Raymond H Nahmad DDS PA v. Hartford Casualty Insurance Company
| Decision Date | 01 November 2020 |
| Docket Number | Case No. 1:20-cv-22833-BLOOM/Louis |
| Citation | 499 F.Supp.3d 1178 |
| Parties | RAYMOND H NAHMAD DDS PA, et al., Plaintiffs, v. HARTFORD CASUALTY INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of Florida |
Daniel Moshe Ilani, The Property People FL PA, Daniel Salomon Smith, Lydecker Diaz, Nicole Sarah Houman, Miami, FL, for Plaintiffs.
Samera Beshir, Butler Weihmuller Katz Craig LLP, Tracy Ann Jurgus, Butler Pappas, Miami, FL, Caitlin R. Tharp, Pro Hac Vice, John J. Kavanagh, Pro Hac Vice, Sarah D. Gordon, Pro Hac Vice, Steptoe & Johnson LLP, Washington, DC, for Defendant.
THIS CAUSE is before the Court upon Defendant's Motion to Dismiss, ECF No. [7] ("Motion"). Plaintiffs filed a Response in Opposition, ECF No. [9] ("Response"), to which Defendant filed a Reply, ECF No. [17] ("Reply"). The Court has considered the Motion, the Response, the Reply, the record in this case, the applicable law, and is otherwise fully advised. For the reasons set forth below, the Motion is granted.
This matter stems from a lawsuit Plaintiffs initiated in the Eleventh Judicial Circuit in and for Miami-Dade County, Florida against Defendant on May 25, 2020. ECF No. [1-2] at 4-16 ("Complaint"). Defendant timely removed this lawsuit to this Court on July 10, 2020, pursuant to 28 U.S.C. §§ 1332, 1441, and 1446.
According to the Complaint, Plaintiffs entered into an insurance contract with Defendant to insure Plaintiffs’ business premises under a policy bearing No. 21 SBA VJ7288 ("Policy").1 ECF No. [1-2] at ¶¶ 5-6. Plaintiffs operate a dental practice, which practice was suspended due to "orders issued by the Governor of Florida and Mayor of Miami-Dade County that non-emergent or elective dental care be postponed indefinitely" in light of the COVID-19 pandemic. Id. at ¶ 10. See also id. at ¶ 18-20 (). This suspension has had a "deleterious effect on [Plaintiffs’] business income." Id. at ¶ 21. Plaintiffs submitted a claim for business interruption loss, but Defendant denied Plaintiffs’ claim on March 20, 2020. Id. at ¶¶ 22-24. Defendant denied the claim because the loss at issue did not come within the coverage grant of the Policy and because certain "potentially applicable exclusions" may bar coverage. Id. at ¶ 24. The Complaint asserts two counts: breach of contract (Count I) and declaratory relief (Count II). Id. at ¶¶ 11-12.
Regarding Count I, id. at ¶¶ 13-39, Plaintiff alleges that Defendant "is denying the obligation to pay for business income losses and other covered expenses incurred by policyholders for the physical loss and damage to the insured property from measures put in place by the civil authorities to stop the spread of COVID-19 among the population." Id. at ¶ 11. In Plaintiffs’ view, Defendant has breached the Policy by failing to provide coverage under the Policy's Business Income, Extra Expense, and Civil Authority provisions. Id. at ¶¶ 12, 25, 31-33.
Regarding Count II, id. at ¶¶ 40-54, Plaintiff seeks a "declaratory judgment that affirms that the COVID-19 pandemic and the corresponding response by civil authorities to stop the spread of the outbreak triggers coverage, has caused physical property loss and damage to the insured property, provides coverage for future civil authority orders that result in future suspensions or curtailments of business interruption, and finds that [Defendant] is liable for the losses suffered by policyholders." Id. at ¶ 11.
Defendant now moves to dismiss the Complaint with prejudice as to both counts. ECF No. [7]. It makes four main arguments. First, the Policy's virus exclusion, ECF No. [6-1] at 135, bars coverage. ECF No. [7-1] at 6-7, 11-19. In this regard, it argues that the Policy's plain terms apply, the virus caused Plaintiffs’ loss, and governmental orders aimed at slowing the spread of the coronavirus do not impact the applicability of the virus exclusion. Id. Second, even if the virus exclusion did not apply, Plaintiffs are not entitled to business income coverage because they do not allege any direct physical loss or damage to their property, which is required for coverage. Id. at 7, 19-20. Third, Plaintiffs are not entitled to "civil authority" coverage under the terms of the Policy. Id. at 7, 20-23. Finally, because there is no breach of contract given the lack of coverage under the Policy, Count I fails and, as a consequence, Count II fails. Id. at 23.
Plaintiffs respond that they have stated actionable claims. ECF No. [9]. They make five points. First, the Complaint sufficiently alleges a covered cause of loss under the Policy, id. at 6-11; second, the Complaint sufficiently alleges "loss of" or "damage to" insured property, id. at 11-15; third, the loss at issue is not specifically excluded by the Policy's "limited fungi, bacteria or virus coverage" provision, id. at 15-18; fourth; Count II is plausibly asserted, id. at 18; and finally, Plaintiffs maintain that the issues underlying coverage and exclusions involve factual inquiries inappropriate for resolution at this time. Id. at 19-20.
Defendant replies that the Complaint alleges only economic losses rather than physical loss or damage, thus precluding coverage, and that regardless, the Complaint cannot avoid application of the Policy's virus exclusion. ECF No. [17] at 2. It adds that four courts have "now concluded COVID-19 business income losses do not satisfy the direct physical loss requirements of property policies." Id. at 3. They make three primary arguments. First, they assert that the virus exclusion applies and Plaintiffs’ case citations are inapposite. Id. at 3-5. Second, Plaintiffs fail to carry their burden to demonstrate a direct physical loss because business income is not "covered commercial property" under the Policy and the Complaint fails to demonstrate a direct physical loss. Id. at 5-10. Finally, there are no factual disputes that require resolution and dismissal is appropriate. Id. at 10.
The Motion, accordingly, is ripe for consideration.
Rule 8 of the Federal Rules of Civil Procedure requires that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Although a complaint "does not need detailed factual allegations," it must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; see Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (). In the same vein, a complaint may not rest on " ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ " Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 (alteration in original)). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. These elements are required to survive a motion brought under Rule 12(b)(6), which requests dismissal for "failure to state a claim upon which relief can be granted."
When reviewing a motion under Rule 12(b)(6), a court, as a general rule, must accept the plaintiff's allegations as true and evaluate all plausible inferences derived from those facts in favor of the plaintiff. See Miccosukee Tribe of Indians of Fla. v. S. Everglades Restoration Alliance , 304 F.3d 1076, 1084 (11th Cir. 2002) ; AXA Equitable Life Ins. Co. v. Infinity Fin. Grp., LLC , 608 F.Supp.2d 1349, 1353 (S.D. Fla. 2009). However, this tenet does not apply to legal conclusions, and courts "are not bound to accept as true a legal conclusion couched as a factual allegation." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ; see Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ; Thaeter v. Palm Beach Cnty. Sheriff's Office , 449 F.3d 1342, 1352 (11th Cir. 2006). Moreover, "courts may infer from the factual allegations in the complaint ‘obvious alternative explanations,’ which suggest lawful conduct rather than the unlawful conduct the plaintiff would ask the court to infer." Am. Dental Ass'n v. Cigna Corp. , 605 F.3d 1283, 1290 (11th Cir. 2010) (quoting Iqbal , 556 U.S. at 682, 129 S.Ct. 1937 ).
A court considering a Rule 12(b)(6) motion is generally limited to the facts contained in the complaint and the attached exhibits, including documents referred to in the complaint that are central to the claim. See Wilchombe v. TeeVee Toons, Inc. , 555 F.3d 949, 959 (11th Cir. 2009) ; Maxcess, Inc. v. Lucent Technologies, Inc. , 433 F.3d 1337, 1340 (11th Cir. 2005) () (citing Horsley v. Feldt , 304 F.3d 1125, 1135 (11th Cir. 2002) ). "[W]hen the exhibits contradict the general and conclusory allegations of the pleading, the exhibits govern." Griffin Indus., Inc. v. Irvin , 496 F.3d 1189, 1206 (11th Cir. 2007).
It is through this lens that the Court considers the Motion and the parties’ arguments.
Determining whether Defendant is entitled to dismissal of the Complaint raises three overarching issues. The first is whether the Complaint alleges facts that come within the scope of the Policy's coverage grants. If so, the second is whether coverage is nonetheless barred by a policy exclusion. And third, whether the claim for declaratory relief is actionable if the breach of contract claim fails. The Court will examine each issue in turn.
Under the Special Property Coverage Form, ECF No. [6-1] at 31, the Policy provides coverage...
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