the COVID-19 pandemic disaster and state and local executive orders.¹ Plaintiff seeks a ruling Defendant is responsible for said losses and expenses in an amount to be determined." (Amended Complaint, Doc. No. 15, ¶ 21). Via its motion for summary judgment Plaintiff asks the Court to conclude as a matter of law that it is entitled to coverage based on two allegedly undisputed facts: (1) that Defendant issued a Policy to Plaintiff covering the above stated period which included business income coverage, and (2) in March 2020, the COVID-19 Pandemic resulted in a slowdown of Plaintiff's business and closure of certain amenities.² (Doc. No. 41, p, 7). Plaintiff did not allege and does not argue that the COVID-19 virus physically attached itself to Plaintiff's property.

In this diversity action, Oklahoma substantive law governs the Court's analysis. See Edens v. Neth. Ins. Co. , 834 F.3d 1116, 1120 (10th Cir. 2016).³ "In Oklahoma, unambiguous insurance contracts are construed, as are other contracts, according to their terms." See Max True Plastering Co. v. U.S. Fid. & Guar. Co. , 912 P.2d 861, 869 (Okla. 1996). "The interpretation of an insurance contract and whether it is ambiguous is determined by the court as a matter of law." Id. Terms not defined in the policy are accorded their ordinary, plain meaning. Bituminous Cas. Corp. v. Cowen Const., Inc. , 55 P.3d 1030, 1033 (Okla. 2002) (citing Phillips v. Estate of Greenfield , 859 P.2d 1101, 1104 (Okla. 1993) ).

Insurance contracts are ambiguous only if they are susceptible to two constructions. In interpreting an insurance contract, this Court will not make a better contract by altering a term for a party's benefit. We do not indulge in forced or constrained interpretations to create and then to construe ambiguities in insurance contracts.

Max True , 912 P.2d at 869 (internal citations omitted). "[I]n the event of ambiguity or conflict in the policy provisions, a policy of insurance is to be construed strictly against the insurer and in favor of the insured." Spears v. Shelter Mut. Ins. Co. , 73 P.3d 865, 868–869 (Okla. 2003). Under Oklahoma law, the insured has the burden of showing covered loss, while insurer has the burden of showing that a loss falls within an exclusionary clause. See, e.g., Pitman v. Blue Cross & Blue Shield of Okla. , 217 F.3d 1291 1298 (10th Cir. 2000).

In support of its contention that there is coverage under the Policy, Plaintiff relies on the following Policy provisions:

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 and for which a Business Income Limit of Insurance is shown in the Declarations. The loss or damage must be caused by or result from a Covered Cause of Loss.

The Policy, Doc. No. 41-1, p. 99.⁴ "Covered Causes of Loss" means "direct physical loss" unless subject to limitations or exclusions. (Doc. No. 41-1, p. 124). The Policy does not define "direct physical loss" and Plaintiff contends that the COVID-19 pandemic, which precipitated the actions of state and local government officials, constituted a "direct physical loss" such that it is entitled to recover its actual loss of Business Income.

The crux of the parties’ coverage dispute revolves around the term "direct physical loss" as set forth above. Plaintiff contends first that the term is ambiguous and therefore should be construed in its favor and second that the term is not ambiguous, and it is entitled to business income coverage under the plain terms of the Policy. (Doc. No. 41, pp. 9-12). Unsurprisingly, Defendant argues that the term is not ambiguous and that by its plain terms, the Policy does not provide coverage.

In interpreting similar language in a Policy issued to Goodwill Industries of Central Oklahoma⁵ this Court recently rejected similar arguments, finding that the phrase "direct physical loss" was not ambiguous and further rejected the insured's contention that the unambiguous term provided coverage in the absence of tangible damage to property:

The Oklahoma Supreme Court has relied on dictionary definitions to provide the common usage of terms; see, e.g., U. S. Fid. & Guar. Co. v. Briscoe , 239 P.2d 754, 757 (Okla. 1951), and Merriam-Webster defines "direct" as "proceeding from one point to another ... without deviation or interruption" or as "stemming immediately from a source," implying that a causal connection must exist. Merriam Webster, https://www.merriam-webster.com/dictionary/direct (last visited Oct. 29, 2020). "Physical" is defined as "having material existence" or as "relating to material things," and a "loss" is defined as a "deprivation." Merriam Webster, https://www.Merriamwebster.com/dictionary/physical (last visited Oct. 29, 2020); Merriam Webster, https://www.merriam-webster.com/dictionary/loss (last visited Oct. 29, 2020). Thus, a direct physical loss results from an actual, or material, deprivation of Plaintiff's property....

Goodwill Indus. Of Cen. Okla., Inc. v. Phila. Indem. Ins. Co. , 499 F.Supp.3d 1098, 1102–03 (W.D. Okla. 2020). The Court concluded that the policy language was not ambiguous and further that the insurer's interpretation was the only reasonable interpretation. Courts throughout the country are currently addressing similar issues regarding business losses, insurance coverage, and the COVID-19 pandemic. Recently, the Northern District of Alabama offered a useful explanation of the term "direct physical loss."

The plain meaning of the phrase "direct physical loss or damage" comports with the findings of the New York and Georgia courts. "Loss" is defined as "ruin, destruction," Loss , Oxford English Dictionary (2021), available at www.oed.com ("Oxford English Dictionary"), and "damage" as "[i]njury, harm; esp. physical injury to a thing, such as impairs its value or usefulness." Damage , Oxford English Dictionary, supra. As Ascent correctly notes, the court must read these terms as having distinct meanings because otherwise one of the terms would be superfluous. See Olin Corp. v. Am. Home Assurance Co. , 704 F.3d 89, 99 (2d Cir. 2012) ; Harris Cnty. v. Penton , 439 S.E.2d 729, 730 (Ga. Ct. App. 1993). The court therefore interprets "damage" to be a lesser harm than "loss," which results in total ruin. See The Woolworth LLC v. The Cincinnati Ins. Co. 535 F.Supp.3d 1149, 1153–54, (N.D. Ala. Apr. 15, 2021). Although the terms vary in the degree of harm they describe, they share the same essential character. And within the context of this policy, both loss and damage to property must be "physical," which is defined as "of or relating to matter or the material world; natural; tangible, concrete." Physical , Oxford English Dictionary, supra.

Ascent Hospitality Management Co., LLC v. Employers Insurance Company of Wausau , 537 F.Supp.3d 1282, 1287, (N.D. Ala. May 5, 2021). This Court concurs with its prior determination in Goodwill , that the term ...