Kingray Inc. v. Farmers Grp. Inc.

523 F.Supp.3d 1163

KINGRAY INC.

v.FARMERS GROUP INC., et al.

Case No. EDCV 20-963 JGB (SPx)

United States District Court, C.D. California.

Filed March 4, 2021

Robert G. Loewy, Law Offices of Robert Loewy PC, Aliso Viejo, CA, Adam M. Moskowitz, Pro Hac Vice, Adam A. Schwartzbaum, Pro Hac Vice, The Moskowitz Law Firm PLLC, Coral Gables, FL, Christopher A. Seeger, Pro Hac Vice, Seeger Weiss LLP, Ridgefield Park, NJ, Paul J. Geller, Pro Hac Vice, Stuart A. Davidson, Pro Hac Vice, Robbins Geller Rudman and Dowd LLP, Boca Raton, FL, Robert S. Schachter, Pro Hac Vice, Zwerling Schachter and Zwerling LLP, Stephen A. Weiss, Pro Hac Vice, Seeger Weiss LLP, New York, NY, William F. Merlin, Jr., Merlin Law Group, Los Angeles, CA, for Kingray Inc.

Adam M. Moskowitz, Pro Hac Vice, Adam A. Schwartzbaum, Pro Hac Vice, The Moskowitz Law Firm PLLC, Coral Gables, FL, Robert G. Loewy, Law Offices of Robert Loewy PC, Aliso Viejo, CA, William F. Merlin, Jr., Merlin Law Group, Los Angeles, CA, Stuart A. Davidson, Robbins Geller Rudman and Dowd LLP, Boca Raton, FL, for Nora's Style Salon Inc.

Jordan D. Teti, Michael M. Maddigan, Elizabeth E. Goncharov, Vassi Iliadis, Hogan Lovells US LLP, Los Angeles, CA, Vanessa O. Wells, Hogan Lovells LLP, Menlo Park, CA, for Truck Insurance Exchange.

Proceedings: Order (1) GRANTING-IN-PART and DENYING-IN-PART Defendant's Motion to Dismiss (Dkt. No. 61); and (2) VACATING the March 8, 2021 Hearing (IN CHAMBERS)

JESUS G. BERNAL, UNITED STATES DISTRICT JUDGE

Before the Court is a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) filed by Defendant Truck Insurance Exchange. ("Motion," Dkt. No. 61.) The Court determines this matter is appropriate for resolution without a hearing. See Fed. R. Civ. P. 78 ; L.R. 7-15. After considering all papers filed in support of and in opposition to the Motion, the Court GRANTS-IN-PART and DENIES-IN-PART Defendant's Motion. The March 8, 2021 hearing is VACATED.

I. BACKGROUND

This is a Covid-19-related business insurance dispute. Plaintiffs are businesses; Defendant is an insurer that has determined Plaintiffs' losses are not covered. On May 4, 2020, Plaintiff Kingray Inc. ("Kingray") filed a complaint against Defendants Farmers Group Inc., Farmers Insurance Company, Inc., and Truck Insurance Exchange. ("Complaint," Dkt. No. 1.) On September 28, 2020, Kingray and Nora's Style Salon, Inc. ("Nora's") filed a First Amended Complaint against Defendant Truck Insurance Exchange. ("FAC," Dkt. No. 50.) The FAC is a class action for declaratory relief and breach of contract arising out of Plaintiffs' insurance with Defendant. (FAC ¶ 1.)

On October 21, 2020, Defendant filed this Motion. (See Motion.) Plaintiffs filed their Opposition on November 11, 2020. ("Opposition," Dkt. No. 63.) Defendant replied on November 23, 2020. ("Reply," Dkt. No. 65.)

Both parties have filed significant supplemental authorities. In support of the Motion, Defendant has filed:

- Declaration of Michael Maddigan (Dkt. No. 61-2);

- Excerpts from Plaintiffs' respective insurance policies ("Nora's Policy," Dkt. No. 61-3; "Kingray Policy," Dkt. No. 61-10);¹

- April 23, 2020 Bulletin issued by the California Insurance Commissioner (Dkt. No. 61-11);²

- Notice pursuant to Local Rule 83-1.3.1 of related actions pending before courts in this District (Dkt. No. 64);

- Orders from other courts interpreting Covid-19-related insurance disputes, including:

• Social Life Magazine, Inc. v. Sentinel Ins. Co., No. 1:20-cv-03311-VEC, Dkt. No. 24-1 (S.D.N.Y. May 14, 2020) (Dkt. No. 61-4);

• Gavrilides Mgmt. Co. LLC, et al. v. Michigan Ins. Co., No. 20-258-CB, 2020 WL 4561979 (Mich. Cir. Ct. July 21, 2020) (Dkt. No. 61-5);

• Rose's 1, LLC, et al. v. Erie Ins. Exch., No. 2020 CA 002424 B (D.C. Super. Ct., Aug. 6, 2020) (Dkt. No. 61-6);

• Travelers Casualty Ins. Co. of America v. Geragos and Geragos, No. 2:20-cv-03619-PSG-E (C.D. Cal. Oct. 19, 2020) (Dkt. No. 61-7);

• Musso & Frank Grill Co. Inc. v. Mitsui Sumitomo Ins. USA Inc., No. 20STCV16681, 2020 WL 7346569 (Super. Ct. Cal. Nov. 9, 2020) (Dkt. No. 65-2);

• DAB Dental PLLC v. Main St. Am. Prot. Ins. Co., No. 20-CA-5504, at *6, 2020 WL 7137138 (Fla. Cir. Ct. Nov. 10, 2020) (Dkt. No. 65-3);

• Boxed Foods Co., LLC v. Cal. Capital Ins. Co., 497 F.Supp.3d 516 (N.D. Cal. 2020) (Dkt. No. 69-1);

• Water Sports Kauai, Inc. v. Fireman's Fund Ins. Co., No. 20-cv-03750-WHO, 499 F.Supp.3d 670(N.D. Cal. Nov. 9, 2020) (Dkt. No. 69-2);

• Long Affair Carpet and Rug Inc. v. Liberty Mut. Ins. Co., No. SACV 20-01713-CJC (JDEx), 500 F.Supp.3d 1075 (C.D. Cal. Nov. 12, 2020) (Dkt. No. 69-3);

• S. Fla. ENT Assocs. Inc. v. Hartford Fire Ins. Co., No. 20-23677, 2020 WL 6864560 (S.D. Fla. Nov. 13, 2020) (Dkt. No. 69-4);

• BBMS, LLC v. Continental Cas. Co., No. 20-0353-CV-W-BP, 504 F.Supp.3d 1044 (W.D. Mo. Nov. 30, 2020) (Dkt. No. 69-5);

• Whiskey River on Vintage Inc. et al. v. Illinois Cas. Co., No. 4:20-cv-185-JAJ, 503 F.Supp.3d 884 (S.D. Iowa Nov. 30, 2020) (Dkt. No. 69-6);

• Zwillo V, Corp. v. Lexington Ins. Co., No. 4:20-00339, 504 F.Supp.3d 1034 (W.D. Mo. Dec. 2, 2020) (Dkt. No. 69-7);

• 4431, Inc. v. Cincinnati Ins. Co., No. 5:20-cv-04396, 504 F.Supp.3d 368 8 (E.D. Pa. Dec. 3, 2020) (Dkt. No. 69-8);

• Promotional Headwear Int'l v. Cincinnati Ins. Co., No. 20-cv-2211-JAR-GEB, 504 F.Supp.3d 1191 (D. Kan. Dec. 3, 2020) (Dkt. No. 69-9);

• Geragos & Geragos Engine Co. No. 28, LLC v. Hartford Fire Ins. Co., No. CV 20-4647-GW-MAAX, 2020 WL 7350413 (C.D. Cal. Dec. 3, 2020) (Dkt. No. 69-10);

• Hajer v. Ohio Sec. Ins. Co., No. 6:20-CV-00283, 505 F.Supp.3d 646 (E.D. Tex. Dec. 7, 2020) (Dkt. No. 69-11);

• HealthNOW Med. Ctr. v. State Farm Gen. Ins. Co., No. 20-4340, 506 F.Supp.3d 864 (N.D. Cal. Dec. 10, 2020) (Dkt. No. 69-12);

• Michael Cetta, Inc. v. Admiral Indem. Co., 20 Civ. 4612, 506 F.Supp.3d 168 (S.D.N.Y. Dec. 11, 2020) (Dkt. No. 69-13);

• Terry Black's Barbecue LLC et al. v. State Auto. Mut. Ins. Co. et al., No. 1:20-CV-665-RP, 2020 WL 7351246 (W.D. Tex. Dec. 14, 2020) (Dkt. No. 69-14);

• Kirsch v. Aspen Am. Ins. Co., No. 20-11930, 507 F.Supp.3d 835 (E.D. Mich. Dec. 14, 2020) (Dkt. No. 69-15);

• 10012 Holdings, Inc. v. Sentinel Ins. Co. Ltd., No. 20 Civ. 4471, 507 F.Supp.3d 482 (S.D.N.Y. Dec. 15, 2020) (Dkt. No. 69-16);

• Prime Time Sports Grill, Inc. v. Dtw 1991 Underwriting Ltd., No. 8:20-cv-771-T-36JSS, 508 F.Supp.3d 1170 (M.D. Fla. Dec. 17, 2020) (Dkt. No. 69-17);

• Mortar and Pestle Corp. v. Atain Specialty Ins. Co., No. 20-cv-03461-MMC, 508 F.Supp.3d 575 (N.D. Cal. Dec. 21, 2020) (Dkt. No. 69-18);

• Karen Trinh, DDS, Inc. v. State Farm Gen. Ins. Co., No. 5:20-cv-04265-BLF, 2020 WL 7696080 (N.D. Cal. Dec. 28, 2020) (Dkt. No. 69-19);

• BA LAX, LLC et al. v. Hartford Fire Ins. Co., No. 2:20-cv-06344-SVW-JPR, 519 F.Supp.3d 711, 713 (C.D. Cal. Jan. 12, 2021) (Dkt. No. 69-20); and

• Other cases in support (See Dkt. Nos. 75-1–75-34; 81-1–81-13).

In support of their Opposition, Plaintiffs have filed:

- Orders and transcripts from other courts interpreting Covid-19-related insurance disputes, including:

• N. State Deli LLC v. Cincinnati Ins. Co., No. 20-cvs-02569 (N.C. Super. Ct., Durham Cty. Oct. 9, 2020) (Dkt. No. 63-2);

• Taps & Bourbon on Terrace, LLC v. Underwriters at Lloyds London, No. 20-CVS-02569 (Pa. Ct. Com. Pl., Philadelphia Cnty. Oct. 26, 2020) (Dkt. No. 63-3);

• Optical Servs. USA v. Franklin Mut. Ins. Co., No. BER-L-3681-20, 2020 WL 5806576 (N.J. Super. Ct. Aug. 13, 2020) (Dkt. Nos. 63-4, 63-5);

• Ridley Park Fitness, LLC v. Phil. Indem. Ins. Co., No. 01093, 2020 WL 8613467 (Pa. Dist. Ct. Aug. 31, 2020) (Dkt. No. 63-6);

• Francois Inc. v. Cincinnati Ins. Co., No. 20CV201416 (Oh. Cnty. Ct. Sept. 29, 2020) (Dkt. No. 63-7);

• Elegant Massage, LLC v. State Farm Mut. Auto. Ins. Co., No. 2:20-cv-00265-RAJ-LRL, 506 F.Supp.3d 360 (E.D. Va. Dec. 9, 2020) (Dkt. No. 67-1);

• Henderson Rd. Rest. Sys., Inc. v. Zurich Am. Ins. Co., No. 1:20 CV 1239, 513 F.Supp.3d 808 (N.D. Ohio Jan. 19, 2021) (Dkt. No. 68-1);

• Goodwill Indus. of Orange Cnty., Cal. v. Philadelphia Indem. Ins. Co., No. 30-2020-01169032-CU-IC-CXC, slip op., 2021 WL 476268 (Cal. Super. Ct. Jan. 28, 2021) (Dkt. No. 71-1);

• Pez Seafood DTLA, LLC v. Travelers Indem. Co., No. CV-20-4699-DMG-GJSX, 514 F.Supp.3d 1197 (C.D. Cal. Jan. 20, 2021) (Dkt. No. 71-2); and

• Other cases in support (See Dkt. Nos. 74-1; 77-1; 78-1; 80-1.)

II. FACTUAL ALLEGATIONS

Plaintiffs allege the following facts, which are assumed to be true for the purposes of this motion.

Plaintiff Nora's is a corporation organized under New York law with its principal place of business in Tappan, New York. (FAC ¶ 11.) Nora's operates a beauty salon. (Id. ) Plaintiff Kingray is a California corporation with its principal place of business located in La Quinta, California. (Id. ¶ 10.) Kingray operates a sports bar and grill. (Id. ) Defendant Truck is an insurance exchange organized under California law with its principal place of business located in Woodland Hills, California. (Id. ¶ 11.) Truck is a subsidiary of Farmer's Group Inc. d/b/a Farmers Underwriters Association ("Farmers") and is duly qualified and licensed to issue insurance. (Id. )

Defendant issued the Farmers Policy No. 60669-00-43 to Kingray for the policy period of October 2, 2019, through October 2, 2020 ("Kingray's Policy"), which is attached to the FAC as Exhibit A. (Id. ¶ 13.) Defendant also issued a policy to Nora's, which Nora's renewed on or about March 11, 2020. (Id. ) Plaintiffs have attached a copy of Nora's 2017-18 policy, "identical in all material respects to the operative policy," to the FAC as Exhibit B. (Id. )

Covid-19 is a deadly global pandemic, national emergency, and unprecedented crisis. (Id. ¶¶ 2-4.)³ In response to Covid-19, many state and local governments entered civil authority orders suspending or severely curtailing business operations of non-essential businesses that interact with the public. (Id. ¶ 5.) To date, almost all states within the United States, and many counties, cities, and municipalities have issued some...