Map Legacy, Inc. v. Zurich Am. Ins. Co.

558 F.Supp.3d 1212

MAP LEGACY, INC., d/b/a Signature Grand, Plaintiff,

v.ZURICH AMERICAN INSURANCE COMPANY, Defendant.

CASE NO. 20-60815-CIV-SINGHAL

United States District Court, S.D. Florida.

Signed August 31, 2021

Entered September 1, 2021

Hillary Brisson Cassel, Michael Alan Cassel, Cassel & Cassel, P.A., Hollywood, FL, for Plaintiff.

Gary John Guzzi, Akerman LLP, Miami, FL, Anthony W. Morris, Pro Hac Vice, Akerman LLP, Atlanta, GA, for Defendant.

ORDER

RAAG SINGHAL, UNITED STATES DISTRICT JUDGE

THIS CAUSE is before the Court on the Zurich American Insurance Company's Motion to Dismiss for Failure to State a Claim and Incorporated Supporting Brief ("Motion to Dismiss") (DE [32]). Plaintiff filed its response in opposition to the motion ("Response") (DE [34]). Defendant has since filed a reply. The Court has also considered the Notice of Supplemental Authority (DE [36]) and the response (DE [37]). Accordingly, the matter is ripe for review.

I. BACKGROUND

Plaintiff Map Legacy, Inc. ("Plaintiff") owns and operates the Signature Grand, a landmark South Florida reception venue located at 6900 SR 84, Davie, Broward County, Florida 33317 (the "Subject Property"). Zurich American Insurance Company ("Defendant") issued Plaintiff a valid, binding, and enforceable policy of insurance bearing Policy Number CPO 7443960 01 (the "Subject Policy"). "The Subject Policy is an ‘all risk’ insurance policy that covers all losses to the Subject Property that are not otherwise expressly excluded." (Am. Compl. (DE [31]), ¶ 5).

In March 2020, the federal, state, and local governments declared an emergency due to the pandemic resulting from the SARS-CoV-2 virus ("COVID-19"). On March 22, 2020, Broward County issued an emergency order requiring the closure of all nonessential retail and commercial businesses due to "the propensity of [COVID-19] to spread person to person and also because the virus is physically causing property damage due to its proclivity to attach to surfaces for prolonged periods of time." Broward Cnty. Er. Order 20-01.

Plaintiff alleges the Subject Property sustained direct physical loss and resultant damage because of the ongoing COVID-19 pandemic. The Subject Policy purportedly requires Defendant to pay for all losses sustained by "covered causes of loss," which is defined as "a fortuitous cause or event, not otherwise excluded, which actually occurs during this policy period." (Am. Compl. (DE [31]), ¶ 21). Following the denial of its insurance claim, Plaintiff filed this action for declaratory relief and breach of contract.

Defendant moves to dismiss the Amended Complaint (DE [31]) for failure to state a claim upon which relief can be granted. Defendant further argues this action must be dismissed because the Subject Policy expressly precludes coverage "for loss or damage consisting of, directly or indirectly caused by, contributed to, or aggravated by the presence, growth, proliferation, spread, or any activity of ‘microorganisms,’ " and "microorganism" is specifically defined to include "virus." (Mot. to Dis. (DE [32]), at 7). And, finally, Defendant argues Plaintiff fails to sufficiently allege any facts to support its cause of action for breach of contract.

In opposition, Plaintiff argues Defendant's arguments are premature and better suited for summary judgment because the parties have conflicting interpretations of the policy. Plaintiff claims it has sufficiently alleged direct physical loss and civil authority coverage because it was forced to suspend operations because of COVID-19.

II. LEGAL STANDARD

At the pleading stage, a complaint must contain "a short and plain statement of the claim showing the [plaintiff] is entitled to relief." Fed. R. Civ. P. 8(a). Although Rule 8(a) does not require "detailed factual allegations," it does require "more than labels and conclusions ... a formulaic recitation of the cause of action will not do." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). To survive a motion to dismiss, "factual allegations must be enough to raise a right to relief above the speculative level" and must be sufficient "to state a claim for relief that is plausible on its face." Id. at 555, 127 S.Ct. 1955. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

In considering a Rule 12(b)(6) motion to dismiss, the court's review is generally "limited to the four corners of the complaint." Wilchombe v. TeeVee Toons, Inc. , 555 F.3d 949, 959 (11th Cir. 2009) (quoting St. George v. Pinellas Cty. , 285 F.3d 1334, 1337 (11th Cir. 2002) ). Courts must review the complaint in the light most favorable to the plaintiff, and it must generally accept the plaintiff's well-pleaded facts as true. Hishon v. King & Spalding , 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984) ; Am. United Life Ins. Co. v. Martinez , 480 F.3d 1043, 1057 (11th Cir. 2007). However, pleadings that "are no more than conclusions are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ; see also id. at 663, 129 S.Ct. 1937 ("[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions").

Regarding insurance policies, under Florida law, "insurance contracts are construed according to their plain meaning," and "[a]mbiguities are construed against the insurer and in favor of coverage." Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co. , 913 So. 2d 528, 532 (Fla. 2005). "[I]f a policy provision is clear and unambiguous, it should be enforced according to its terms whether it is a basic policy provision or an exclusionary provision." Garcia v. Fed. Ins. Co. , 969 So. 2d 288, 291 (Fla. 2007) (quoting Taurus Holdings , 913 So. 2d at 532 ). If a term is undefined in a policy, a court "may consult references commonly relied upon to supply the accepted meanings of words." See id. at 291–92 ; see also Hyman v. Nationwide Mut. Fire Ins. Co. , 304 F.3d 1179, 1188 (11th Cir. 2002) ("Because none of the terms in that provision are defined in the policy, we accord each its ordinary meaning.") (citation omitted). The court must "look at the policy as a whole and give every provision its full meaning and operative effect." Hyman , 304 F.3d at 1186 (citations omitted).

III. POLICY PROVISIONS

Defendant argues the Subject Policy makes a clear distinction between microorganisms that are the result of another covered cause of loss (such as when a broken water pipe leaves furniture soggy, and mold or mildew results—a covered loss), and microorganisms that are the cause of loss themselves (such as spread of mildew in the absence of any other covered cause—an excluded loss). Plaintiff, on the other hand, alleges the Subject Policy both covers and excludes loss caused by "microorganisms," suggesting this claimed ambiguity leads to a hopeless interpretational quagmire. The provisions at issue are as follows:

The Commercial Property Definitions contained within the Subject Policy defines "microorganism" as follows:

44. "Microorganism" means any type or form of organism of microscopic or ultramicroscopic size including, but not limited to, "fungus", wet or dry rot, virus, algae, or bacteria, or any by-product.

See (DE [1-1], SG000052, ¶ 44).¹

The Real and Personal Property Coverage Form contained within the Subject Policy contains an exclusionary provision related to "microorganisms" as follows:

B. EXCLUDED CAUSES OF LOSS

* * *

12. Microorganisms

We will not pay for loss or damage consisting of, directly or indirectly caused by, contributed to, or aggravated by the presence, growth, proliferation, spread, or any activity of "microorganisms" , unless resulting from fire or lightning. Such loss or damage is excluded regardless of any other cause or event, including a "mistake", "malfunction" , or weather condition, that contributes concurrently or in any sequence to the loss, even if such other cause or event would otherwise be covered.

But if a result of one of these excluded causes of loss is a "specified cause of loss" , other than fire or lightning, we will pay that portion of the loss or damage which was solely caused by that "specified cause of loss" .

We will also not pay for loss, cost, or expense arising out of any request, demand, order, or statutory or regulatory requirement that requires any insured or others to test for, monitor, clean up, remove, treat, detoxify, or neutralize, or in any way respond to, or assess the effects of "microorganisms" .

See (DE [1-1], SG000067, ¶ 12).

The Commercial Property Coverage Part Declarations contained within the Subject Policy, however, reflects Limits of Insurance of $100,000 for Microorganisms and $100,000 for Microorganism-Business Income. See (DE [1-1], SG000027).

With regards to the additional coverages for "Microorganisms," the Additional Coverages Form contained within the Subject Policy provides as follows:

A. ADDITIONAL COVERAGES FORM

* * *

14. Microorganisms

We will pay the following when "microorganisms" are the result of a "covered cause of loss", other than fire or lightning:

a. Direct physical loss of or damage to Covered Property caused by "microorganisms" , including the cost of removal of the "microorganisms" ;

b. The reasonable cost to tear out and replace any part of the covered building or other property needed to gain access to the "microorganisms" ; and

c. The reasonable cost of testing performed after removal, repair, replacement, or restoration of the damaged property is completed, provided there is a reason to believe that the "microorganisms" are still present. The most we will pay under this Additional Coverage in any one policy year is the Annual Aggregate

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