Menominee Indian Tribe of Wis. v. Lexington Ins. Co.
| Decision Date | 23 August 2021 |
| Docket Number | Case No. 21-cv-00231-WHO |
| Citation | 556 F.Supp.3d 1084 |
| Parties | MENOMINEE INDIAN TRIBE OF WISCONSIN, et al., Plaintiffs, v. LEXINGTON INSURANCE COMPANY, et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Jennie Lee Anderson, Andrus Anderson LLP, San Francisco, CA, Adam J. Levitt, Pro Hac Vice, DiCello Levitt Gutzler LLC, Chicago, IL, Brian P. Cawley, Pro Hac Vice, Timothy Wilson Burns, Pro Hac Vice, Burns Bowen Bair LLP, Madison, WI, Jeff James Bowen, Munger Tolles & Olson, Los Angeles, CA, Kenneth Pascal Abbarno, Pro Hac Vice, DiCello Levitt Gutzler LLC, Mentor, OH, for Plaintiffs Menominee Indian Tribe of Wisconsin, Menominee Indian Gaming Authority.
Jennie Lee Anderson, Andrus Anderson LLP, San Francisco, CA, Adam J. Levitt, Pro Hac Vice, DiCello Levitt Gutzler LLC, Chicago, IL, Brian P. Cawley, Pro Hac Vice, Timothy Wilson Burns, Pro Hac Vice, Burns Bowen Bair LLP, Madison, WI, Kenneth Pascal Abbarno, Pro Hac Vice, DiCello Levitt Gutzler LLC, Mentor, OH, for Plaintiff Wolf River Development Company.
Richard Joseph Doren, Matthew Allan Hoffman, Ryan Stephen Appleby, Gibson Dunn and Crutcher LLP, Los Angeles, CA, for Defendant Lexington Insurance Company.
Daniel Millea, Nicholas Dolejsi, Pro Hac Vice, Zelle LLP, Minneapolis, MN, Matthew L. Gonzalez, Pro Hac Vice, Zelle, LLP, New York, NY, Qianwei Fu, Zelle LLP, Oakland, CA, for Defendants Underwriters at Lloyd's - Syndicates: ASC 1414, XLC 2003, TAL 1183, MSP 318, ATL1861, KLN 510, AGR 3268, Underwriters at Lloyd's - Syndicate: CNP 4444, Underwriters at Lloyd's - Syndicates: KLN 0510, ATL 1861, ASC 1414, QBE 1886, MSP 0318, APL 1969, CHN 2015, XLC 2003, Underwriters at Lloyd's - Syndicate: BRT 2987, Underwriters at Lloyd's - Syndicates: KLN 0510, TMK 1880, BRT 2987, BRT 2988, CNP 4444, ATL 1861, Neon Worldwide Property Consortium, AUW 0609, TAL 1183, AUL 1274, Endurance Worldwide Insurance Ltd. t/as Sompo International.
William Eric Blumhardt, Lewis Brisbois Bisgaard & Smith LLP, San Francisco, CA, for Defendants Underwriters at Lloyd's - Aspen Specialty Insurance Company, Hallmark Specialty Insurance Company.
Daniel Millea, Nicholas Dolejsi, Pro Hac Vice, Zelle LLP, Minneapolis, MN, Qianwei Fu, Zelle LLP, Oakland, CA, for Defendant Homeland Insurance Company of New York.
Shannon M. O'Malley, Kristin C. Cummings, Pro Hac Vice, Zelle LLP, Dallas, TX, Qianwei Fu, Zelle LLP, Oakland, CA, for Defendants Arch Specialty Insurance Company, Liberty Mutual Fire Insurance Company, Landmark American Insurance Company.
P. Bruce Converse, Dickinson Wright PLLC, Phoenix, AZ, for Defendant Evanston Insurance Company.
Constantino Suriano, Pro Hac Vice, Robert S. Goodman, Mound Cotton Wollan Greengrass LLP, New York, NY, Jonathan Gross, Lawrence Hecimovich, Mound Cotton Wollan & Greengrass, Emeryville, CA, for Defendant Allied World National Assurance Company.
Qianwei Fu, Zelle LLP, Oakland, CA, for Defendant XL Catlin Insurance Company UK Ltd.
Plaintiffs Menominee Indian Tribe of Wisconsin, the Menominee Indian Gaming Authority d/b/a Menominee Casino Resort ("MCR"), and the Wolf River Development Company's (collectively, "Menominee") seek coverage from each defendant for the damages Menominee sustained due to the COVID-19 pandemic and resulting government closure orders. Defendant Lexington Insurance Company ("Lexington"), joined by the other insurance company defendants (collectively "Defendants"), moves to dismiss Menominee's First Amended Complaint ("FAC") because Menominee cannot plausibly allege that it is entitled to coverage. For the reasons explained below, all of Defendants’ motions related to Lexington's motion to dismiss Menominee's FAC are GRANTED with prejudice.1
Menominee operates a variety of businesses located in Keshena, Wisconsin, including the Thunderbird Complex—a mini casino, restaurant, bar, and outdoor entertainment venue—and the Menominee Tribal Clinic, a multi-service healthcare center. Dkt. No. 58 ("FAC") ¶¶ 5–8. These properties are among those insured under the Tribal Property Insurance Program ("TPIP"), a nationwide insurance program in which various insurers participate. Id. ¶¶ 29, 46–50. The TPIP involves separate layers of coverage that implicate different insurers. Id. ¶¶ 10–11. For the policy period from July 1, 2019, through July 1, 2020, each of these policies incorporates a master policy form, referred to as the Tribal First Policy Wording, TPIP USA Form No. 15 (the "Policy"), which sets forth the terms, conditions, and exclusions of coverage applicable to Menominee. Id. ¶ 46. The Policy insures against "covered perils," which are defined as "all risk of direct physical loss or damage," subject to the Policy's "terms, conditions and exclusions." Policy at 24. The Policy was a part of the TPIP's "Property Solutions" and includes coverage under the Business Interruption, Extra Expense, Ingress/Egress, Civil Authority, Contingent Time Element, Tax Revenue Interruption, and Protection and Preservation of Property provisions. FAC ¶¶ 11–12, 60–61.
In March 2020, the State of Wisconsin and the Menominee Tribe issued public health orders (the "Closure Orders") due to the "threat and presence of COVID-19." Id. ¶¶ 101–34. The orders required the "whole or partial suspension of business at a wide range of establishments" from March 2020 through March 2021. Id. The Wisconsin orders "exempted tribal members acting within their own reservation" but the Menominee Tribal Legislature adopted Wisconsin's guidelines, subject to "the sovereignty of the Tribe." Id. ¶¶ 109, 120.
Menominee asserts that it suffered "direct physical loss or damage" to its property from "the presence of COVID-19." Id. ¶¶ 13, 66, 138; see also id. ¶¶ 78–100. According to Menominee, "it is statistically certain that the virus has been present for some period of time since the COVID-19 outbreak began and that the virus continues to pose an actual imminent threat to Plaintiffs." Id. ¶ 148. Menominee claimed that "[a]t least 42 employees [ ] tested positive in 2020" and "during the period of the Policy, individuals with COVID-19 or otherwise carrying the coronavirus entered Plaintiffs’ properties, including MCR, Thunderbird, and the Tribal Clinic." Id. ¶ 139. It alleged that it incurred losses and was "forced to suspend business activities" due to "the presence of COVID-19" and various "Closure Orders." Id. ¶¶ 13, 20, 151. The "presence of the coronavirus" and "the damage caused to Menominee's physical property" rendered its properties "uninhabitable." Id. ¶¶ 13, 15–16.
Menominee submitted an insurance claim for its alleged losses under the Policy, and the claim was denied. Id. ¶ 152. In November 2020, Menominee brought this class action in California state court against its insurers, seeking a declaration of coverage for the claimed damages Menominee sustained due to the COVID-19 pandemic and resulting Closure Orders. Dkt. No. 1-2. Lexington removed the action to federal court and on February 11, 2021, moved to dismiss the complaint, arguing, among other things, that Menominee had pleaded only the temporary loss of use of property. Dkt. No. 17. The other Defendants joined Lexington's motion. Dkt. Nos. 18, 20–23, 25–26, 28. On March 12, 2021, Menominee voluntarily amended its complaint and added various allegations regarding the presence of COVID-19 and the property damage the virus allegedly caused. Dkt. No. 58.
Menominee seeks relief under seven provisions of the Policy: Business Interruption, Extra Expense, Ingress/Egress, Interruption by Civil Authority, Contingent Time Element, Tax Revenue Interruption, and Protection and Preservation of Property. FAC ¶¶ 163–270. As to each identified provision, Menominee asserts causes of action for breach of contract and declaratory judgment. Id. On April 9, 2021, Lexington filed the present motion to dismiss Menominee's FAC. Dkt. No. 62 ("Mot."). Subsequently, the other Defendants joined Lexington's motion to dismiss.2 Three defendants, Arch, Liberty, and Landmark joined Lexington's motion and filed their own motions to dismiss Menominee's FAC under different theories. See Dkt. Nos. 68–70.
Under the Policy's section for "Business Interruption, Extra Expense & Rental Income," the provision provides, in relevant part:
Dkt. No. 58-1 ("Policy") at 19.
The Policy extends coverage to "Extra Expense," which provides in relevant part:
Id. Both the Business Interruption and Extra Expense loss is paid "during the period of restoration," id. , which is defined as follows:
The section for "Business Interruption, Extra Expense & Rental Income," also includes...
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