Elegant Massage, LLC v. State Farm Mut. Auto. Ins. Co.

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ELEGANT MASSAGE, LLC d/b/a LIGHT STREAM SPA, on behalf of itself and all others similarly situated, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and STATE FARM FIRE AND CASUALTY COMPANY, Defendants.

Civil Action No. 2:20-cv-265

United States District Court, E.D. Virginia, Norfolk Division

February 11, 2022

MEMORANDUM OPINION AND ORDER

Before the Court are three motions ripe for judicial determination. The first is a Motion for Class Certification under Rule 23(b)(3), Appointment of Class Representative, and Appointment of Class Counsel filed by Elegant Massage, LLC d/b/a Light Stream Spa (‘'Elegant Massage” or “Plaintiff'). Pl.'s Second Mot, Class Cert Appoint. Class Rep. & Appoint. Class Counsel, ECF No. 237 (“Second Mot. Class Cert.”). The second is a Motion to Exclude the Testimony and Opinions of Jeffrey E Meyers filed by State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company (collectively, “State Farm” or “Defendants”). Defs.' Mot. Exclude Test & Op. of Jeffrey E. Meyers, ECF No. 253 (“Defs? Mot. Exclude”). The third is a Motion to Exclude Opinions and Testimony of Stephen D. Prowse for Class Certification, Summary Judgment, and Trial filed by Elegant Massage. Pl.'s Mot. Exclude Op. & Test, of Stephen D Prowse for Class Cert., Summ. J., and Trial, ECF No. 278 (“Pl.'s Mot. Exclude”).

Upon review of the relevant filings, the Court finds that hearings on Plaintiffs Motions and Defendants' Motion are not necessary. See E.D. VA. LOCAL CIV. R. 7(J). For the reasons stated herein, Defendants' Motion to Exclude is DENIED, Plaintiffs Motion to Exclude is GRANTED IN PART, and Plaintiffs Motion for Class Certification is GRANTED.

I. FACTUAL AND PROCEDURAL HISTORY

On May 27, 2020, Plaintiff filed the instant suit. See Compl., ECF No. 1. On July 21, 2020, Plaintiff filed an amended complaint. See Am. Compl., ECF No. 20. In its Amended Complaint, Plaintiff alleges that Elegant Massage has owned and operated Light Stream Spa since 2016, which provides therapeutic massages in Virginia Beach, Virginia. Id. at ¶¶ 2, 57. In 2019, Plaintiff purchased an insurance policy (Policy No. 96-C6-P556-2) (“the Policy”) from State Farm. Id. at ¶ 3, Ex. A, at 4. The Policy issued to Plaintiff is an “all risk” commercial property insurance policy, which covers loss or damage to the covered premises resulting from all risks other than those expressly excluded. Id. at ¶¶ 1, 3, 25-27. The Policy was effective from July 22, 2019 until July 22, 2020 and Plaintiff paid an annual premium of $475.00. Id. at Ex. A, at 4. The Policy includes coverage for “Loss of Income and Extra Expense, ” the standard form for which is identified as CMP-4705.1. Id. at ¶ 3, Ex. A, at 7-8, 17. Under the provision, the Policy provides for the loss of business income sustained as a result of the suspension of business operations which includes action of a civil authority that prohibits access to the Plaintiffs business property. Id. at ¶¶ 3, 34-35, Ex. A, at 17-20. The Policy also states that it does not cover Exclusions for “Fungi, Virus or Bacteria, ” “Ordinance or Law, ” “Acts or Decisions, ” or “Consequential Loss” Id. at ¶¶ 89, 91, 93, 96.

On March 13, 2020, President Donald J. Trump issued a National Emergency Concerning the Novel Coronavirus Disease (“COVID-19) Outbreak.^[1] On March 16, 2020, the Centers for Disease Control and Prevention (CDC) issued guidance recommending the implementation of “social distancing” policies to prevent the spread of the a novel strain of coronavirus, SARS-CoV-2 (“COVID-19”). On March 20, 2020, Governor Northam and the Virginia State Health Commissioner declared a public health emergency and restricted the number of patrons permitted in restaurants, fitness centers, and theaters to ten or less.^[2] On March 23, 2020, Governor Northam issued Executive Order No. 53, which ordered the closure of “recreational and entertainment businesses, ” including “spas” and “massage parlors.”^[3] On March 23, 2020, Governor Northam issued Executive Order No. 55, which ordered all individuals in Virginia to stay home unless they were carrying out necessary life functions.^[4] On May 8, 2020, the Governor issued Executive Order No. 61, which amended Executive Order Nos. 53 and 55 and, beginning on May 15, 2020, eased some of the restrictions.^[5] Under Executive Order No. 61, spas and message centers were permitted to re-open subject to certain restrictions including limiting occupancy to 50% as well as requiring six feet between workstations, workers and patrons to wear face coverings, and hourly cleaning and disinfection while in operation. Id. However, if businesses were unable to comply with the restrictions in Executive Order No. 61, they were ordered to remain closed. Id.

As a result of the policies on social distancing and restrictions on its business, Plaintiff voluntarily closed Light Stream Spa on March 16, 2020. Am. Compl. at ¶ 58. On March 23, 2020, Executive Order No. 53 mandated that Plaintiff remain closed through May 15, 2020. Id. Accordingly, Plaintiff suffered a complete loss of income after closing on March 16, 2020 and incurred extra expenses as well. Id. at ¶¶ 63-64. On March 16, 2020, Plaintiff submitted a claim for loss of business income and extra expenses under the Policy. Id. at ¶ 111. On March 26, 2020, Defendants denied Plaintiffs claim (“Denial Letter”). Id. at ¶ 112. The Denial Letter stated that the grounds for denial were because Plaintiff voluntarily closed their business on March 16, 2020, there was no civil order to close the business, there was no known damage to the business space or property resulting from COVID-19, and the Loss of Income Coverage excludes coverage for loss caused by virus. Id. at ¶ 113.

On May 27, 2020, Plaintiff filed a Class Action Complaint for Declaratory Judgement (Count I) and Breach of Contract (Count II) against Defendants, pursuant to Federal Rule of Civil Procedure (FRCP) 23(b)(1), 23(b)(2), and 23(b)(3) on behalf of itself and all members of the proposed class and sub-class. Compl. at ¶¶ 48-77. On July 21, 2020, Plaintiff filed the instant First Amended Class Action Complaint against Defendants pursuant to FRCP 23(b)(1), 23(b)(2), and 23(b)(3) for Declaratory Judgment on behalf of itself and the proposed Declaratory Judgment Class (Count I), Breach of Contract on behalf of itself and the proposed Nationwide Class, or alternatively, on behalf of the proposed Virginia Sub-Class (Count II), and Breach of Covenant of Good Faith and Fair Dealing on behalf of itself and the proposed Virginia Sub-Class (Count III). Am. Compl. at ¶¶ 143-176. On August 11, 2020, Defendants filed a Motion to Dismiss for Failure to State a Claim as to all three Counts. Defs.' Mot. Dismiss Pl.'s Am. Compl., ECF No. 29. Plaintiff responded in opposition and Defendants replied. Pl.'s Mem. Opp. Defs.' Mot. Dismiss Pl.'s Am. Compl., ECF No. 39; Defs.' Reply to Pl.'s Mem. Opp. Defs.' Mot. Dismiss Pl.'s Am. Compl., ECF No. 41. On December 9, 2020, the Court denied in part and granted in part Defendants' Motion to Dismiss. Mem. Op. & Order Den. Part & Grant. Part Defs.' Mot. Dismiss, ECF No. 62 (“Dec. Mem. Op. & Order”).

Plaintiff filed their first Motion for Class Certification on May 27, 2021. Pl.'s First Mot. Class Cert, under Rule 23(b)(2), ECF No. 115 (“First Mot. Class Cert.”). On August 19, 2021, the Court granted in part and denied in part Plaintiff s First Motion for Class Certification. Mem. Op. & Order. Grant. Part. & Den. Part Pl.'s First Mot. Class Cert., ECF No. 204 (“First Class Cert. Order”). On August 31, 2021, Defendants filed a petition for permission to appeal the Court's Certification Order to the Fourth Circuit Court of Appeals pursuant to FRCP 23(f). Pet. Permission Appeal, ECF No. 229. On September 2, 2021, the Fourth Circuit reversed and remanded the Court's sua sponte certification of an ‘opt-in' Rule 23(b)(3) damages class. State Farm Mut. Auto. Ins. Co. v. Elegant Massage, LLC, No. 21-255, 2021 WL 4202678, at *1 (4th Cir. Sept. 2, 2021). It expressed no opinion on whether a Rule 23(b)(3) class is appropriate in this case, but rather reversed and remanded due to the sua sponte nature of the certification and the opt-in provision. Id. Accordingly, the Court granted Plaintiff leave to file a new request for class certification, if any. Order Grant. Leave File New Mot. Class Cert., ECF No. 234.

On September 27, 2021, Plaintiff filed their Second Motion for Class Certification. Second Mot. Class Cert.; see also Pl.'s Mem. Supp. Pl.'s Second Mot. Class Cert., Appoint. Class Rep. & Appoint. Class Counsel, ECF No. 238 (“Pl.'s Mem. Supp. Cert.”). Defendants filed a memorandum in opposition and Plaintiff replied. Defs.' Mem. Opp. Pl.'s Second Mot. Class Cert., Appoint. Class Rep. & Appoint. Class Counsel, ECF No. 249 (“Defs.' Mem. Opp. Cert.”); Pl.'s Reply to Defs.' Mem. Opp. Pl.'s Second Mot. Class Cert., Appoint. Class Rep. & Appoint. Class Counsel, ECF No. 263 (“Pl.'s Reply Cert.”).

On October 12, 2021, Defendants filed a Motion to Exclude the Testimony and Opinions of Jeffrey E. Meyers. Defs.' Mot. Exclude Meyers; see also Defs.' Mem. Supp. Defs.' Mot. Exclude Test. & Op. of Jeffrey E. Meyers, ECF No. 254 (“Defs.' Mem. Supp. Exclude Meyers”). On October 26, 2021, Plaintiff filed a memorandum in opposition and Defendants replied. Pl.'s Mem. Opp. Defs.' Mot. Exclude Test. & Op. of Jeffrey E. Meyers, ECF No. 269 (“PL's Mem. Opp. Exclude Meyers”); Defs.' Reply to Pl.'s Mem. Opp. Defs.' Mot. Exclude Test. & Op. of Jeffrey E. Meyers, ECF No. 289 (“Defs.' Reply Exclude Meyers”).

On October 29, 2021, Plaintiff filed a Motion to Exclude Opinions and Testimony of Stephen D. Prowse for Class Certification, Summary Judgment, and Trial. Pl.'s Mot. Exclud...