VZA, LLC v. Cincinnati Insurance Company
| Citation | 564 F.Supp.3d 645 |
| Decision Date | 30 September 2021 |
| Docket Number | Case No. 3:20-cv-01046-GCS |
| Parties | VZA, LLC d/b/a Maverick's Slots, Plaintiff, v. The CINCINNATI INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of Illinois |
Ann E. Callis, R. Seth Crompton, Holland Law Firm, Eric D. Holland, Holland, Groves, et al., St. Louis, MO, for Plaintiff.
Michael Paul Baniak, Brian M. Reid, Litchfield Cavo LLP, Chicago, IL, for Defendant.
INTRODUCTION AND BACKGROUND
Plaintiff is a licensed Video Game Location in East Alton, Illinois. (Doc. 1-1, ¶ 1). In March 2020, Illinois Governor Pritzker issued a series of executive orders designed to address the COVID-19 pandemic. Id. at ¶ 3. These orders mandated that all "nonessential businesses" close to the public, thus effectively shuttering all restaurants, bars, and movie theaters (hereinafter collectively referred to as the "Closure Orders"). Id. Due to these Closure Orders, Plaintiff was forced to halt its ordinary gaming operations, thus resulting in substantial lost revenues. (Doc. 1-1, ¶ 4).
On August 31, 2020, Plaintiff VZA, LLC, d/b/a Maverick's Slots, filed its Complaint in the Circuit Court of Madison County, Illinois, against Defendant, The Cincinnati Insurance Company. (Doc. 1-1). Defendant later removed this matter to this Court pursuant to the Court's diversity jurisdiction. (Doc. 1). Plaintiff seeks relief related to Defendant's denial of Plaintiff's insurance claim for business losses sustained during the shutdown of non-essential businesses in Illinois during the early days of the COVID-19 pandemic. (Doc. 1-1). Plaintiff first requests a declaratory judgment that Defendant must provide coverage under the relevant insurance policy for losses sustained as a result of executive orders which were issued to curb the spread of COVID-19 (Count I). (Doc. 1-1, ¶¶ 50-55). Moreover, Plaintiff seeks damages for breach of contract due to Defendant's failure to provide coverage under the policy (Count II). Id. at ¶¶ 56-60. Plaintiff finally asserts claims for bad faith denial under 255 ILL. COMP. STAT. § 5/154.6 (Count III) and requests damages and attorneys’ fees under 255 ILL. COMP. STAT. § 5/155. Id. at ¶¶ 61-68.
Now before the Court is Defendant's Motion to Dismiss, which Defendant filed on October 9, 2020. (Doc. 5). Plaintiff filed a response in opposition on November 9, 2020. (Doc. 14). Defendant filed a reply in support on November 23, 2020. (Doc. 16). During the pendency of this motion, both parties filed a number of supplementary authorities. (Doc. 20, 22, 26, 29, 35, 38). Having reviewed the briefing, arguments, and supplementary authorities, the Defendant's Motion to Dismiss (Doc. 5) is GRANTED for the reasons set forth below.
Defendant issued a Commercial property and Commercial General Liability Policy to Plaintiff, Policy No. EPP 050 33 34. (Doc. 1-1, ¶ 14). The policy covers the period from September 4, 2019 through September 4, 2022. (Doc. 1-1, p. 24). Plaintiff purchased the policy from Defendant to cover its principal place of business located in East Alton, Illinois. (Doc. 1-1, ¶ 20). The policy purchased does not include an exception for loss due to viruses. Id. at ¶ 8. Thus, according to Plaintiff, it reasonably anticipated that the insurance it purchased from Defendant would cover property damage and business interruption losses of the type at issue in the instant matter. Id. Plaintiff estimates its total losses exceed $10,000 per month. Id. at ¶ 47. As a result, Plaintiff has been forced to furlough workers and is in danger of permanent closure. Id.
Plaintiff relies on policy provisions relating to the loss of "Business Income" during a period of restoration resulting from a "suspension" of business "operations" caused by a direct loss to property. (Doc. 1-1, ¶¶ 19, 21). Plaintiff further relies on policy provisions relating to the loss of "Business Income" and the payment of "Extra Expense[s]" resulting from a civil authority's actions. Id. at ¶¶ 22, 25-27. Together, Plaintiff claims that these provisions cover the losses it has incurred in the instant matter.
The Building and Personal Property Coverage Form includes both the Civil Authority coverage and the Business Income and Extra Expense coverage, which Plaintiff claims apply to this case. The Business Income coverage requirements state, in pertinent part:
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 a property at a "premises" caused by or resulting from any Covered Cause of Loss.
The Extra Expense coverage section provides in pertinent part as follows:
The policy further provides Civil Authority coverage, which states in pertinent part:
The term "Covered Cause of Loss," which is used above in the Business Income, Extra Expense and Civil Authority coverage sections, is defined as "direct ‘loss’ unless the ‘loss’ is excluded or limited in this Coverage Part." (Doc. 1-1, p. 48). Finally, "Loss" is defined as "accidental physical loss or accidental physical damage." (Doc. 1-1, p. 81).
Plaintiff alleges that it has suffered a loss to property as contemplated by the policy. Specifically, Plaintiff alleges that COVID-19 is transmitted by human contact with airborne virus particles and that the presence of these particles renders physical property and the premises unsafe. (Doc. 1-1, ¶¶ 35-36). The presence of any COVID-19 particles on physical property impairs its value, usefulness, and/or normal function. Id. at ¶ 37. As such, according to Plaintiff, the presence of COVID-19 particles causes direct physical loss or damage to property. Id. at ¶ 38.
Plaintiff further claims that COVID-19 particles have "likely" infected its premises. (Doc. 1-1, ¶ 41). Plaintiff notes that the first death associated with COVID-19 occurred as early as Feb. 6, 2020. Id. Because the incubation period is at least 14 days, "it is likely customers, employees and/or other visitors to the insured property over the last two plus months were infected with COVID-19 and thereby infected the insured property with COVID-19." Id. To further support this claim, Plaintiff notes that COVID-19 strains can stay alive on surfaces for up to 17 days. Id. at ¶ 42. Plaintiff further notes that the virus may linger on surfaces for up to four weeks in low temperatures. Id.
"The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits." Gibson v. City of Chicago , 910 F.2d 1510, 1520 (7th Cir. 1990). To survive dismissal, Plaintiff must state a claim that is ‘plausible on its face.’ " Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). A plausible claim exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009). However, the plaintiff's allegations of fact must rise above a speculative level in order to constitute a "showing" that makes the claims in a complaint rise to the level of plausibility. Bell Atlantic Corp. , 550 U.S. at 555, 127 S.Ct. 1955 (internal citations omitted).
The Court will accept all well-pleaded factual allegations as true and will construe all reasonable inferences in Plaintiff's favor. See Gibson , 910 F.2d 1510 at 1520-21 ; Zablocki v. Merchants Credit Guide Co., 968 F.3d 620, 623 (7th Cir. 2020). "Well-pleaded facts," however, include neither legal conclusions nor unsupported conclusions of fact. Hickey v. O'Bannon , 287 F.3d 656, 658 (7th Cir. 2002) (internal citations omitted). See also Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 (); Zablocki , 968 F.3d at 623 (...
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