Robert E. Levy, D.M.D., LLC v. Hartford Fin. Servs. Grp. Inc.

• Decision Date: 16 February 2021
• Docket Number: Case No.: 4:20-cv-00643-SRC
• Citation: 520 F.Supp.3d 1158
• Court: U.S. District Court — Eastern District of Missouri
• Parties: ROBERT E. LEVY, D.M.D., LLC, et al., Plaintiffs, v. HARTFORD FINANCIAL SERVICES GROUP INC., et al., Defendants

520 F.Supp.3d 1158

ROBERT E. LEVY, D.M.D., LLC, et al., Plaintiffs,

v.HARTFORD FINANCIAL SERVICES GROUP INC., et al., Defendants,

Case No.: 4:20-cv-00643-SRC

United States District Court, E.D. Missouri, Eastern Division.

Signed February 16, 2021

Kevin Paul Green, Mark C. Goldenberg, Thomas P. Rosenfeld, Goldenberg Heller PC, Edwardsville, IL, Richard S. Cornfeld, Daniel Scott Levy, Law Office of Richard S. Cornfeld LLC, Anthony S. Bruning, The Bruning Law Firm LLC, St. Louis, MO, for Plaintiff Robert Levy, D.M.D., LLC.

Anthony S. Bruning, The Bruning Law Firm LLC, Daniel Scott Levy, Richard S. Cornfeld, Law Office of Richard S. Cornfeld LLC, St. Louis, MO, for Plaintiffs Vanessa N. Keller, D.M.D., Trisha M. Young, D.M.D., P.C., Rivka Goldenhersh, D.M.D., LLC, Farhad Moshiri, D.M.D., M.S., P.C., Mazyar Moshiri, D.M.D., M.S., P.C.

Anthony Anscombe, Pro Hac Vice, Steptoe and Johnson LLP, Chicago, IL, Patrick J. Kenny, Angela B. Kennedy, Armstrong Teasdale LLP, St. Louis, MO, Sarah Gordon, Pro Hac Vice, Steptoe and Johnson LLP, Washington, DC, for Defendant Hartford Casualty Insurance Company.

Anthony Anscombe, Pro Hac Vice, Steptoe and Johnson LLP, Chicago, IL, Patrick J. Kenny, Armstrong Teasdale LLP, St. Louis, MO, Sarah Gordon, Pro Hac Vice, Steptoe and Johnson LLP, Washington, DC, for Defendants Sentinel Insurance Company, LTD, Twin City Fire Insurance Company.

Memorandum and Order

STEPHEN R. CLARK, UNITED STATES DISTRICT JUDGE

The COVID-19 pandemic—the coronavirus—has caused many disruptions in various aspects of daily life. In this case, several dentists shut down their practices in the wake of governmental and dental-association guidance aimed at slowing the spread of the virus. The dentists then filed claims on their insurance policies to recoup their losses, but the insurers denied the claims on the basis of the policies’ virus exclusion, and now move for judgment on the pleadings. Doc. 56. The Court now addresses that motion and determines whether the policies exclude coverage for the coronavirus-related shutdowns of the dentists’ practices.

I. Background

Plaintiffs allege that they purchased insurance from Defendants to protect their dental practices against losses from catastrophic events. During the onset of the COVID-19 pandemic, Plaintiffs shut down their practices entirely, or only saw a few emergency patients, and made claims under their insurance policies for the losses caused by the shutdowns. Defendants denied each claim, asserting that the policies did not cover losses caused by the COVID-19 pandemic, and therefore they had no obligation to provide any coverage.

Plaintiffs assert six claims: 1) business income breach of contract; 2) breach of the implied covenant of good faith and fair dealing applicable to business income 3) declaratory relief applicable to business income; 4) extra expense breach of contract; 5) breach of the implied covenant of good faith and fair dealing applicable to extra expense; and 6) declaratory relief applicable to extra expense. Plaintiffs also seek to represent four classes of plaintiffs allegedly holding similar policies and suffering similar losses from the COVID-19 pandemic.

After Twin City, Sentinel, and Hartford Casualty answered Plaintiffs first amended complaint, Hartford Financial Services Group filed a motion to dismiss. Docs. 21–22. The Court granted Hartford Financial's motion to dismiss without prejudice. Doc. 48. Plaintiffs then sought leave to file a second amended complaint to raise additional allegations regarding Hartford Financial. Doc. 51. The Court held a status conference, during which it denied without prejudice the motion for leave to file a second amended complaint. Docs. 52, 53. At that conference, counsel for Defendants advised the Court that Defendants intended to bring a motion for judgment on the pleadings as to the remaining defendants. Defendants subsequently filed that motion, which the Court addresses below.

II. Standard

Rule 12(c) of the Federal Rules of Civil Procedure provides that after the pleadings are closed, a party may move for judgment on the pleadings. A motion under Rule 12(c) is determined by the same standards applied to a motion under Rule 12(b)(6). Ginsburg v. InBev NV/SA , 623 F.3d 1229, 1233 n.3 (8th Cir. 2010). To survive a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted, "a 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 Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A plaintiff need not provide specific facts in support of his allegations, Erickson v. Pardus , 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam), but "must include sufficient factual information to provide the ‘grounds’ on which the claim rests, and to raise a right to relief above a speculative level." Schaaf v. Residential Funding Corp. , 517 F.3d 544, 549 (8th Cir. 2008) (citing Twombly , 550 U.S. at 555 & n.3, 127 S.Ct. 1955 ). This obligation requires a plaintiff to plead "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. A complaint "must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory." Id. at 562, 127 S.Ct. 1955 (quoted case omitted). This standard "simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of [the claim or element]." Id. at 556, 127 S.Ct. 1955.

On a motion to dismiss, the court accepts as true all of the factual allegations contained in the complaint, even if it appears that "actual proof of those facts is improbable," id. at 556, 127 S.Ct. 1955, and reviews the complaint to determine whether its allegations show that the pleader is entitled to relief. Id. at 550 U.S. at 555–56, 127 S.Ct. 1955 ; Fed. R. Civ. P. 8(a)(2). The principle that a court must accept as true all of the allegations contained in a complaint does not apply to legal conclusions, however.

Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (stating "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice"). Although legal conclusions can provide the framework for a complaint, the pleader must support them with factual allegations. Id. at 679, 129 S.Ct. 1937. The court reviews the plausibility of the plaintiff's claim "as a whole, not the plausibility of each individual allegation." Zoltek Corp. v. Structural Polymer Group , 592 F.3d 893, 896 n.4 (8th Cir. 2010).

"When considering a motion for judgment on the pleadings (or a motion to dismiss under Fed. R. Civ. P. 12(b)(6) ), the court generally must ignore materials outside the pleadings, but it may consider some materials that are part of the public record or do not contradict the complaint as well as materials that are necessarily embraced by the pleadings." Porous Media Corp. v. Pall Corp. , 186 F.3d 1077, 1079 (8th Cir. 1999) (internal citations omitted); see also Cent. Telecommunications, Inc. v. City of Jefferson City, Mo. , 589 F. Supp. 85, 91 (W.D. Mo. Feb. 29, 1984) ("The scope of a court's inquiry on a Rule 12(b)(6) motion is limited to the pleadings.").

III. Discussion

A. Breach of contract and declaratory judgment (Counts I, III, IV, VI)

Plaintiffs assert that the policies provide coverage for Plaintiffs’ losses and Defendants failure to pay constitutes a breach of contract. Plaintiffs also seek a declaratory judgment that their policies provide coverage for the alleged losses. These claims necessarily depend on an interpretation of the insurance policies at issue.

1. The policies

Plaintiffs each purchased business-interruption insurance from Defendants. Docs. 17-1, 17-2, 17-3, 17-4, 17-5. Under the "Special Property Coverage Form," the policies provide that Defendants:

will pay for direct physical loss of or physical damage to Covered Property at the premises described in the Declarations (also called "scheduled premises" in this policy) caused by or resulting from a Covered Cause of Loss.

Docs. 17-1 at p. 31, 17-2 at p. 32, 17-3 at p. 33, 17-4 at p. 28, 17-5 at p. 33. The policies define "Covered Cause of Loss" as:

RISKS OF DIRECT PHYSICAL LOSS unless the loss is:

a. Excluded in Section B., EXCLUSIONS ; or

b. Limited in Paragraph A.4 .

Docs. 17-1 at p. 32, 17-2 at p. 33, 17-3 at p. 34, 17-4 at p. 29, 17-5 at p. 34. The policies provide additional coverage for business income, extended business income, and extra expense as follows:

o. Business Income

(1) 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 physical damage to property at the "scheduled premises," including personal property in the open (or in a vehicle) within 1,000 feet of the "scheduled premises," caused by or resulting from a Covered Cause of Loss.

...

(5) With respect to the coverage provided in this Additional Coverage, suspension means:

(a) The partial slowdown of your business activities; or

(b) That part or all of the "scheduled premises" is rendered untenantable as a result of a Covered Cause of Loss if coverage for Business Income applies to the policy.

p. Extra Expense

(1) We will pay reasonable and necessary Extra Expense you incur during the "period of restoration" that you would not have incurred if there had been no direct physical loss or physical damage to property at the "scheduled premises," including personal property in the open (or in a vehicle) within 1,000 feet, caused by or resulting from a Covered Cause of Loss.

...

r. Extended Business Income

(1) If the necessary suspension of your "operations

...