Michael J. Redenburg, Esq. PC v. Midvale Indem. Co.

• Decision Date: 27 January 2021
• Docket Number: 20 Civ. 5818 (PAE)
• Citation: 515 F.Supp.3d 95
• Court: U.S. District Court — Southern District of New York
• Parties: MICHAEL J. REDENBURG, ESQ. PC, Plaintiff, v. MIDVALE INDEMNITY COMPANY, Defendant.

515 F.Supp.3d 95

MICHAEL J. REDENBURG, ESQ. PC, Plaintiff,

v.MIDVALE INDEMNITY COMPANY, Defendant.

20 Civ. 5818 (PAE)

United States District Court, S.D. New York.

Signed January 27, 2021

Michael Joseph Redenburg, Michael D. Redenburg Esq. PC, New York, NY, for Plaintiff.

Michael John Garvey, Bryce Leigh Friedman, Simpson Thacher & Bartlett LLP, New York, NY, for Defendant.

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:

Plaintiff Michael J. Redenburg, Esq. PC is a Manhattan law firm owned and operated by Michael J. Redenburg, Esq., its sole proprietor.¹ On May 25, 2020, Redenburg brought suit in New York State Supreme Court against Midvale Indemnity Company ("Midvale"), seeking a declaration that the firm's commercial property insurance policy with Midvale covered its losses caused by stay-at-home and social-distancing directives issued by New York State in response to the COVID-19 pandemic. Midvale removed the action to this court. Two motions are pending. Redenburg moves to remand the case to state court, and Midvale moves to dismiss Redenburg's Complaint for failure to state a claim, under Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the Court denies the motion to remand, and—consistent with the decisions of courts across the nation dismissing claims for coverage under commercial business-interruption or property-damage policies for losses attributable to COVID-19—grants Midvale's motion to dismiss.

I. Background²

A. Factual Background

The offices of the Redenburg law firm ("the Property") are located at 32 Broadway in lower Manhattan. See Compl. ¶¶ 8–10. Redenburg purchased a commercial property-insurance policy from Midvale (Policy BPP1009534) which covered the Property and which, as renewed, was in effect at all relevant times. Dkt. 18 ("MTD Opp'n") at 1; see Policy. The Policy provides, inter alia , that Midvale "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." Policy at MIC15.

Redenburg claims that it has suffered significant losses as a result of governmental orders, imposed following the onset of the COVID-19 pandemic, which closed non-essential offices. Compl. ¶ 2. These included New York's State's order, imposed on March 20, 2020, which required non-essential workers to stay at home, and its order, imposed on April 17, 2020, which required persons over age two to wear a face covering when in public. Id. ¶¶ 34–35. Redenburg alleges that, although he continued to go to his office, his clients could not, which harmed the firm's business, which relies on "face-to-face interactions" with clients. Id. ¶ 36; see also Redenburg Letter at 2. Redenburg also notes that, as a result of state mandates limiting new filings in state court to emergency matters, between March 20 and May 25, 2020, he was unable to file new civil actions in state court. Compl. ¶ 43.

On a date the record does not specify, Redenburg submitted a claim under its property-insurance policy with Midvale, seeking to recover the business income the firm had lost as a result of the state's stay-at-home and social-distancing orders. On May 13, 2020, Midvale's claim administrator sought further information about the claim, and on May 19, 2020, Redenburg submitted a letter in response. Redenburg Letter at 1. He represented that, as a result of the state's orders, he had lost the use of his office as a place to meet clients. See id. at 2 ("Due to Civil Authority Orders, CDC guidance and common sense given the global pandemic, Michael J. Redenburg, Esq. PC is currently closed to clients coming to his office. Further, due to the COVID-19 pandemic, the Courts are closed so the business of Michael J. Redenburg, Esq. PC is effectively closed."). He estimated that the firm had lost, beginning March 20, 2020, $6,914.46 in income per week, a figure derived by dividing the firms’ gross receipts from 2019 by 52. Id. at 4. The letter stated that Redenburg was seeking coverage for "[b]usiness income loss," "[b]usiness interruption due to the closure of [office] by order of Civil Authority," and for "business loss for property damage." Id. at 1.³

After receiving this letter, Midvale's claims administrator investigated. It denied the claim, finding that there had been no direct physical damage to the Property, and noting that loss or damage caused directly or indirectly by any virus is expressly excluded from coverage under the Policy. Dkt. 25 ("Remand Opp'n") at 2.

B. Procedural History

On May 25, 2020, Redenburg filed suit against Midvale in New York State Supreme Court in Manhattan. His Complaint sought a declaratory judgment that the Policy covered the firm's loss of business income attributable to the state's COVID-19 directives. Compl. ¶¶ 2, 36, 41. The declaration as sought applied to "any current, future and continued [ ] closure of [the firm's] business" attributable to these directives. See id. at 12 (prayer for relief). On June 26, 2020, the Complaint was served on Midvale. See Removal Notice ¶ 4.

On July 27, 2020, Midvale removed the case to this Court, based on diversity jurisdiction. Midvale explained that the Redenburg firm is a citizen of New York, Midvale is a citizen of Wisconsin, and the amount in controversy, Redenburg's estimated weekly income loss multiplied by the weeks covered by the directives, exceeded $75,000. Id. ¶ 14.

On July 29, 2020, Redenburg moved to remand to state court, Dkt. 9, and filed a memorandum of law in support, id. , Ex. 1 ("Remand Mem."). On August 3, 2020, Midvale filed a motion to dismiss, Dkt. 11, and a memorandum of law in support, Dkt. 12 ("MTD Mem.").

On August 4, 2020, the Court set a briefing schedule, Dkt. 17, in accordance with which, on August 25, 2020, Redenburg filed an opposition to the motion to dismiss, Dkt. 18, and, on September 1, 2020, Midvale filed a reply, Dkt. 20 ("MTD Reply").⁴ On September 8, 2020, Midvale filed its opposition to the motion to remand, Remand Opp'n, and the declaration of Carolyn D. Yau, Assistant Vice Principal of Commercial Product Management of Homesite Insurance Company, see Yau Decl. On September 12, 2020, Redenburg filed a reply in support of remand. Dkt. 27 ("Remand Reply").

II. Redenburg's Motion to Remand

Because the Court must confirm its subject-matter jurisdiction at the outset, the Court considers first Redenburg's motion to remand. See All. for Env't Renewal, Inc. v. Pyramid Crossgates Co. , 436 F.3d 82, 85 (2d Cir. 2006) (generally "the jurisdictional issue must be resolved before the merits issue"). Midvale's basis for removal was diversity jurisdiction, 28 U.S.C. § 1441(a), which requires complete diversity between the parties and an amount in controversy exceeding $75,000. See 28 U.S.C. § 1332. Redenburg disputes both that there is complete diversity and an amount in controversy above $75,000. Midvale, as the removing party, bears the burden of establishing federal jurisdiction. See Herrick Co. v. SCS Commc'ns, Inc. , 251 F.3d 315, 322–32 (2d Cir. 2001).

A. Diversity of Citizenship

"[F]or diversity jurisdiction to be available, all of the adverse parties in a suit must be completely diverse with regard to citizenship." E.R. Squibb & Sons, Inc. v. Accident & Cas. Ins. Co. , 160 F.3d 925, 930 (2d Cir. 1998). For diversity purposes, a corporation "is considered a citizen of the state in which it is incorporated and the state of its principal place of business." Bayerische Landesbank, N.Y. Branch v. Aladdin Cap. Mgmt. LLC , 692 F.3d 42, 48 (2d Cir. 2012) ; 28 U.S.C. § 1332(c). Redenburg is undisputedly a citizen of New York, as it is a New York domestic professional corporation with its principal place of business in New York City. Compl. ¶¶ 7–8; Saxe, Bacon & Bolan, P.C. v. Martindale-Hubbell, Inc. , 710 F.2d 87, 89 (2d Cir. 1983) ("[P]rofessional corporations ... [f]or purposes of removal under section 1441(a) ... [are] deemed a citizen of any State by which [they have] been incorporated and of the State where [they have their] principal place[s] of business."). As to Midvale, it has offered persuasive declarations that it is a Wisconsin corporation with its principal place of business in Wisconsin. See Removal Notice ¶ 13; Yau Decl. ¶¶ 2–3; Brown v. Richer-Guinard , No. 19 Civ. 5914 (AJN), 2020 WL 2833867, at *2 (S.D.N.Y. June 1, 2020) ("[B]ased on the declaration ... Defendants have proven [a party is] ... a citizen of Maryland for diversity purposes.").

Nevertheless, Redenburg argues that, for three reasons, the parties are not diverse.

First, Redenburg argues that Midvale has failed to identify its members, parent companies, and subsidiaries. That argument is misguided. As a corporation, Midvale does not have "members"; a corporation has shareholders but their citizenship is irrelevant to diversity jurisdiction. See E.R. Squibb & Sons, Inc. , 160 F.3d at 931 ("[The corporation's] citizenship alone matters and the status of [its] individual shareholders can therefore be ignored."). And Boghozian v. Jaguar Land Rover N. Am., LLC , 2019 WL 1925491 (C.D. Cal. Apr. 29, 2019), on which Redenburg relies, is inapposite, because it involved an LLC, not a corporation. Id. at *1. The citizenships of Midvale's parent and subsidiary corporations are likewise irrelevant. See Matsumura v. Benihana Nat'l Corp. , 2007 WL 1489758, at *6 (S.D.N.Y. May 21, 2007) ("[I]n all but exceptional circumstances, the principal place of business of a corporation for purposes of 28 U.S.C. § 1332(c)(1) is determined without reference to the business of parent corporations or subsidiary corporations." (internal quotation marks and citation omitted)); Powers v. Fox Television Stations, Inc. , 907 F. Supp. 719, 722 (S.D.N.Y. 1995) ("[The] general rule [is] that a subsidiary corporation which is incorporated as a separate entity from its parent corporation is considered to have its own principal place of business." (quotations omitted)). Here, Redenburg has...