Lindenwood Female Coll. v. Zurich Am. Ins. Co.

569 F.Supp.3d 970

LINDENWOOD FEMALE COLLEGE d/b/a Lindenwood University, individually and on behalf of all others similarly situated, Plaintiff,

v.ZURICH AMERICAN INSURANCE COMPANY, Defendant.

Case No. 4:20CV1503 HEA

United States District Court, E.D. Missouri, Eastern Division.

Signed November 1, 2021

Bradley T. Wilders, Christopher Curtis Shank, Patrick J. Stueve, Todd Michael McGuire, Stueve Siegel LLP, Kansas City, MO, Brett A. Emison, Langdon and Emison LLC, Lexington, MO, for Plaintiff.

Bronwyn F. Pollock, Pro Hac Vice, Douglas Allen Smith, Pro Hac Vice, Mayer Brown LLP, Los Angeles, CA, Evan Mark Tager, Pro Hac Vice, Archis A. Parasharami, Pro Hac Vice, Mayer Brown LLP, Gabriela Richeimer, Patrick F. Hofer, Pro Hac Vice, Clyde and Co. US LLP, Washington, DC, Timothy J. Wolf, Brown and James PC, St. Louis, MO, Debra Bogo-Ernst, Pro Hac Vice, Mayer Brown LLP, Chicago, IL, for Defendant.

OPINION, MEMORANDUM AND ORDER

HENRY EDWARD AUTREY, UNITED STATES DISTRICT JUDGE

This matter is before the Court on Defendant's Motion to Dismiss, [Doc. No. 37].

Plaintiff opposes the Motion. For the reasons set forth below, the Motion will be granted.

Facts and Background

This case is one of the many cases involving insurance coverage for certain economic losses and ill effects to businesses attributable to the COVID-19 pandemic. Plaintiff is a private liberal arts college with its main campus in St. Charles, Missouri. It also has a second campus in Belleville, Illinois. Plaintiff brings this action on behalf of itself, two putative nationwide classes and two subclasses. Plaintiff's First Amended Class Action Complaint alleges causes of action for breach of contract and declaratory judgment.

Plaintiff purchased a business insurance policy from Defendant which insured against "direct physical loss of or damage caused by a Covered Cause of Loss to Covered Property[.] Covered Cause of Loss is defined as "[a]ll risks of direct physical loss of or damage from any cause unless excluded."

Plaintiff alleges that in March of 2020, it closed its dorms and sent students home; shuttered all dining halls; closed administrative buildings; cancelled spring sports seasons; and took many other precautions as a result of the COVID pandemic. Revenue producing summer events were also cancelled.

Plaintiff submitted claims for "direct physical loss of or damage to property and resulting business interruption and other covered losses and damage attributable to the presence of the Coronavirus and the COVID-19 pandemic. Plaintiff alleges Defendants conducted no investigation with respect to Plaintiff's claim. Further, Plaintiff claims Defendant has refused to pay Plaintiffs though Plaintiffs experienced a "physical loss of" their insured properties due to the COVID-19 pandemic.

Plaintiff brought this action against Defendant insurer under the policy. The Complaint sets forth two counts: declaratory judgment and breach of contract on behalf of itself and on behalf of a class of similarly situated institutions of higher education. Plaintiff claims the policy issued by Defendant provides several different types of coverages triggered by Plaintiff's claim for losses and damage attributable to the Coronavirus and the COVID-19 pandemic: Section III-Property Damage: Plaintiff claims the presence of the Coronavirus and COVID-19 at its insured locations and within 1,00 feet thereof has caused and continues to cause direct physical loss of or damage to property; Section IV-Time Element: the policy covers Time Element loss resulting from the necessary suspension of Plaintiff's business activities at an insured location. The suspension must be due to direct physical loss of or damage to property caused by a covered cause of loss at the location. Plaintiff claims its business interruption losses are covered; and Section V-Special Coverages: Civil or Military Authority coverage for the actual time element loss sustained by the insured resulting from the necessary suspension of Plaintiff'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. The 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 the policy and located within the distance of the insured's location.

Defendants have moved to dismiss under Fed.R.Civ.P. 12(b)(6), arguing the Complaint fails to state a claim upon which relief can be granted.

Standard of Review

Federal Rule of Civil Procedure 8(a) requires that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R.Civ.P. 8(a)(2). If a pleading fails to state a claim upon which relief can be granted, an opposing party may move to dismiss it. See Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotations and citation omitted). The factual content of the plaintiff's allegations must "allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Cole v. Homier Distrib. Co. , 599 F.3d 856, 861 (8th Cir. 2010) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ). If a claim fails to allege one of the elements necessary to recovery on a legal theory, that claim must be dismissed for failure to state a claim upon which relief can be granted. Crest Constr. II, Inc. v. Doe , 660 F.3d 346, 355 (8th Cir. 2011).

When ruling on a motion to dismiss, the Court "must liberally construe a complaint in favor of the plaintiff," Huggins v. FedEx Ground Package Sys., Inc. , 592 F.3d 853, 862 (8th Cir. 2010), and must grant all reasonable inferences in its favor, Lustgraaf v. Behrens , 619 F.3d 867, 872–73 (8th Cir. 2010). Although courts must accept all factual allegations as true, they are not bound to take as true "a legal conclusion couched as a factual allegation." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotations and citation omitted); Iqbal , 556 U.S. at 677–78, 129 S.Ct. 1937. Indeed, "[c]ourts should dismiss complaints based on ‘labels and conclusions, and a formulaic recitation of the elements of a cause of action.’ " Hager v. Ark. Dep't of Health , 735 F.3d 1009, 1013 (8th Cir. 2013) (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).

Discussion

This Policy Insures against direct physical loss of or damage caused by a Covered Cause of Loss to Covered Property, at an Insured Location described in Section II-2.01, all subject to the terms, conditions and exclusions stated in this Policy.

COVERED PROPERTY

This Policy insures the following property, unless otherwise excluded elsewhere in this Policy, located at an Insured Location or within 1,000 feet thereof or as otherwise provided for in this Policy.

3.01.01. The Insured's interest in buildings (or structures) including new construction, additions, alterations, and repairs that the Insured owns, occupies, leases or rents.

3.01.02. The Insured's interest in Personal Property, including Improvements and Betterments.

3.01.03. Property of Others will not extend any Time Element Coverage provided under this Policy to the owner of the property and is limited to property:

3.01.03.01. In the Insured's care, custody or control;

3.01.03.02. In which the Insured has an insurable interest or obligation;

3.01.03.03. For which the Insured is legally liable; or

3.01.03.04. For which the Insured has agreed in writing prior to any loss or damage to provide coverage.

3.01.04. Personal Property of officers and employees of the Insured

The following exclusions apply unless specifically stated elsewhere in this Policy:

3.03.01. This Policy excludes the following unless it results from direct physical loss or damage not excluded by this Policy.

3.03.01.01. Contamination, and any cost due to Contamination including the inability to use or occupy property or any cost of making property safe or suitable for use or occupancy, except as provided by the Radioactive Contamination Coverage of this Policy.

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, or as provided in Off Premises Storage for Property Under Construction Coverages.

The Company will also pay for the actual Time Element loss sustained by the Insured, during the Period of Liability at other Insured Locations. The Time Element loss must result from the necessary Suspension of the Insured's business activities at the other Insured Locations. Such other Location must depend on the continuation of business activities at the Location that sustained direct physical loss or damage caused by a Covered Cause of Loss.

4.01.02. There is recovery only to the extent that the Insured is:

4.01.02.01. unable to make up lost production within a reasonable period of time not limited to the period during which production is Suspended;

4.01.02.02. unable to continue such operations or services during the Period of Liability; and

4.01.02.03. able to demonstrate a loss of revenue for the operations, services or production Suspended.

4.01.03. The Company insures Time Element loss only to the extent it cannot be reduced by:

4.01.03.01. The Insured resuming business activities in whole or part;

4.01.03.02. Using damaged or undamaged property

...