ThinkFood Grp. v. Travelers Prop. Cas. Co. of Am., 8:20-cv-02201-PWG

CourtUnited States District Courts. 4th Circuit. United States District Court (Maryland)
Docket Number8:20-cv-02201-PWG
Decision Date30 September 2021

THINKFOOD GROUP LLC, et al., Plaintiffs,


No. 8:20-cv-02201-PWG

United States District Court, D. Maryland, Southern Division

September 30, 2021



This insurance coverage case involves a restaurant company's claim for coverage under the business's insurance policy for the damages it allegedly sustained as a result of the government-mandated restrictions imposed on restaurants during the COVID-19 pandemic. Currently pending before this Court is the Defendant's Motion to Dismiss, ECF No. 29. I have reviewed the parties' filings[1] and find a hearing unnecessary. See Loc. R. 105.6 (D. Md. 2021). For the reasons stated below, Travelers Property Casualty Company of America's Motion to Dismiss is GRANTED, and ThinkFood Group, LLC's amended complaint, ECF No. 22, is DISMISSED.


At the direction of ThinkFood Group, LLC (“TFG”), Plaintiffs operate seventeen restaurants in Maryland, Florida, Nevada, New York, Virginia, and the District of Columbia. Am.


Compl. ¶¶ 9, 21, 114, ECF No. 22. Nine of these restaurants are located in Washington, D.C., which is where TFG's principal place of business is located. Id. at ¶¶ 9, 116. Beginning early January 2020, reports documented an outbreak of coronavirus and that this virus was spreading through human-to-human contact and transmission. Id. at ¶ 14. Plaintiffs assert that the coronavirus has been present in each of the counties in which TFG's restaurants are located, although they do not allege that the coronavirus was present in any of their restaurants. Id. at ¶¶ 136-137.

As asserted in the Plaintiffs' amended complaint, in March 2020, state and local officials began to implement “population-wide social distancing” in recognition that one of the most substantial “non-pharmaceutical interventions . . . was needed to mitigate the transmission of COVID-19.” Id. at ¶¶ 17-18. In response, local governments issued a series of orders placing significant limitations on public activities and private gatherings to limit the spread of COVID-19. Id. at ¶ 18. Plaintiffs allege that these restrictions “were implemented to lessen the burden on health care services and critical infrastructure in the states.” Id. at ¶ 20.

Plaintiffs also allege that governmental orders were issued in the jurisdictions where their restaurants were located, which “resulted in the partial or complete closure of” these restaurants. Id. at ¶ 21. However, the restaurants were permitted to perform take-out, delivery, and drive-through services under these government orders. Def.'s Mot. Mem. 5, ECF No. 29-1. Plaintiffs assert that the government orders “have caused direct loss of Plaintiffs' insured property in that the restaurants and their equipment, furnishings, and other business personal property have been made unavailable, inoperable, useless, and uninhabitable, and their functionality has been severely reduced if not eliminated.” Am. Compl. ¶ 140. Plaintiffs claim that because of the orders' requirements, they made “numerous physical alterations to occupy their premises” including


removing and rearranging furniture, and installing plexiglass, touchless fixtures, and sanitation stations. Id. at ¶ 145.

Because of the losses suffered by TFG due to the COVID-19 pandemic, Plaintiffs filed an insurance claim with Travelers Property Casualty Company of America (“Travelers”), which was denied based on TFG's claims not being covered by the policy. See Id. at ¶¶ 6, 146.

Plaintiffs allege that the insurance policy issued by Travelers provides coverage for business income losses and extra expenses resulting from the coronavirus pandemic and the orders from governments issued to address the pandemic. In their complaint, Plaintiffs assert three causes of action for declaratory judgment, breach of contract, and breach of the implied covenant of good faith and fair dealing, all premised on Plaintiffs' theory that a “loss of use” is a “direct physical loss of … property.” Id. at ¶¶ 147-174.

Additionally, Plaintiffs assert that the policy's Virus Exclusion does not apply because of statements given by the Insurance Services Office to State insurance regulators, and based on “information and belief . . . that the history of this provision demonstrates that it was not approved by regulators as a bar to coverage arising from public health counter-measures like the” above-described orders. Id. at ¶ 123.


Federal Rule of Civil Procedure 12(b)(6) provides for “the dismissal of a complaint if it fails to state a claim upon which relief can be granted.” Velencia v. Drezhlo, Civil Action No. RDB-12-237, 2012 WL 6562764, at *4 (D. Md. Dec. 13, 2012). This rule's purpose “‘is to test the sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.'” Id. (quoting Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006)). To that end, the Court bears in mind the requirements of Rule 8, Bell


Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009) when considering a motion to dismiss pursuant to Rule 12(b)(6). Specifically, a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), and must state “a plausible claim for relief, ” as “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice, ” Iqbal, 556 U.S. at 678-79. See Velencia, 2012 WL 6562764, at *4 (discussing standard from Iqbal and Twombly). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 663.

When reviewing a motion to dismiss, “[t]he court may consider documents attached to the complaint, as well as documents attached to the motion to dismiss, if they are integral to the complaint and their authenticity is not disputed.” Sposato v. First Mariner Bank, No. CCB-12-1569, 2013 WL 1308582, at *2 (D. Md. Mar. 28, 2013); see CACI Int'l v. St. Paul Fire & Marine Ins. Co., 566 F.3d 150, 154 (4th Cir. 2009); see also Fed. R. Civ. P. 10(c) (“A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.”). Moreover, where the allegations in the complaint conflict with an attached written instrument, “the exhibit prevails.” Fayetteville Inv'rs v. Commercial Builders, Inc., 936 F.2d 1462, 1465 (4th Cir. 1991); see Azimirad v. HSBC Mortg. Corp., No. DKC-10-2853, 2011 WL 1375970, at *2-3 (D. Md. Apr. 12, 2011). Here, I have considered excerpts from the insurance policy at issue that was attached to Defendant's motion. The insurance policy is integral to the complaint, and the authenticity of the excerpts provided are not disputed.

Additionally, public documents such as orders that were issued by State and local governments attached to the dismissal motion can be properly considered because they are


referenced in and relied upon in the Amended Complaint. See Exs. B-M, ECF Nos. 29-4 - 29-15; Resp. 14, n. 71. They are also proper subjects for judicial notice under Fed.R.Evid. 201(b), (d), and I have taken judicial notice of the referenced orders.


I. Standard for interpreting the insurance policy under Washington D.C. law[3]

Courts in Washington, D.C. have recognized that insurance policies are to be construed according to principles of contract interpretation because an insurance policy constitutes a contract. Sec. Title Guarantee Corp. of Balt. v. 915 Decatur St NW, LLC, 427 F.Supp.3d 1, 9 (D.D.C. 2019) (quoting Stevens v. United Gen. Title Ins. Co., 801 A.2d 61, 66 (D.C. 2002). Under Washington D.C. law, courts give the words used in an insurance contract “their common, ordinary, and . . . popular meaning.” Athridge v. Aetna Cas. & Sur. Co., 351 F.3d 1166, 1172 (D.C. Cir. 2003) (quoting Quadrangle Dev. Corp. v. Hartford Ins. Co., 645 A.2d 1074, 1075 (D.C. 1994)). In determining the scope of an insurance contract, courts need to look to “the written language embodying the terms of the agreement.” Dun v. Transamerica Premier Life Ins. Co., 442 F.Supp.3d 229, 238 (D.D.C. 2020) (quoting Hedgeye Risk Mgmt., LLC v. Heldman, 196 F.Supp.3d 40, 47 (D.D.C. 2016)). A court may not allow forced constructions to create an obligation against the insurer. Id. And courts “should not seek out ambiguity where none exists.” Athridge, 351 F.3d at 1172 (quoting Medical Serv. of Dist. of Columbia v. Llewellyn, 208 A.2d 734, 736 (D.C. 1965)).

However, if ambiguities exist in an insurance policy, then the policy is interpreted against the insurer who drafted it, and in favor of “the reasonable expectations of the purchaser of the policy.” Chase v. State Farm Fire & Cas. Co., 780 A.2d 1123, 1127 (D.C. 2001).


II. The Insurance Policy covers only physical loss or physical damage to property

Travelers asserts that “[t]he Business Income coverage applies only where a Covered Cause of Loss (such as a fire) causes direct physical loss of or damage to property at the insured premises, and that in turn causes a necessary suspension of the insured's business operations.” Def.'s Mot. Mem. 7. The policy provides that Travelers “will pay for the actual loss of Business Income you sustain due to the necessary ‘suspension' of your ‘operations' during the ‘period of restoration'” if the “suspension” is “caused by direct physical loss of or damage to property at described premises. Id. (quoting Policy Excerpts 68, Ex. A, ECF No. 29-3 (emphasis added)).

Here, Plaintiffs' complaint does not allege that any “direct physical loss of or damage to property” occurred at their restaurants, or at any “dependent...

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