Troy Stacy Enters. Inc. v. Cincinnati Ins. Co.

Decision Date24 September 2021
Docket NumberMaster Case No. 1:20-cv-312 (Consolidated)
Parties TROY STACY ENTERPRISES INC., Swearingen Smiles LLC, Eleisha J. Nickoles DDS, Reeds Jewelers of Niagara Falls, Inc., Burning Brothers Brewing LLC, Chicago Magic Lounge LLC, and CDC Catering, Inc. T/A Brookside Manor, individually and on behalf of all others similarly situated, Plaintiffs, v. The CINCINNATI INSURANCE COMPANY, the Cincinnati Casualty Company, the Cincinnati Indemnity Company, and Cincinnati Financial Corporation, Defendants. This Documents Relates to: All actions
CourtU.S. District Court — Southern District of Ohio

Mark Abramowitz, Mark A. DiCello, Kenneth P. Abbarno, DiCello Levitt Gutzler LLC, Mentor, OH, Randolph Harry Freking, Freking Myers & Reul LLC, Cincinnati, OH, Adam J. Levitt, Pro Hac Vice, DiCello Levitt Gutzler LLC, Chicago, IL, Burton S. DeWitt, Pro Hac Vice, William R.H. Merrill, Pro Hac Vice, Susman Godfrey L.L.P., John Scott Black, Pro Hac Vice, Melissa Waden Wray, Pro Hac Vice, Richard D. Daly, Pro Hac Vice, Daly & Black, P.C., Houston, TX, Jesse-Justin Cuevas, Pro Hac Vice, Marc M. Seltzer, Pro Hac Vice, Steven G. Sklaver, Pro Hac Vice, Susman Godfrey L.L.P., Los Angeles, CA, Seth Ard, Pro Hac Vice, New York, NY, for Plaintiffs Troy Stacy Enterprises Inc., Burning Brothers Brewing LLC, Chicago Magic Lounge LLC, CDC Catering, Inc.

Kenneth P. Abbarno, DiCello Levitt Gutzler LLC, Mentor, OH, Randolph Harry Freking, Freking Myers & Reul LLC, Cincinnati, OH, Adam J. Levitt, Pro Hac Vice, DiCello Levitt Gutzler LLC, Chicago, IL, Burton S. DeWitt, Pro Hac Vice, William R.H. Merrill, Pro Hac Vice, Susman Godfrey L.L.P., John Scott Black, Pro Hac Vice, Melissa Waden Wray, Pro Hac Vice, Richard D. Daly, Pro Hac Vice, Daly & Black, P.C., Houston, TX, Howard M. Louik, Pro Hac Vice, Louik Law Offices, Pittsburgh, PA, Jesse-Justin Cuevas, Pro Hac Vice, Marc M. Seltzer, Pro Hac Vice, Steven G. Sklaver, Pro Hac Vice, Susman Godfrey L.L.P., Los Angeles, CA, Seth Ard, Pro Hac Vice, New York, NY, for Plaintiff Swearingen Smiles LLC.

Kenneth P. Abbarno, DiCello Levitt Gutzler LLC, Mentor, OH, Randolph Harry Freking, Freking Myers & Reul LLC, Cincinnati, OH, Adam J. Levitt, Pro Hac Vice, DiCello Levitt Gutzler LLC, Chicago, IL, Burton S. DeWitt, Pro Hac Vice, William R.H. Merrill, Pro Hac Vice, Susman Godfrey L.L.P., John Scott Black, Pro Hac Vice, Richard D. Daly, Pro Hac Vice, Daly & Black, P.C., Houston, TX, Howard M. Louik, Pro Hac Vice, Louik Law Offices, Pittsburgh, PA, Jesse-Justin Cuevas, Pro Hac Vice, Marc M. Seltzer, Pro Hac Vice, Steven G. Sklaver, Pro Hac Vice, Susman Godfrey L.L.P., Los Angeles, CA, Seth Ard, Pro Hac Vice, New York, NY, for Plaintiff Eleisha J. Nickoles, DDS.

Mark Abramowitz, Mark A. DiCello, Kenneth P. Abbarno, DiCello Levitt Gutzler LLC, Mentor, OH, Burton S. DeWitt, Pro Hac Vice, William R.H. Merrill, Pro Hac Vice, Susman Godfrey L.L.P., John Scott Black, Pro Hac Vice, Melissa Waden Wray, Pro Hac Vice, Richard D. Daly, Pro Hac Vice, Daly & Black, P.C., Houston, TX, Jesse-Justin Cuevas, Pro Hac Vice, Marc M. Seltzer, Pro Hac Vice, Steven G. Sklaver, Pro Hac Vice, Susman Godfrey L.L.P., Los Angeles, CA, Randolph Harry Freking, Freking Myers & Reul LLC, Cincinnati, OH, Seth Ard, Pro Hac Vice, New York, NY, for Plaintiff Reeds Jewelers of Niagra Falls, Inc.

Carrie Dettmer Slye, Baker & Hostetler, Cincinnati, OH, Michael P. Baniak, Pro Hac Vice, Laurence J. Tooth, Pro Hac Vice, Litchfield Cavo LLP, Chicago, IL, Michael K. Farrell, Baker & Hostetler LLP, Cleveland, OH, Rodger L. Eckelberry, Baker & Hostetler, Columbus, OH, for Defendant The Cincinnati Insurance Company.

Michael K. Farrell, Baker & Hostetler LLP, Cleveland, OH, for Defendants The Cincinnati Casualty Company, The Cincinnati Indemnity Company, The Cincinnati Financial Corporation.

ORDER GRANTING MOTION TO DISMISS AND DENYING MOTION TO STAY AS MOOT

MATTHEW W. McFARLAND, JUDGE

These consolidated actions arise from business closures related to the COVID-19 pandemic and the resulting economic shutdowns. After the Court consolidated these claims (Doc. 57), Plaintiffs filed a Consolidated Amended Class Action Complaint (Doc. 61). Now before the Court are motions to dismiss (Doc. 63) and to stay (Doc. 66) filed by Defendants (collectively, "Cincinnati").

Because neither the presence of SARS-CoV-2 or COVID-19 in the insured property nor the government closure orders constitute "direct accidental physical loss or accidental physical damage," the Court grants the motion to dismiss and denies the motion to stay as moot.

FACTUAL ALLEGATIONS

The plaintiffs, like so many of the rest of us the past year and a half, have endured significant burdens because of the SARS-CoV-2 virus, commonly known as novel coronavirus, and the disease it causes, COVID-19. (See Am. Compl., Doc. 61, ¶ 10.) Among the pandemic's many other consequences, interruptions in commerce have caused businesses significant losses in profits. In these consolidated actions, seven plaintiff businesses seek insurance coverage from their insurer for "direct physical loss or damage" to their property. (See id. at ¶¶ 11, 22-32.) The plaintiffs hail from mostly different states and run mostly different kinds of businesses:

1. CDC Catering, Inc., trading as Brookside Manor, is an event space and catering service in Feasterville-Trevose, Pennsylvania. (Id. at ¶¶ 9, 43.)
2. Reeds Jewelers of Niagara Falls, Inc., owns and operates seven jewelry and watch retail outlets in New York, and one in Massachusetts. (Id. at ¶ 6.) It is incorporated under the laws of New York. (Id. at ¶ 40.)
3. Troy Stacy Enterprises Inc. owns and operates Craft & Vinyl, a craft beer pub, vinyl record shop, and live music venue in Columbus, Ohio. (Id. at ¶¶ 3, 37.)
4. Swearingen Smiles LLC is a dentists’ office in East Liverpool, Ohio. (Id. at ¶¶ 4, 38.)
5. Chicago Magic Lounge is a bar and theatre that showcases parlor magic for adults and offers food and drinks. (Id. at ¶ 8.) It is a Delaware limited liability company. Its principal place of business is in Chicago, Illinois. (Id. at ¶ 42.)
6. Burning Brothers Brewing LLC is a microbrewery that makes gluten-free beer in St. Paul, Minnesota. (Id. at ¶¶ 7, 41.)
7. Eleisha Nickoles, DDS, is a dentist who maintains an office in Wheeling, West Virginia. (Id. at ¶¶ 5, 39.)

Though they run different kinds of businesses, Plaintiffs have all been forced to reduce or suspend their operations due to the COVID-19 pandemic. (See id. at ¶ 12.) The virus has allegedly contaminated their properties. (Id. at ¶ 204.) People who have been present on insured property have tested positive for COVID-19. (Id. at ¶¶ 179, 193-99.) Since the virus poses a threat to people's health, the businesses have had to disinfect and reconfigure their commercial spaces. (See id. at ¶¶ 93, 94.) And, in response to the COVID-19 pandemic, Plaintiffs’ state and local governments ordered extensive shutdowns. (Id. at ¶¶ 120-165.) In short, because of COVID-19 and the resulting shutdown orders, Plaintiffs could not run their businesses as they normally would. (Id. at ¶¶ 185-192.)

Plaintiffs all had insurance policies with Cincinnati. (Id. at ¶¶ 47-53.) In those policies, Cincinnati agreed to provide coverage for lost "Business Income":

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 property at a "premises" caused by or resulting from any Covered Cause of Loss.

(E.g. , Craft & Vinyl Policy, Doc. 61-1, Pg. ID 3011; Swearingen Smiles Policy, Doc. 61-2, Pg. ID 3154; Eleisha Nickoles DDS Policy, Doc. 61-3, Pg. ID 3374.) "Covered Cause of Loss" means "direct ‘loss’ unless the ‘loss’ is excluded or limited." (E.g. , Craft & Vinyl Policy, Doc. 61-1, Pg. ID 2998; Brookside Manor Policy, Doc. 61-7, Pg. ID 4929.) The policies define "loss" as "accidental physical loss or accidental physical damage." (E.g. , Craft & Vinyl Policy, Doc. 61-1, Pg. ID 3031; Brookside Manor Policy, Doc. 61-7, Pg. ID 4962.) The policies also provide for "Extra Expense" coverage and "Civil Authority" coverage. "Extra Expense" refers to necessary expenses an insured sustains during a "period of restoration" which would not have been incurred had there been no direct loss to property. (Am. Compl., Doc. 61, ¶¶ 64-65; Craft & Vinyl Policy, Doc. 61-1, Pg. ID 3012.) "Civil Authority" coverage is available when, among other conditions, a loss causes damage to property other than the insured property and a civil authority prohibits access to the insured premises. (Am. Compl., Doc. 61, ¶ 66; Craft & Vinyl Policy, Doc. 61-1, Pg. ID 3012.)

Plaintiffs sought coverage under the "Business Income," "Extra Expense," and "Civil Authority" provisions. Cincinnati denied coverage. (Am. Compl., Doc. 61, ¶¶ 214-16.) These lawsuits followed. The Court consolidated them in January 2021. Troy Stacy Enterprises Inc. v. Cincinnati Ins. Co. , 337 F.R.D. 405, 408 (S.D. Ohio 2021). Plaintiffs bring four claims for breach of contract, seeking business income coverage, civil authority coverage, extra expense coverage, and sue-and-labor coverage. They also bring four claims for declaratory judgment under the same four coverage provisions.

LAW AND ANALYSIS

The Federal Rules of Civil Procedure allow, upon motion, the dismissal of a complaint "for failure to state a claim upon which relief can be granted." Fed. R. Civ. R. 12(b)(6). A Rule 12(b)(6) motion to dismiss tests the plaintiff's cause of action as stated in the complaint. Golden v. City of Columbus , 404 F.3d 950, 958–59 (6th Cir. 2005). The Court accepts the complaint's factual allegations as true. It is not bound to do the same for a complaint's legal conclusions. Bell Atl. Corp, v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Thus, surviving a motion to dismiss is a matter of pleading sufficient factual content. 16630 Southfield...

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