Firenze Ventures LLC v. Twin City Fire Ins. Co.

532 F.Supp.3d 607

FIRENZE VENTURES LLC, d/b/a Firenze–Italian Street Food, on behalf of itself and all others similarly situated, Plaintiff,

v.TWIN CITY FIRE INSURANCE COMPANY, d/b/a the Hartford, Defendant.

20 C 4226

United States District Court, N.D. Illinois, Eastern Division.

Signed March 31, 2021

Daniel A. Edelman, Cathleen M. Combs, Dulijaza Clark, Bryan G. Lesser, Carly Marie Cengher, Edelman, Combs, Latturner & Goodwin LLC, Patrick Neil Wartan, Taft Stettinius & Hollister LLP, Chicago, IL, William Charles Wagner, Taft Stettinius & Hollister LLP, Indianapolis, IN, for Plaintiff.

Anthony J. Anscombe, Darlene Kay Alt, Mary E. Buckley, Steptoe & Johnson LLP, Chicago, IL, Sarah Danielle Gordon, Pro Hac Vice, Steptoe & Johnson LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION AND ORDER

Gary Feinerman, United States District Judge Firenze Ventures LLC, a food court vendor in Chicago, alleges in this putative class action that Twin City Fire Insurance Company, its insurer, wrongfully denied coverage for losses that it suffered due to government-ordered shutdowns arising from the COVID-19 pandemic. Doc. 1-1. The complaint alleges breach of Twin City's insurance policy, id. at pp. 17-18, ¶¶ 55-61; improper insurance claims practice under § 155 of the Illinois Insurance Code, 215 ILCS 5/155, id. at pp. 19-20 ¶¶ 62-67; and unfair and deceptive practices under the Illinois Consumer Fraud Act, 815 ILCS 505/2, id. at pp. 20-21 ¶¶ 68-71. Twin City moves to dismiss the complaint under Civil Rule 12(b)(6), arguing that the policy does not cover Firenze's claimed losses. Doc. 16. The motion is granted.

Background

In resolving a Rule 12(b)(6) motion, the court assumes the truth of the operative complaint's well-pleaded factual allegations, though not its legal conclusions. See Zahn v. N. Am. Power & Gas, LLC , 815 F.3d 1082, 1087 (7th Cir. 2016). The court must also consider "documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice," along with additional facts set forth in Firenze's brief opposing dismissal, so long as those additional facts "are consistent with the pleadings." Phillips v. Prudential Ins. Co. of Am. , 714 F.3d 1017, 1020 (7th Cir. 2013) (internal quotation marks omitted). The facts are set forth as favorably to Firenze as those materials allow. See Pierce v. Zoetis, Inc. , 818 F.3d 274, 277 (7th Cir. 2016). In setting forth the facts at the pleading stage, the court does not vouch for their accuracy. See Goldberg v. United States , 881 F.3d 529, 531 (7th Cir. 2018).

A. Firenze's Losses

Firenze operates an "Italian Street Food" deli in the food court at the Metra rail station at Ogilvie Transportation Center in downtown Chicago. Doc. 1-1 at p. 8, ¶ 7. On March 16, 2020, in response to the emerging COVID-19 pandemic, the Governor of Illinois issued Executive Order 2020-07. Doc. 33-1 at 2-7. Executive Order 2020-07 required restaurants to "suspend service for and ... not [to] permit on-premises consumption," but "permitted and encouraged [restaurants] to serve food and beverages so that they may be consumed off-premises." Id. at 3. The order also allowed "customers [to] enter the premises to purchase food or beverages for carry-out." Ibid . On March 20, the Governor issued Executive Order 2020-10, which required all Illinois residents to shelter-in-place and all "non-essential businesses" to close. Id. at 9-20. The March 20 order exempted from closure "[r]estaurants and other facilities that prepare and serve food, but only for consumption off-premises, through such means as in-house delivery, third-party delivery, drive-through, curbside pick-up, and carry-out." Id. at 14.

Firenze was "forced to halt ordinary operations" due to the executive orders. Doc. 1-1 at p. 13, ¶ 31. The orders "were issued because of the widespread presence of COVID-19 throughout the Chicago metropolitan area, resulting in contamination by the virus of numerous premises." Id. at p. 15, ¶ 40. Among those premises was Ogilvie Transportation Center. Id. at pp. 12-14, ¶¶ 28, 34. Following the March 16 order, the food court at Ogilvie was closed to the public. Doc. 33 at 6.

During the period when the food court was closed, Firenze's only business activities were to make sandwiches to donate to hospitals and first responders. Ibid. When the food court re-opened in mid-April, customers were permitted to place orders for pick-up, but not to sit down and eat. Ibid. Firenze added a delivery service option in early May, and the food court returned to sit-down dining in July. Ibid. The months-long disruption in Firenze's business resulted in "substantial lost revenues." Doc. 1-1 at p. 13, ¶ 31.

B. Firenze's Twin City Insurance Policy

Twin City issued a "Spectrum businessowners’ insurance policy" to Firenze for a one-year period beginning on January 8, 2020. Id. at p. 10, ¶ 15; id. at pp. 25-152. The policy requires Twin City to "pay for direct physical loss or physical damage to Covered Property ... caused by or resulting from a Covered Cause of Loss." Id. at p. 51. Firenze's deli is designated as the insured premises. Id. at p. 38.

1. Pertinent Coverage Provisions

The policy's "Special Property Coverage Form" sets forth four coverages pertinent to this case: (1) "Business Income"; (2) "Extra Expense"; (3) "Extended Business Income"; and (4) "Civil Authority." Id. at pp. 60-61.

The Business Income provision states:

[Twin City] 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 physical loss of or physical damage to property at the "scheduled premises" ... caused by or resulting from a Covered Cause of Loss.

Id. at p. 60. The Extra Expense provision states:

[Twin City] will pay reasonable and necessary Extra Expense you incur during the "period of restoration" that you would not have incurred if there had been no direct physical loss or physical damage to property at the "scheduled premises" ... caused by or resulting from a Covered Cause of Loss.

Ibid. The Extended Business Income provision grants additional coverage for an insured with a payable claim under the Business Income provision. Id. at p. 61. It states that "[Twin City] will pay for the actual loss of Business Income [the insured] incur[s] during the period that [b]egins on the date [its] property is actually repaired, rebuilt, or replaced and ‘operations’ are resumed," and that ends no more than 30 consecutive days thereafter. Ibid.

The Civil Authority provision grants coverage for an "actual loss of Business Income" sustained by the insured "when access to [its] ‘scheduled premises’ is specifically prohibited by order of a civil authority as the direct result of a Covered Cause of Loss to property in the immediate area of [its] ‘scheduled premises.’ " Ibid. "Civil Authority" coverage is to "begin 72 hours after the order of a civil authority" and "end at the earlier of" two dates: "[1] when access is permitted to [the insured's] ‘scheduled premises’; or [2] 30 consecutive days after the order of the civil authority." Ibid.

2. Virus Exclusion

By endorsement, the Policy sets forth what Twin City calls the "Virus Exclusion," which states:

[Twin City] will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss:

(1) Presence, growth, proliferation, spread or any activity of "fungi," wet rot, dry rot, bacteria or virus.

(2) But if "fungi," wet rot, dry rot, bacteria or virus results in a "specified cause of loss" to Covered Property, we will pay for the loss or damage caused by that "specified cause of loss."

Id. at p. 118. By its terms, the Exclusion excludes from coverage loss or damage caused by " ‘fungi,’ wet rot, dry rot, bacteria or virus." Ibid. But the Exclusion does not apply if the "virus results in a ‘specified cause of loss’ to Covered Property" that in turn causes the claimed loss or damage. Ibid. Nor does the Exclusion apply "[w]hen [the] virus results from fire or lightning" or "[t]o the extent that coverage is provided in the Additional Coverage – Limited Coverage for ‘Fungi’, Wet Rot, Dry Rot, Bacteria and Virus with respect to loss or damage by a cause of loss other than fire or lightning." Ibid.

The policy proceeds to set forth the terms of the "Limited Coverage for ‘Fungi’, Wet Rot, Dry Rot, Bacteria and Virus" coverage, which effectively serves as an exception to the Virus Exclusion. Id. at pp. 119-120. As pertinent here, the Limited Coverage provision applies when two criteria are satisfied. First, the "virus [must be] the result of ... a ‘specified cause of loss’ other than fire or lightning" or the result of an "[e]quipment [b]reakdown." Id. at p. 119. Second, the "loss or damage by ... virus" must consist of "[d]irect physical loss or direct physical damage to Covered Property caused by ... virus." Ibid. The policy's definition of "specified cause of loss" is set forth below.

C. Twin City's Denial of Firenze's Claim

Firenze made a claim for its loss of business income in March 2020. Id. at p. 14, ¶ 33; id. at pp. 154-159. Twin City denied the claim. Ibid.

Discussion

The parties agree that all of Firenze's claims rise or fall with its claim that Twin City breached the insurance policy by denying coverage. Doc. 16 at 11-12; Doc. 33 at 15. The parties further agree that Illinois law governs interpretation of the Twin City policy. Doc. 16 at 5 n.3; Doc. 33 at 7-8.

In Illinois, the interpretation of an insurance policy is a question of law. See Rich v. Principal Life Ins. Co. , 226 Ill.2d 359, 314 Ill.Dec. 795, 875 N.E.2d 1082, 1089 (2007). "Like any contract, an insurance policy is to be construed as a whole, giving effect to every provision, if possible, because it must be assumed that...