Totally Tickets v. Sentinel Ins. Co.

• Decision Date: 14 July 2021
• Docket Number: Case No. CIV-20-778-SLP
• Citation: 549 F.Supp.3d 1309
• Parties: TOTALLY TICKETS, Plaintiff, v. SENTINEL INSURANCE COMPANY, LTD., Defendant.
• Court: U.S. District Court — Western District of Oklahoma

549 F.Supp.3d 1309

TOTALLY TICKETS, Plaintiff,

v.SENTINEL INSURANCE COMPANY, LTD., Defendant.

Case No. CIV-20-778-SLP

United States District Court, W.D. Oklahoma.

Signed July 14, 2021

Kenyatta R. Bethea, Holloway Bethea & Osenbaugh PLLC, Oklahoma City, OK, for Plaintiff.

Jordan E. Sessler, Timila S. Rother, Crowe & Dunlevy, Oklahoma City, OK, Sarah D. Gordon, Andrew J. Sloniewsky, Steptoe & Johnson LLP, Washington, DC, for Defendant.

ORDER

SCOTT L. PALK, UNITED STATES DISTRICT JUDGE

Before the Court is Defendant's Rule 12(c) Motion for Judgment on the Pleadings to Dismiss Claims of Plaintiff and Memorandum of Law in Support [Doc. Nos. 17-18]. Plaintiff has responded [Doc. No. 24] and Defendant has replied [Doc. No. 25]. The Court is also in receipt of Defendant's Notices of Supplemental Authority [Doc. Nos. 29-30].¹ The matter is at issue and ready for determination. For the reasons set forth, Defendant's Motion is GRANTED.

I. Background

This is a declaratory judgment action to resolve a coverage dispute under a property insurance policy issued to Plaintiff, Totally Tickets (Totally Tickets), by Defendant, Sentinel Insurance Company, Ltd. (Sentinel). Totally Tickets seeks to recover under the policy for direct physical loss or injury resulting from the COVID-19 pandemic. Sentinel contends the policy does not provide coverage for the loss at issue. Sentinel further contends the policy's virus exclusion precludes coverage.

II. Governing Standard

Rule 12(c) of the Federal Rules of Civil Procedure governs. Rule 12(c) provides that a party may move for judgment on the pleadings "[a]fter pleadings are closed – but early enough not to delay trial[.]" Fed. R. Civ. P. 12(c).

"A motion for judgment on the pleadings under Rule 12(c) is treated as a motion to dismiss under Rule 12(b)(6)." Atlantic Richfield Co. v. Farm Credit Bank of Wichita , 226 F.3d 1138, 1160 (10th Cir. 2000). The court applies the same standards under either rule. Brown v. Montoya , 662 F.3d 1152, 1160 n. 4 (10th Cir. 2011). The court accepts as true the complaint's well-pleaded factual allegations and views them in the light most favorable to the plaintiff. Schrock v. Wyeth Inc. , 727 F.3d 1273, 1280 (10th Cir. 2013). But the court need not accept as true legal conclusions, and "naked assertions devoid of further factual enhancement" will not suffice. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quotation omitted).

"That they share governing standards does not mean that Rule 12(c) motions are the same as Rule 12(b) motions." Krontz v. CNG Logistics, LLC , No. 19-4081-SAC, 2020 WL 224525 (D. Kan. Jan. 15, 2020). "A motion proceeding under Rule 12(c) occurs only after the pleadings are closed and is designed to provide a means of disposing of cases when the material facts are not in dispute and a judgment on the merits can be achieved by focusing on the content of the pleadings and any facts of which the court will take judicial notice." Id. (internal quotation marks and citations omitted).

III. Factual Allegations of the Complaint ²

Totally Tickets is a "ticket event company" with its headquarters located in Oklahoma City, Oklahoma. Compl. [Doc. No. 1-2], ¶ 1. Sentinel issued Policy No. 38 SBA B54211 SC (the Policy) to Totally Tickets for the period February 24, 2020 to February 24, 2021. Id. , ¶ 6.³ The Policy insures "Totally Tickets' property located within the State of Oklahoma." Id. , ¶ 3.

"On or about March of 2020, the United States of America became infected by COVID-19 resulting in a pandemic." Id. , ¶ 7. "As a result of this pandemic and infection, Totally Tickets [sic] Property sustained direct physical loss or damage and will continue to sustain direct physical loss or damage covered by the policy, including but not limited to business interruption, extra expense, interruption by civil authority, limitations on ingress and egress, and expenses to reduce loss." Id.⁴ "As a direct result of this pandemic and infection, Totally Tickets' Property has been damaged, as described above, and cannot be used for its intended purpose." Id. As relief, Totally Tickets seeks a declaratory judgment that the Policy covers Totally Ticket's "losses and expenses related to the COVID-19 pandemic and infection ...." Id. , ¶ 10.

IV. Policy Terms ⁵

A. Coverage

The Policy provides coverage for "direct physical loss of or physical damage to Covered Property ... caused by or resulting from a Covered Cause of Loss." Policy Form SS 00 07 07 05 [Doc. No. 18-1:35], ¶ A COVERAGE . The Policy defines "Covered Causes of Loss" as "risks of direct physical loss," unless the loss is excluded or limited by other Policy Provisions. Id. , 18-1:36, ¶ A. 3.

The Policy provides "Additional Coverages" for "Business Income" as follows:

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.

Id. , 18-1:44, ¶ A. 5. o. (1). "Scheduled premises" is defined as property located at the "premises described in the [Policy's] Declarations." Id. , 18-1:35, ¶ A. COVERAGE .

The Policy also provides coverage for "Extra Expense" as follows:

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.

Id. , 18-1:44, ¶ A. 5. p. (1).

Finally, the Policy provides Civil Authority coverage:

This insurance is extended to apply to the actual loss of Business Income you sustain when access to your "scheduled premises" is specifically prohibited by order of a civil authority as the direct result of a Covered Cause of Loss to property in the immediate area of your "scheduled premises."

Id. , 18-1:45, ¶ A 5. q. (1).

B. Exclusions

The Policy excludes from coverage any loss or damage caused by a virus. Specially, the Policy's Virus Exclusion provides:

[Sentinel] will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss:

(1) Presence, growth, proliferation, spread or any activity of "fungi", wet rot, dry rot, bacteria or virus.

* * *

This exclusion applies whether or not the loss event results in widespread damage or affects a substantial area.

Policy Form SS 40 93 07 05, 18-1:145.

V. Discussion

Oklahoma law governs the issues presented in this action, where federal subject matter jurisdiction is predicated on diversity of citizenship. See, e.g., Universal Underwriters Ins. Co. v. Winton , 818 F.3d 1103, 1105-06 (10th Cir. 2016). The Policy, therefore, must be interpreted in accordance with Oklahoma law.⁶

A. Interpretation of Insurance Contracts

Under Oklahoma law, "[w]hen policy provisions are clear, consistent, and unambiguous, [the court must] look to the plain and ordinary meaning of the policy language to determine and give effect to the parties' intent." Porter v. Okla. Farm Bureau Mut. Ins. Co. , 330 P.3d 511, 515 (Okla. 2014). "The interpretation of an insurance contract and whether it is ambiguous is a matter of law for the Court to determine and resolve accordingly." Dodson v. St. Paul Ins. Co. , 812 P.2d 372, 376 (Okla. 1991). "An insurance contract is ambiguous only if it is susceptible to two constructions on its face from the standpoint of a reasonably prudent layperson, not from that of a lawyer." Haworth v. Jantzen , 172 P.3d 193, 196 (Okla. 2006). In determining whether a contract is ambiguous, the court "will not indulge in forced or constrained interpretations to create and then construe ambiguities[.]" Id.

The insured has the burden of showing that a covered loss occurred, while the insurer has the burden of showing that a loss falls within an exclusionary clause of the policy. See Pitman v. Blue Cross & Blue Shield of Okla. , 217 F.3d 1291, 1298 (10th Cir. 2000) (Once coverage is established, "the insurer has the burden of showing that a loss falls within an exclusionary clause of the policy."); McGee v. Equicor-Equitable HCA Corp. , 953 F.2d 1192, 1205 (10th Cir. 1992) ("It is a basic rule of insurance law that the insured carries the burden of showing a covered loss has occurred and the insurer must prove facts that bring a loss within an exclusionary clause of the policy."); Fehring v. Universal Fid. Life Ins. Co. , 721 P.2d 796, 799 (Okla. 1986) (insurer bears burden of proving applicability of exclusionary clause). An exclusion is a policy term eliminating coverage where it otherwise would have existed under the general declaration. Dodson , 812 P.2d at 377.

B. Coverage

1. Direct Physical Loss of or Damage to Property

Under any of the three coverage provisions at issue, Totally Tickets must allege direct physical loss or damage to property. Totally Tickets alleges in wholly conclusory fashion that as a result of the COVID-19 pandemic, Totally Tickets' property "sustained direct physical loss or damage and will continue to sustain direct physical loss or damage...." Compl., ¶ 7. These allegations are insufficient to support a claim for relief. See, e.g., Burnett v. Mortg. Elec. Registration Sys., Inc. , 706 F.3d 1231, 1235 (10th Cir. 2013) ("[M]ere labels and conclusions, and a formulaic recitation of the elements of a cause of action will not suffice; a plaintiff must offer specific factual allegations to support each claim." (internal quotation marks and citation omitted)). As Sentinel argues, numerous courts have found similar conclusory allegations...