WP6 Rest. Mgmt. Grp. LLC v. Zurich Am. Ins. Co.

• Decision Date: 31 March 2022
• Docket Number: Case No. 2:20-CV-1506-KJD-NJK
• Citation: 595 F.Supp.3d 973
• Parties: WP6 RESTAURANT MANAGEMENT GROUP LLC, Plaintiff, v. ZURICH AMERICAN INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Nevada

595 F.Supp.3d 973

WP6 RESTAURANT MANAGEMENT GROUP LLC, Plaintiff,

v.ZURICH AMERICAN INSURANCE COMPANY, Defendant.

Case No. 2:20-CV-1506-KJD-NJK

United States District Court, D. Nevada.

Signed March 31, 2022

Debra Spinelli, James J. Pisanelli, Pisanelli Bice PLLC, Las Vegas, NV, John N. Ellison, Reed Smith LLP, Philadelphia, PA, Richard P. Lewis, Pro Hac Vice, Reed Smith LLP, New York, NY, for Plaintiff.

Alicia G. Curran, Pro Hac Vice, Cozen O'Connor, Dallas, TX, Daniel B. Heidtke, Dominica C. Anderson, Tyson E. Hafen, Duane Morris LLP, Las Vegas, NV, for Defendant.

ORDER

Kent J. Dawson, United States District Judge

Presently before the Court is Defendant's Motion to Dismiss (#42/43). Plaintiff filed a response in opposition (#47) to which Defendant replied (#48/49).

I. Background

Plaintiff WP6 Restaurant Management Group, LLC ("WP6") owns and operates "more than a dozen fine dining restaurants, as well as premium catering services, more than 80 Wolfgang Puck Express operations, and [provides] management services to restaurant services around the world." (Amended Complaint, ECF No. 35, ¶ 9.) WP6's restaurant locations are located in California, Nevada, Florida, Hawaii and New York. (Id., ¶ 10.) According to its complaint, WP6 also "earns income through royalty, licensing fee and commission agreements with various restaurants and establishments located throughout the United States and the world (collectively referred to as ‘Dependent Time-Element Locations’)." (Id., ¶ 11.)

Defendant Zurich American Insurance Company ("Zurich") issued Edge Policy No. ERP 0082839-05 to WP6, effective January 1, 2020 to January 1, 2021 ("Policy"). (Ex. "A" to Amended Complaint). The Insuring Agreement of the Policy states that:

This Policy Insures against direct physical loss of or damage caused by a Covered Cause of Loss¹ to Covered Property, at an Insured Location ... all subject to terms, conditions and exclusions stated in this Policy.

(Policy, § 1.01; Amended Complaint, ¶ 105.)

According to its amended complaint, WP6 contends that it should be provided coverage under the Policy pursuant to Sections 4.01.01 ("Loss Insured"), 5.02.03 ("Civil or Military Authority"), and 5.02.05 ("Contingent Time Element") of the Policy. Those provisions provide as follows:

4.01 LOSS INSURED

4.01.01

The Company will pay for the actual Time Element loss the Insured sustains, as provided in the Time Element Coverages, during the Period of Liability. The Time Element loss must result from the necessary Suspension of the Insured's business activities at an Insured Location. The Suspension must be due to direct physical loss of or damage to Property (of the type insurable under this Policy other than Finished Stock ) caused by a Covered Cause of Loss at the Location .

* * * * * * *

5.02.03. CIVIL OR MILITARY AUTHORITY

The Company will pay for the actual Time Element loss sustained by the Insured, as provided by this Policy, resulting from the necessary Suspension of the Insured's business activities at an Insured Location if the Suspension is caused by order of civil or military authority that prohibits access to the Location . That order must result from a civil authority's response to direct physical loss of or damage caused by a Covered Cause of Loss to property not owned, occupied, leased or rented by the Insured or insured under this Policy and located within the distance of the Insured's Location as stated in the Declarations. The Company will pay for the actual Time Element loss sustained, subject to the deductible provisions that would have applied had the physical loss or damage occurred at the Insured Location, during the time the order remains in effect, but not to exceed the number of consecutive days following such order as stated in the Declarations up to the limit applying to this Coverage.

* * * * * * *

5.02.05. CONTINGENT TIME ELEMENT

The Policy covers the actual Time Element Loss as provided by the Policy, sustained by the Insured during the Period of Liability directly resulting from the necessary Suspension of the Insured's business activities at an Insured Location if the Suspension results from direct physical loss of or damage caused by a Covered Cause of Loss to property (of the type insurable under this Policy) at Direct Dependent Time Element Locations, Indirect Dependent Time Element Locations and Attraction Properties .

The Policy also contains exclusions. The Policy expressly excludes coverage for loss arising from the "loss of use" of property. (Policy, § 3.03.02.01 ["This Policy excludes: Loss or damage arising from delay, loss of market, or loss of use."].)

II. Standard for a Motion to Dismiss

A Federal Rule of Civil Procedure 12(b)(6) motion to dismiss should be granted where a plaintiff fails to plead "enough facts to state a claim to relief 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) (" Twombly"), or where plaintiff fails to plead a "cognizable legal theory." Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988). "A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of elements of a cause of action will not do.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (" Iqbal") (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ). "Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ " Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955 ). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ).

While considering Rule 12(b)(6) motions, courts must accept factual allegations as true, but "a court need not blindly accept conclusory allegations, unwarranted deductions of fact, and unreasonable inferences." Packaging Sys. v. PRC-Desoto Int'l, Inc., 268 F. Supp. 3d 1071, 1079 (C.D. Cal. 2017) (citing Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001) ). "A complaint that does not permit the court to infer more than the mere possibility of misconduct has ‘alleged – but not shown – that the pleader is entitled to relief,’ and it must be dismissed." Nelson v. XL Am., Inc., No. 2:16-cv-00060-JAD-GWF, 2017 WL 4185461, at *2, 2017 U.S. Dist. LEXIS 154103, at *5 (D. Nev. Sep. 21, 2017) (granting defendant insurer's motion to dismiss on basis of insurance policy's exclusion) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ).

III. Analysis

Under Nevada law, "[t]he starting point for the interpretation of any contract, including insurance policies, is with its plain language." Hunt v. AAA Nev. Ins. Co., 369 F. Supp. 3d 1113, 1117 (D. Nev. 2019) (citing McDaniel v. Sierra Health and Life Ins. Co., Inc., 118 Nev. 596, 53 P.3d 904, 906 (2002)). "If an insurance policy is unambiguous, the Nevada Supreme Court interprets it according to the plain meaning of its terms." Cohen v. Berkley Nat'l Ins. Co., No. 2:17-cv-00057-GMN-GWF, 2017 WL 3925418 at *2, 2017 U.S. Dist. LEXIS 144633 at *6 (D. Nev. Sep. 6, 2017) (granting defendant insurer's motion to dismiss based upon an exclusion in the policy at issue) (quoting Powell v. Liberty Mut. Fire Ins. Co., 127 Nev. 156, 252 P.3d 668, 672 (2011) ). "A provision in an insurance policy is ambiguous if it is reasonably susceptible to more than one interpretation." Benchmark Ins. Co. v. Sparks, 127 Nev. 407, 254 P.3d 617, 621 (2011). But, "just because language could be more precise does not mean it is ambiguous[,]" City of Carlsbad v. Ins. Co. of the State of Penn., 180 Cal. App. 4th 176, 182, 102 Cal.Rptr.3d 535 (Cal. Ct. App. 2009), and "an abstract ambiguity based on a semantically permissible interpretation of a word or phrase cannot create coverage where none would otherwise exist." State Farm Gen. Ins. Co. v. JT's Frames, Inc., 181 Cal. App. 4th 429, 444, 104 Cal.Rptr.3d 573 (Cal. Ct. App. 2010).

Ultimately, as explained by the Nevada Supreme Court, an insurance policy is "given its plain and ordinary meaning from the viewpoint of one not trained in law, meaning, [courts] will not rewrite contract provisions that are otherwise unambiguous ... [or] increase an obligation to the insured where such was intentionally and unambiguously limited by the parties." United Nat'l Ins. Co. v. Frontier Ins. Co., 120 Nev. 678, 99 P.3d 1153, 1156 (2004) ; Farmers Ins. Exch. v. Neal, 119 Nev. 62, 64 P.3d 472 (2003) ; Farmers Ins. Group v. Stonik, 110 Nev. 64, 867 P.2d 389, 391 (1994) ("this court will not rewrite contract provisions that are otherwise unambiguous."). WP6 does not allege that any of the Policy's terms at issue in this motion are ambiguous, and this Court has not previously held that such terms are ambiguous. Circus Circus LV, LP v. AIG Specialty Insurance Company, 525 F.Supp.3d 1269, 1274-75 (D. Nev. 2021) ; Levy Ad Group v. Chubb Corp., 519 F.Supp.3d 832, 836-37 (D. Nev. 2021) (granting motion to dismiss because plaintiffs failed to allege physical loss or damage to their premises and "instead merely assert that they were ‘ordered to close’ and ‘were not permitted to conduct business operations’ ") (aff'd mem., 2022 WL 816927 *1, No. 21-15413 (9th Cir. March 17, 2022) ).

A. Failure to state a claim for a Covered Cause of Loss

WP6 has failed to meet its burden of demonstrating that its claim is covered under the Policy. Nat'l Auto. & Cas. Ins. Co. v. Havas, 75 Nev. 301, 339 P.2d 767, 768 (1959) (under Nevada law, the insured bears the burden of proof initially and must demonstrate that the claim is "within the terms of the policy."). Under the Policy's insuring agreement for property coverage, WP6 must plead with supporting factual allegations and ultimately prove the existence of "direct physical loss of or damage caused by a Covered Cause of Loss to Covered Property, at an Insured Location." (Policy, § 1.01). Similarly, the Policy's Contingent Time Element coverage requires "direct...