Sweetberry Holdings LLC v. Twin City Fire Insurance Co.
| Decision Date | 19 July 2021 |
| Docket Number | 20-08200 (FLW) |
| Parties | SWEETBERRY HOLDINGS LLC, Plaintiff, v. TWIN CITY FIRE INSURANCE COMPANY, Defendant |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
Plaintiff Sweetberry Holdings, LLC (“Plaintiff”), on behalf of itself and all persons and entities with coverage under a property insurance policy issued by Defendant Twin City Fire Insurance Company (“Defendant”), filed this putative class action seeking coverage for losses sustained as a result of the 2019 novel coronavirus (“COVID-19”) pandemic. Presently before the Court is Defendant's Motion for Judgment on the Pleadings pursuant to Federal Rule of Civil Procedure 12(c). For the reasons set forth herein, Defendant's Motion is GRANTED.
Plaintiff is a New Jersey company that owns and operates ice cream stores located in New Jersey, Florida, and Illinois. (Compl ¶ 4.) Defendant issued to Plaintiff Policy No. 13 SBA AB3313 for the period of October 23, 2019 through October 23 2020 (the “Policy”), which included coverage for thirteen of Plaintiff's locations. (Id. ¶ 12.) The Policy provides that Defendant will “pay for all losses caused by a ‘Covered Cause of Loss,' defined as ‘risks of direct physical loss' unless the loss is excluded or limited in the Policy.” (Id. ¶ 15 ().) The Policy covers “Business Income” lost during the suspension of operations, “Extra Expenses” that a business “would not have incurred if there had been no direct physical loss or physical damage to the property, ” and “Business Income from Dependent Properties.” (Id. ¶¶ 17-24 (emphasis added).) The Policy also extends coverage to losses sustained “when access . . . is specifically prohibited by order of a civil authority as the direct result of a Covered Cause of Loss.” (Id. ¶ 25 (emphasis added).)
On March 9, 2020, New Jersey Governor Philip D. Murphy issued Executive Order 103, which declared a state of emergency and public health emergency in response to the COVID-19 pandemic. Thereafter, on March 21, 2020, Governor Murphy issued Executive Order 107, “requiring all resident to stay home, prohibiting all social gatherings, and closing all non-essential retail businesses, including Plaintiff's ice cream stores.” (Id. at ¶ 41.) Similar orders were issued nationwide by state and local authorities throughout March and April 2020 (the “Closure Orders”).[1] “As a result of the presence of COVID-19 and the Closure Orders, ” Plaintiff alleges that it suspended business operations and sustained business losses at the premises of its Dependent Properties.[2] (Id. at ¶ 50.)
Relevant here, the Policy is modified by a form entitled “Limited Fungi, Bacteria or Virus Coverage” (the “Virus Exclusion”). The Virus Exclusion specifies that it applies to and modifies all coverages in the Special Property Coverage Form, including the Business Income, Civil Authority, Extra Expense, and Dependent Properties coverages. (Moving Br., Ex. A, at 166.) The Virus Exclusion provides the following language:
[Defendant] will not pay for loss or damage caused directly or indirectly by any of the following . . . (1) Presence, growth, proliferation, spread or any activity of “fungi”, wet rot, dry rot, bacteria or virus. (2) But if “fungi”, wet rot, dry rot, bacteria or virus results in a “specified cause of loss” to Covered Property, we will pay for the loss or damage caused by that “specified cause of loss.”
(Id. (emphasis added).) Later, in an exception to this exclusion, the Policy specifies that the “exclusion does not apply: (1) When ‘fungi', wet or dry rot, bacteria or virus results from fire or lightning; or (2) To the extent that coverage is provided in the Additional Coverage - Limited Coverage for ‘Fungi', Wet Rot, Dry Rot, Bacteria and Virus (the “Limited Coverage provision”) with respect to loss or damage by a cause of loss other than fire or lightning.” (Id.) This Limited Coverage provision is a carveout to the Virus Exclusion that provides up to $50, 000 in coverage but (Id. at 167.) “Specified cause of loss” is defined in the Policy as: “Fire; lightning; explosion, windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire extinguishing equipment; sinkhole collapse; volcanic action; falling objects; weight of snow, ice or sleet; water damage.” (Id. at 76.)
Plaintiff submitted a claim under the Policy for losses sustained as a result of the Closure Orders, which was subsequently denied by Defendant. (Compl. ¶¶ 53-54.) Thereafter, on July 2, 2020, Plaintiff filed this putative class action against Defendant. Plaintiff brings four breach of contract claims, asserting that Defendant breached its obligations to provide coverage under the (i) business income, (ii) civil authority, (iii) extra expense, and (iv) dependent properties provisions. (Id. ¶¶ 66-98.) Plaintiff further seeks a declaration that the “losses incurred in connection with the Closure Orders and the necessary interruption of their businesses stemming from the COVID-19 pandemic are insured losses under [Defendant's] policies.” (Id. at 25.) Plaintiff brings all its claims individually and on behalf of a proposed class of businesses with the same policy that have suffered losses due to COVID-19 related closures. (Id.) Defendant moves for judgment on the pleadings on both the individual and class claims.
“After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). “A motion for judgment on the pleadings based on the defense that the plaintiff has failed to state a claim is analyzed under the same standards that apply to a Rule 12(b)(6) motion.” Zimmerman v. Corbett, 873 F.3d 414, 417 (3d Cir. 2017) (quoting Revell v. Port Auth. of N.Y. & N.J., 598 F.3d 128, 134 (3d Cir. 2010)); see Hoffman v. Nordic Naturals, Inc., 837 F.3d 272, 279 n.47 (3d Cir. 2016); Spruill v. Gillis, 372 F.3d 218, 223 n.2 (3d Cir. 2004) (“There is no material difference in the applicable legal standards”); Newton v. Greenwich Twp., 2012 WL 3715947, at *2 (D.N.J. Aug. 27, 2012) (“The difference between a motion to dismiss pursuant to Rule 12(b)(6) and Rule 12(c) is only a matter of timing and the Court applies the same standard to a Rule 12(c) motion as it would to a Rule 12(b)(6) motion.” (citing Turbe v. Gov't of V.I., 938 F.2d 427, 428 (3d Cir. 1991)).
A motion to dismiss pursuant to Rule 12(b)(6), challenges the legal sufficiency of a complaint. Fed.R.Civ.P. 12(b)(6). In reviewing a motion to dismiss for failure to state a claim upon which relief may be granted, under Federal Rule of Civil Procedure 12(b)(6), “courts accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (internal quotation marks omitted).
A court must dismiss a claim under Rule 12(b)(6) if “the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Johnsrud v. Carter, 620 F.2d 29, 33 (3d Cir. 1980). The moving party bears the burden of showing that no claim has been stated, Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005), and dismissal is appropriate only if, accepting all of the facts alleged in the complaint as true, the plaintiff has failed to plead “enough facts to state a claim to relief that is plausible on its face, ” Bell Atlantic Corp. v. Twombly, 500 U.S. 544, 570 (2007). Furthermore, in order to satisfy federal pleading requirements, the plaintiff must “provide the grounds of his entitlement to relief, ” which “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Phillips v. Cty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (brackets and quotations marks omitted) (quoting Twombly, 550 U.S. 544, 555). In considering a motion to dismiss, the court generally “relies on the complaint, attached exhibits, and matters of public record.” Sands v. McCormick, 502 F.3d 263, 268 (3d Cir. 2007).
Under New Jersey law, the determination of “the proper coverage of an insurance contract is a question of law.”[3] Buczek v. Cont'l Cas. Ins Co., 378 F.3d 284, 288 (3d Cir. 2004) (citing Atl. Mut. Ins. Co. v. Palisades Safety & Ins. Ass'n, 364 N.J.Super. 599, 604 (App. Div. 2003)). “An insurance policy is a contract that will be enforced as written when its terms are clear in order that the expectations of the parties will be fulfilled.” Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010). However, because insurance policies are contracts of adhesion, they “are subject to special rules of interpretation, ” Longobardi v. Chubb Ins. Co. of N.J., 121 N.J. 530, 537 (1990), and “courts must assume a particularly vigilant role in ensuring their conformity to public policy and principles of fairness.” Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 175, (1992); see Zacarias v. Allstate Ins. Co., 168 N.J. 590, 594 (2001) (). In a...
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