Harvest Moon Distribs., LLC v. S.-Owners Ins. Co.

• Decision Date: 09 October 2020
• Docket Number: Case No. 6:20-cv-1026-Orl-40DCI
• Parties: HARVEST MOON DISTRIBUTORS, LLC, Plaintiff, v. SOUTHERN-OWNERS INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Florida

493 F.Supp.3d 1179

HARVEST MOON DISTRIBUTORS, LLC, Plaintiff,

v.SOUTHERN-OWNERS INSURANCE COMPANY, Defendant.

Case No. 6:20-cv-1026-Orl-40DCI

United States District Court, M.D. Florida, Orlando Division.

Signed October 9, 2020

Alec Larkin Weber, Imran Malik, Malik Law P.A., Maitland, FL, for Plaintiff.

Lori McAllister, Pro Hac Vice, Dykema Gossett, PLLC, Lansing, MI, Mark D. Tinker, Cole, Scott & Kissane, PA, Tampa, FL, for Defendant.

ORDER

PAUL G. BYRON, UNITED STATES DISTRICT JUDGE

This cause is before the Court on Defendant's Motion to Dismiss Pursuant to Rule 12(b)(6) (Doc. 3 (the "Motion ")) and Plaintiff's Response to Defendant's Motion to Dismiss and Incorporated Memorandum of Law (Doc. 19 (the "Response ")). Upon consideration, Defendant's Motion is due to be granted.

I. BACKGROUND

This lawsuit arises from a dispute between Plaintiff Harvest Moon Distributors, LLC, and Defendant Southern-Owners Insurance Company as to Plaintiff's entitlement to payments under its commercial insurance policy (hereinafter, the "Policy "). Plaintiff, a wine and beer distributor, purchased beer at an unspecified date in accordance with its contract with Walt Disney Parks and Resorts US Inc. ("Disney "). (Doc. 1-2, ¶¶ 34, 39). On March 15, 2020, before Plaintiff shipped its product, Disney voluntarily closed to the public due to the COVID-19 pandemic. (Doc. 1-2, ¶ 33; Doc. 3, p. 6). Disney subsequently refused to accept Plaintiff's product or compensate Plaintiff. (See Doc. 3, p. 6).

Four days after Disney's voluntary closure, Plaintiff submitted a claim to Defendant for loss of business income, extra expense, inventory, and accounts receivable caused by the pandemic. (Id. ). On April 15, 2020, Plaintiff submitted a sworn proof of loss of its product to Defendant, claiming that its beer spoiled while Disney remained closed. (Id. at pp. 6–7). Defendant denied Plaintiff's claim. (Id. at p. 7).

On May 22, 2020, Plaintiff filed a complaint in Florida state court, requesting damages for breach of contract and declaratory judgment that it is entitled to coverage under the Policy. (Doc. 1-2, ¶¶ 28, 31; Doc. 3, pp. 2, 7). On June 11, 2020, Defendant removed the case to this Court. (Doc. 1). Defendant filed the instant Motion on June 18, 2020 (Doc. 3), and Plaintiff filed its Response on July 17, 2020 (Doc. 19). On July 31, 2020, Defendant submitted a reply to Plaintiff's Response (Doc. 29 (the "Reply ")).

II. STANDARD OF REVIEW

A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a)(1). Thus, to survive a motion to dismiss made pursuant to Rule 12(b)(6), the 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 Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A claim is plausible on its face 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. To assess the sufficiency of factual content and the plausibility of a claim, courts draw on their "judicial experience and common sense" in considering: (1) the exhibits attached to the complaint; (2) matters that are subject to judicial notice; and (3) documents that are undisputed and central to a plaintiff's claim. See id. ; Parham v. Seattle Serv. Bureau, Inc. , 224 F. Supp. 3d 1268, 1271 (M.D. Fla. 2016).

Though a complaint need not contain detailed factual allegations, mere legal conclusions or recitation of the elements of a claim are not enough. Twombly , 550 U.S. at 555, 127 S.Ct. 1955. Moreover, courts are "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain , 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Iqbal , 556 U.S. at 679, 129 S.Ct. 1937. Courts must also view the complaint in the light most favorable to the plaintiff and must resolve any doubts as to the sufficiency of the complaint in the plaintiff's favor. Hunnings v. Texaco, Inc. , 29 F.3d 1480, 1483 (11th Cir. 1994) (per curiam).

In sum, courts must (1) ignore conclusory allegations, bald legal assertions, and formulaic recitations of the elements of a claim; (2) accept well-pled factual allegations as true; and (3) view well-pled allegations in the light most favorable to the plaintiff. Iqbal , 556 U.S. at 679, 129 S.Ct. 1937.

III. DISCUSSION

Federal courts construe insurance contracts according to substantive state law. See Sphinx Int'l, Inc. v. Nat'l Union Fire Ins. of Pittsburgh, Pa. , 412 F.3d 1224, 1227 (11th Cir. 2005) (citation omitted). In Florida, "the law of the jurisdiction where the contract was executed governs the rights and liabilities of the parties in determining an issue of insurance coverage." State Farm Mut. Ins. Co. v. Roach , 945 So. 2d 1160, 1163 (Fla. 2006) (citation omitted); see LaTorre v. Conn. Mut. Life. Ins. Co. , 38 F.3d 538, 540 (11th Cir. 1994). Because the instant Policy was issued in Florida, Florida law controls its interpretation. (Doc. 3, p. 4).

"Under Florida law, the interpretation of an insurance contract is a matter of law to be decided by the court." AIX Specialty Ins. Co. v. Ashland 2 Partners, LLC , 383 F. Supp. 3d 1334, 1337 (M.D. Fla. 2019). Moreover, "Florida courts have said again and again that ‘insurance contracts must be construed in accordance with the plain language of the policy.’ " Sphinx , 412 F.3d at 1227 (citing Swire Pac. Holdings, Inc. v. Zurich Ins. Co. , 845 So. 2d 161, 165 (Fla. 2003) ). When interpreting insurance contracts for purposes of a Motion to Dismiss, "coverage clauses ... are interpreted in the broadest possible manner to effect the greatest amount of coverage," and "exclusionary clauses are strictly construed, again in a manner that affords the insured the broadest possible coverage." Fabricant v. Kemper Indep. Ins. Co. , 474 F. Supp. 2d 1328, 1331 (S.D. Fla. 2007) (citing Westmoreland v. Lumbermens Mut. Cas. Co. , 704 So. 2d 176, 179 (Fla. 4th DCA 1997) ). When an insurance policy "unambiguously reveals that the underlying claim is not covered," dismissal is appropriate. Cammarota v. Penn-Am. Ins. Co. , No. 17-cv-21605, 2017 WL 5956881, at *2, 2017 U.S. Dist. LEXIS 188073, at *5–6 (S.D. Fla. Nov. 9, 2017) (collecting cases).

"To state a claim for breach of contract, a plaintiff must allege: ‘(1) the existence of a contract; (2) a material breach of that contract; and (3) damages resulting from the breach.’ " Mauricio Martinez, DMD, P.A. v. Allied Ins. Co. of Am. , No. 2:20-cv-00401, 483 F.Supp.3d 1189, 1191 (M.D. Fla. Sept. 2, 2020)¹ (quoting Vega v. T-Mobile USA, Inc. , 564 F.3d 1256, 1272 (11th Cir. 2009) ). Plaintiff clearly alleges the existence of the Policy (Doc. 1-2, ¶ 18) and damages resulting from Defendant's alleged breach (Id. ¶ 25). Thus, the only remaining issue is whether Plaintiff properly alleged a material breach.

To allege a material breach, Plaintiff must establish that the denied claim was covered by the Policy. Upon review of the Policy's plain language, coverage exists when (1) the insured suffers a "direct physical loss of or damage to Covered Property," (2) arising from a covered Cause of Loss, (3) provided that the loss is not otherwise excluded under the Policy. (See Doc. 3-1).² The Court analyzes the sufficiency of Plaintiff's Complaint by addressing each element in turn.

A. Whether the Complaint Alleges Direct Physical Loss or Damage

To state a claim for breach of contract under the Policy, Plaintiff must first allege a "direct physical loss of or damage to Covered Property." (Doc. 3, p. 3). Plaintiff alleges that it suffered a "direct physical loss of or damage to" its beer.

If Plaintiff properly alleges the general requirement of "direct physical loss of or damage to Covered Property" (i.e. , the beer), then it may also be entitled to payments under the Business Income and Extra Expenses Endorsement and the Accounts Receivable Endorsement. (See id. at p. 8). To sufficiently plead claims for business income, extra expenses, and accounts receivable coverage, Plaintiff must comply with the terms of the respective Endorsements.

1. Loss of Beer

First, Plaintiff claims that it suffered a "direct physical loss" of its beer. In relevant part, the Policy provides:

A. COVERAGE

We will pay for 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.

(Doc. 3-1, p. 33) (emphasis added). Notably, the Policy does not define "direct physical loss or damage." (See Doc. 3-1). "Covered Property" includes "Stock," which is defined as "merchandise held in storage for sale, raw materials and in-process or finished goods, including supplies used in their packing or shipping." (Id. at pp. 33, 42).

Plaintiff alleges that it "operates as a wine and beer distributor, supplying its products to certain Vendors," and that it "purchased South African beers" pursuant to its contract with Disney. (Doc. 1-2, ¶¶ 34, 39). Plaintiff therefore properly alleges that its beer constitutes "Stock." (Doc. 3-1, pp. 33, 42).

The Complaint also asserts that the beer spoiled when Disney voluntarily closed due to the pandemic, and that the spoliation of Plaintiff's product constituted a direct physical loss. (Doc. 1-2, ¶¶ 13, 15, 42) ("Plaintiff's loss of use of the insured property and insured property's inability to function as contemplated and intended by Plaintiff ... is a direct physical loss."). The Complaint therefore alleges enough factual matter to plead a plausible claim that the spoiled beer constitutes a covered loss because the current alleged condition of the beer makes it inedible. See Iqbal , 556 U.S. at 678, ...