BN Farm LLC v. Cincinnati Cas. Co.

560 F.Supp.3d 455

BN FARM LLC d/b/a The Farm Bar and Grille Essex, BN Ipswich LLC d/b/a Fox Creek Tavern f/k/a En Fuego Cocina Mexicana, BN Marina LLC, BNR Beverly Inc. d/b/a En Fuego Beverly, BNR Salisbury LLC d/b/a Portside Waterfront Kitchen & Bar, BNR Methuen LLC d/b/a The Miller's Tavern a/k/a The Miller Tavern, BNRFarmDover, LLC d/b/a The Farm Bar & Grille Dover, BNRFarmManch LLC d/b/a The Farm Bar & Grille Manchester, BNRHampton LLC d/b/a The 401 Tavern and BN Realty Limited Liability Company, Plaintiffs/Defendants-in-Counterclaim,

v.The CINCINNATI CASUALTY COMPANY, Defendant/Plaintiff-in-Counterclaim.

CIVIL ACTION NO. 20-10874-MBB

United States District Court, D. Massachusetts.

Filed September 16, 2021

Seth H. Hochbaum, Sarah Elizabeth Eckert, Tyler O. Casey, Regnante Sterio LLP, Wakefield, MA, for Plaintiffs/Defendants-in-Counterclaim.

Nora R. Adukonis, Robert L. Ciociola, Litchfield Cavo LLP, Lynnfield, MA, Kathleen F. Adams, Pro Hac Vice, Litchfield Cavo, LLP, Simsbury, CT, for Defendant/Plaintiff-in-Counterclaim.

MEMORANDUM AND ORDER RE: PLAINTIFFS/DEFENDANTS-IN-COUNTERCLAIM MOTION FOR SUMMARY JUDGMENT (DOCKET ENTRY # 47); CINCINNATI CASUALTY COMPANY'S CROSS MOTION FOR SUMMARY JUDGMENT (DOCKET ENTRY # 51)

BOWLER, U.S.M.J.

Pending before this court is a motion for summary judgment filed by plaintiffs/defendants-in-counterclaim BN Farm LLC d/b/a The Farm Bar and Grille Essex ("BN Farm Essex"), BN Ipswich LLC d/b/a Fox Creek Tavern f/k/a En Fuego Cocina Mexicana ("BN Ipswich"), BN Marina LLC ("BN Marina"), BNR Beverly Inc. d/b/a En Fuego Beverly ("BNR Beverly"), BNR Salisbury LLC d/b/a Portside Waterfront Kitchen and Bar ("BNR Salisbury"), BNR Methuen LLC d/b/a The Miller's Tavern a/k/a The Miller Tavern ("BNR Methuen"), BNRFarmDover, LLC d/b/a The Farm Bar and Grille Dover ("BNR Farm Dover"), BNRFarmManch LLC d/b/a The Farm Bar and Grille Manchester ("BN Farm Manchester"), BNRHampton LLC d/b/a The 401 Tavern ("BNR Hampton"), and BN Realty Limited Liability Company ("BN Realty"). (Docket Entry # 47). Also pending before the court is a motion for summary judgment filed by defendant/plaintiff-in-counterclaim The Cincinnati Casualty Company ("Cincinnati"). (Docket Entry # 51).

PROCEDURAL BACKGROUND

As operators of full-service restaurants in Massachusetts and New Hampshire, BN Farm Essex, BN Ipswich, BN Marina, BNR Beverly, BNR Salisbury, BNR Methuen, BNR Farm Dover, BN Farm Manchester, BNR Hampton, and BN Realty ("plaintiffs") filed an amended complaint against Cincinnati seeking a declaratory judgment of coverage under commercial property insurance policy number EPP0568391 ("the Policy") and damages for breach of contract. (Docket Entry # 42, ¶¶ 99–123) (Docket Entry # 53, ¶¶ 1, 24). Count I of the amended complaint requests a declaration that: (a) plaintiffs have coverage for business income and civil authority losses, as well as extra expenses, as a result of the coronavirus ("COVID-19" or "COVID") pandemic under the Policy; (b) Cincinnati owes plaintiffs payment for these losses and extra expenses; and (c) the Policy lacks an exclusion that bars or limits plaintiffs’ coverage for business income and civil authority losses, as well as extra expenses. (Docket Entry # 42, pp. 19–21, ¶ 103).¹ Count II seeks damages for breach of contract as a result of Cincinnati's refusal to cover plaintiffs’ COVID-related business income losses and extra expenses under the Policy. (Docket Entry # 42, p. 22, ¶ 113). Count III seeks damages for breach of contract for Cincinnati's failure to provide coverage for plaintiffs’ business income losses and extra expenses under the Civil Authority provision of the Policy. (Docket Entry # 42, pp. 23–24, ¶ 123).

Cincinnati filed an answer to the amended complaint with a counterclaim for a declaratory judgment against plaintiffs on the basis that coverage is unavailable under the Policy. (Docket Entry # 46). Count I of the counterclaim asserts that the lack of direct physical loss and/or damage to plaintiffs’ property precludes coverage under the Business Income and Civil Authority provisions of the Policy. (Docket Entry # 46, p. 26, ¶¶ 13–15). Count II seeks declaratory relief because plaintiffs fail to satisfy the requirements of the Civil Authority provision since plaintiffs’ property remained accessible. (Docket Entry # 46, pp. 26–27, ¶¶ 16–19). Lastly, Count III of the counterclaim submits that the Ordinance or Law and the Delay or Loss of Use exclusions preclude coverage. (Docket Entry # 46, pp. 27–28, ¶¶ 20–25).

Plaintiffs filed the motion for summary judgment on counts I through III of the amended complaint and Cincinnati's counterclaim. (Docket Entry # 47). Cincinnati filed the cross motion for summary judgment on all counts of the amended complaint and the counterclaim. (Docket Entry # 51). "The parties agree and stipulate that Massachusetts substantive law" applies to their dispute. (Docket Entry # 53, ¶ 40). They also concur "[t]he summary judgment record shall consist of agreed-upon relevant documents and documents that are admissible by way of judicial notice." (Docket Entry # 17, p. 3).

STANDARD OF REVIEW

Summary judgment is designed " ‘to pierce the boilerplate of the pleadings and assay the parties’ proof in order to determine whether trial is actually required.’ " Tobin v. Fed. Express Corp., 775 F.3d 448, 450 (1st Cir. 2014) (citation omitted). It is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). It is inappropriate "if the record is sufficiently open-ended to permit a rational factfinder to resolve a material factual dispute in favor of either side." Pierce v. Cotuit Fire Dist., 741 F.3d 295, 301 (1st Cir. 2014). It is permissible to consider "other materials" in the record beyond those cited to support or oppose a particular summary judgment motion. Fed. R. Civ. P. 56(c)(3).

"An issue is ‘genuine’ when a rational factfinder could resolve it [in] either direction," and a "fact is ‘material’ when its (non)existence could change a case's outcome." Mu v. Omni Hotels Mgmt. Corp., 882 F.3d 1, 5 (1st Cir. 2018). The record is viewed in favor of the nonmoving party and reasonable inferences are drawn in his favor. See Garcia-Garcia v. Costco Wholesale Corp., 878 F.3d 411, 417 (1st Cir. 2017) (courts examine " ‘record in the light most favorable to the nonmovant’ and must make ‘all reasonable inferences in that party's favor’ "); Ahmed v. Johnson, 752 F.3d 490, 495 (1st Cir. 2014). The parties submit a joint Local Rule 56.1 ("L.R. 56.1") statement of undisputed facts, as well as their own L.R. 56.1 statements, and Cincinnati filed a response to plaintiffs’ statement. (Docket Entries ## 48, 53, 56, 63). Uncontroverted statements of fact in the moving party's L.R. 56.1 statement comprise part of the summary judgment record. See Cochran v. Quest Software, Inc., 328 F.3d 1, 12 (1st Cir. 2003) ; Stonkus v. City of Brockton Sch. Dep't, 322 F.3d 97, 102 (1st Cir. 2003).

FACTUAL BACKGROUND

I. Coronavirus Pandemic

On January 30, 2021, the World Health Organization ("WHO") declared that the coronavirus, or SARS-CoV-2, outbreak was "a Public Health Emergency of International Concern." (Docket Entry # 53, ¶ 2). Following suit, the United States announced a public health emergency due to COVID-19 on January 31, 2020. (Docket Entry # 53, ¶ 3). WHO later declared the COVID-19 outbreak a pandemic on March 11, 2020. (Docket Entry # 53, ¶ 11). On March 13, 2020, President Donald J. Trump invoked the Stafford Act to designate the COVID-19 outbreak as both a pandemic and a national emergency. (Docket Entry # 53, ¶ 13) (Docket Entry # 53-7, p. 3).

COVID-19 is "highly contagious" and transmitted via "several modes," including close contact with pre-symptomatic, asymptomatic, and symptomatic individuals. (Docket Entry # 53, ¶¶ 4-5, 7–9) (Docket Entry # 48-1, p. 1). In plaintiffs’ restaurants, customers interact with surfaces made of steel, glass, plastic, and copper, among other materials. (Docket Entry # 53, ¶¶ 10, 22–23). The Centers for Disease Control and Prevention ("CDC") warns that respiratory droplets of infected individuals may accumulate on such surfaces. (Docket Entry # 53, ¶¶ 7–9) (Docket Entry # 48-1, p. 2) (Docket Entry # 48-10) (Docket Entry # 48-11) (Docket Entry # 48-14, p. 1). Although this method of viral transmission is uncommon, "[i]t is possible that a person could get COVID-19 by touching a surface or object that has the virus on it and then touching [his or her] own mouth, nose, or eyes." (Docket Entry # 48-14, p. 1).

"Studies indicate COVID-19 is primarily transmitted from infected people to others when people are in close contact with each other (within about 6 feet, or 2 arm lengths), through respiratory droplets." (Docket Entry # 53, ¶¶ 7–9). The transmission of the virus via aerosols between individuals more than six feet apart remains a matter of scientific debate.² (Docket Entry # 48-3). For example, an August 2020 article notes "growing evidence that in addition to contact and drople[t] spread, the transmission of [COVID-19] via aerosols is plausible under favorable conditions, particularly in relatively confined settings with poor ventilation and long duration exposure to high concentrations of aerosols ...."³ (Docket Entry # 48-3, p. 2). COVID-19 is "most commonly spread[ ] during close contact[,]" such as within six feet of an infected individual, and "can sometimes" spread "by airborne transmission" of respiratory droplets or smaller particles from infected individuals greater than six feet away or left in the air after the infected person leaves the space. (Docket Entry # 48-1, pp. 1-2).⁴ On-site indoor dining with tables spaced less than six feet apart poses a higher risk of contracting COVID-19 than outdoor drive-through or "curb-side pick up" of food. (Docket Entry # 48-14, p. 1).

As of December 24, 2020, the Massachusetts Department...