Seoul Taco Holdings, LLC v. Cincinnati Ins. Co.

• Decision Date: 11 May 2021
• Docket Number: No. 4:20-CV-1249 RLW,4:20-CV-1249 RLW
• Citation: 538 F.Supp.3d 926
• Parties: SEOUL TACO HOLDINGS, LLC, et al., Plaintiffs, v. The CINCINNATI INSURANCE CO., et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

538 F.Supp.3d 926

SEOUL TACO HOLDINGS, LLC, et al., Plaintiffs,

v.The CINCINNATI INSURANCE CO., et al., Defendants.

No. 4:20-CV-1249 RLW

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

Signed May 11, 2021

Richard Milton Elias, Elias LLC, St. Louis, MO, for Plaintiffs.

Brian K. McBrearty, Lori Ann Schmidt, Adam Andrew Field, Litchfield Cavo LLP, St. Louis, MO, Dennis M. Dolan, Pro Hac Vice, Litchfield Cavo LLP, Chicago, IL, for Defendants The Cincinnati Insurance Company, The Cincinnati Casualty Company, The Cincinnati Indemnity Company, Cincinnati Financial Corporation.

Robert H. Dierker, Catherine Dierker, St. Louis City Counselors Office, St. Louis, MO, for Defendants City of St. Louis, Frederick Echols.

MEMORANDUM AND ORDER

RONNIE L. WHITE, UNITED STATES DISTRICT JUDGE

This matter is before the Court on Defendants The Cincinnati Insurance Company, The Cincinnati Casualty Company, The Cincinnati Indemnity Company and Cincinnati Financial Corporation's Motion to Dismiss Case (ECF No. 15 ) and Defendant City of St. Louis and Fredrick Echols’ Motion to Dismiss (ECF No. 26 ). These matters are fully briefed and ready for disposition.

LEGAL STANDARD

To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), 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, 1949, 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 "formulaic recitation of the elements of a cause of action" will not suffice. Twombly , 550 U.S. at 555, 127 S.Ct. 1955. "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ).

BACKGROUND

Plaintiffs Seoul Taco Holdings LLC, Seoul Taco LLC, Seoul Taco STL LLC, Seoul Taco Chesterfield LLC, Seoul Taco Columbia LLC, Seoul Taco Chicago LLC, Seoul Taco Hyde Park LLC, Seoul Taco Naperville LLC, and Seoul Taco Food Trucks LLC (collectively referred to as "Plaintiffs") are a group of restaurants incorporated in Missouri and operating under the brand "Seoul Taco." Plaintiffs have operations in St. Louis County, Missouri; St. Louis City, Missouri; Columbia, Missouri; and several locations in Chicago, Illinois. (Petition ("Pet."), ECF No. 9, ¶¶5-6 ). Defendants The Cincinnati Insurance Company, The Cincinnati Casualty Company, The Cincinnati Indemnity Company, and Cincinnati Financial Corporation (collectively, "The Cincinnati Insurance Defendants") are an insurance conglomerate headquartered in Fairfield, Ohio. (Pet., ¶7). Defendant City of St. Louis is a city in the state of Missouri, and Defendant Frederick Echols, M.D., is the Director for the St. Louis City Department of Health. (Pet., ¶¶8-9). The Court refers to Defendant City of St. Louis and Dr. Echols as "the St. Louis City Defendants."

Plaintiffs bring this action under the Missouri Declaratory Judgment Act, § 527.010, R.S.Mo., asking the Court to find that The Cincinnati Insurance Defendants are obligated to pay Plaintiffs for lost business income and extra expenses incurred due to the forced suspension of operations at Plaintiffs’ restaurants. (Pet., ¶¶1-2). Plaintiffs claim loss based upon the forced suspension of operations when the City of St. Louis, Missouri, St. Louis County, Missouri, Boone County, Missouri, Columbia, Missouri, the State of Illinois, and other government officials issued shut down orders ("shutdown orders") for various businesses. including restaurants, to slow and/or prevent the spread of the coronavirus ("COVID-19"). (Pet., ¶1).

On September 14, 2020, The Cincinnati Insurance Defendants removed this action to federal court, contending complete diversity of citizenship exists between Plaintiffs Seoul Taco Holdings LLC, Seoul Taco LLC, Seoul Taco STL LLC, Seoul Taco Chesterfield LLC, Seoul Taco Naperville LLC, and Seoul Taco Food Trucks LLC and Defendants The Cincinnati Insurance Company, The Cincinnati Indemnity Company, and Cincinnati Financial Corporation. (Notice of Removal, ECF No. 1, ¶17 ; 28 U.S.C. § 1332 ). The Cincinnati Insurance Defendants further asserted that the amount in controversy exceeds $75,000. (Notice of Removal, ¶¶18-23).

On December 16, 2020, the Court found that the St. Louis City Defendants were nominal defendants and denied Plaintiffs’ Motion to Remand. See ECF No. 33. The Court ordered the parties to complete briefing the pending Motions to Dismiss. The Court now grants those Motions to Dismiss.

DISCUSSION

I. City of St. Louis and Dr. Echol's Motion to Dismiss

The Court finds there is no controversy involving the St. Louis City Defendants. Plaintiffs allege that the St. Louis City Defendants issued orders in March 2020 prohibiting on-premises dining. (Pet., ¶20). The shutdown orders referenced in the Petition expired around the time this case was filed and were replaced with superseding orders allowing on-premises dining. See ECF No. 20-1 ; https://www.stlouis-mo.gov/government/departments/health/communicable-disease/covid-19/documents/upload/FINAL-ORDER-NO-8.pdf and https://www.stlouis-mo.gov/government/departments/health/communicable-disease/covid-19/documents/upload/Phase-1-Reopening-Exhibit-F.pdf (last visited on December 9, 2020).¹ Plaintiffs do not seek any relief from the St. Louis City Defendants, nor have Plaintiffs requested that this Court interpret the St. Louis City shutdown orders. Indeed, even though Plaintiffs’ restaurants located outside of the St. Louis City are named as Plaintiffs, Plaintiffs do not name as Defendants the government authorities responsible for other shutdown orders in their Petition, other than the St. Louis City Defendants.

In response, Plaintiffs argue that the St. Louis City Defendants are necessary parties. Plaintiffs contend that because "the resolution of this dispute turns, in part, on the Court's interpretation of the shutdown orders issued by the St. Louis City Defendants, they have an interest that could be affected by the declaratory relief that Plaintiffs seek." (ECF No. 37 ). Plaintiffs further contend that they joined St. Louis City as the only municipal defendant because this case originated in the Circuit Court for the City of St. Louis, which precluded joinder of out-of-county government authorities. (ECF No. 37 (citing Mo. Rev. Stat. § 508.060) ).

Plaintiffs’ lawsuit does not involve an interpretation of the shutdown orders. Plaintiffs allege that the shutdown orders forbade "all in-premises access to Seoul Taco restaurants to the general public." (Pet., ¶19). Plaintiffs specifically identify the "actual controversy" in this case: "Plaintiffs contend, and Cincinnati Insurance disputes that: (1) the shutdown orders described above constitute a forced suspension of operations and prohibition of access to the Insured Premises; (2) the shutdown orders and uncontrolled spread of the COVID-19 Virus in the community triggers coverage because the Policy does not exclude damages caused by viral pandemics, and actually extends coverage for such loss or damage under the business suspension and civil authority provisions of the Policy; and (3) Cincinnati Insurance is obligated to pay the full and actual amount of Plaintiffs’ loss of business income and extra expenses incurred during the periods of coverage under the Policy." (Pet., ¶36). Plaintiffs have not alleged that any of these orders, including the St. Louis City shutdown orders, exceeded the government's authority or were improperly or unconstitutionally enacted. (Pet., ¶¶19-26). Rather, the only issue in this case is whether these losses and damages as a result of these shutdown orders constitute a covered loss under Plaintiffs’ policy with The Cincinnati Insurance Defendants. (Pet., ¶¶27-38). Thus, even under their own interpretation of their Petition, Plaintiffs are not alleging that the shutdown orders were ambiguous or that the St. Louis City Defendants can elucidate the meaning or implications of those orders for Plaintiffs’ restaurants. Rather, all parties agree that the issue is whether the forced shutdown of Plaintiffs’ restaurants triggers relief under Plaintiffs’ Policy with the Cincinnati Insurance Defendants. The Court grants the Motion to Dismiss of the St. Louis City Defendants, finding they have "no real connection with the controversy." Knudson v. Sys. Painters, Inc. , 634 F.3d 968, 976 (8th Cir. 2011) (citing Chesapeake & Ohio Ry. Co. v. Cockrell, 232 U.S. 146, 152, 34 S.Ct. 278, 58 L.Ed. 544 (1914) ). Thus, no cause of action exists against the St. Louis City Defendants on the face of Plaintiffs’ Petition. See Anderson v. Home Ins. Co. , 724 F.2d 82, 84 (8th Cir. 1983) ("Fraudulent joinder exists if, on the face of plaintiff's state court pleadings, no cause of action lies against the resident defendant."). For the foregoing reasons, the Court grants the Motion to Dismiss and dismisses the St. Louis City Defendants.

II. The Cincinnati Defendants

On June 19, 2019, Plaintiffs entered into a contract of insurance with the Cincinnati Insurance Company, Policy Number ECP 054 21 28 (hereinafter, "the Policy"), for the policy period of June 19, 2019 to June 19, 2022. (Pet., ¶10; Policy, p. 13).² Plaintiffs seek recovery under the Policy.³

Defendants argue that the Policy requires "direct physical loss" for coverage under the Policy. Defendants identify the "direct physical loss" requirement in multiple places. For Business Income coverage, the Policy provides:

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 "loss" to the property at "premises" which are described in the Declarations and for which a "Business Income" Limit of Insurance is

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