L & L Logistics and Warehousing Inc. dba L & L Trucking, No. 3:2020cv00324 - Document 60 (E.D. Va. 2021)
Court Description: MEMORANDUM OPINION. It is so ORDERED. Signed by District Judge Robert E. Payne on 04/13/2021. (walk, )
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L & L Logistics and Warehousing Inc. dba L & L Trucking Doc. 60 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division L&L LOGISTICS AND WAREHOUSING INC. DBA L&L TRUCKING, Plaintiff, Civil Action No. 3:20-cv-324 V. EVANSTON INSURANCE CO., Defendant. MEMORANDUM OPINION This MOTION matter TO Dismiss") DISMISS (ECF No. ("Evanston") Warehousing COMPLAINT is before AMENDED d/b / a (ECF No. 13) Court on DEFENDANTS' ( "Renewed COMPLAINT RENEWED Motion to Defendant Evanston Insurance Company1 48). requests Inc. the that Plaintiff L&L Trucking' s L&L ( "L&L' s" ) Logistics and FIRST AMENDED be dismissed with prejudice pursuant to Federal Rule of Civil Procedure 12 (b) ( 6) . For the reasons set forth below, the Renewed Motion to Dismiss will be granted. I. BACKGROUND A. Statement of Facts At all relevant times, an insurance policy (the L&L, a "Policy") California corporation, had with Evanston Insurance, an insurance carrier headquartered in Glen Allen, Virginia. FAC , , Markel Corporation ("Markel") was originally named as a defendant, but by agreement of the parties, the Court dismissed Markel as a party to the suit. ORDER, ECF No. 56. 1 Dockets.Justia.com 3, 9, ECF No . 13 . The Policy was based on "language that is essentially standardized language adopted from and/or developed by the ISO," 2 and it covered certain business losses. FAC ~ 11, 21, ECF No. 13. Between March 4, 2020 - March 17, 2020, COVID-19 pandemic, restrictions in response to the the state of California enacted a series of on public gatherings, concluding with a stay-at- home order limiting the ability of non-essential businesses to function normally. FAC ~1 42-45, ECF No. 13. Like many businesses around the world, "[i] n light of the Coronavirus global pandemic and state and local orders mandating that all March non-essential 16, 2020, business loss." in store businesses must Plaintiff's FAC ~ 2, trucking ECF No. 13. company shut down on has suffered L&L takes the position that its damages were caused both by the contamination of COVID19 on the covered premises and the California COVID-19 orders. See FAC ~1 54-60, ECF No. 13; see also March 24 Hearing Tr. "The Insurance Services Office, or ISO, 'is a nonprofit trade association that provides rating, statistical, and actuarial policy forms and related drafting services to approximately 3,000 nationwide property or casualty insurers. Policy forms developed by ISO are approved by its constituent insurance carriers and then submitted to state agencies for review. Most carriers use the basic ISO forms, at least as the starting point for their general liability policies.'" McMillin Homes Construction, Inc. v. National Fire & Marine Ins. Co., 247 Cal. Rptr. 3d 825, 840 n.2 {Cal. Ct. App. 2019) {quoting Montrose Chemical Corp. v. Admiral Ins. Co., 42 Cal. Rptr. 2d 324, 355 n . 13 {Ca 1 . 19 9 5 ) ) . 2 2 23:8-12, ECF No. and business 58. L&L submitted a claim for business loss interruption insurance in an amount greater than FAC 11 4, 13, ECF No. $150,000, but Evanston denied the claim. 13. L&L is now seeking a declaratory judgment that would essentially find that L&L is entitled to Business Income, Extra Expense, and Civil Authority coverage under the Policy. at 13, which ECF No. essentially opposite. have 13. Evanston, seeks in turn, declaratory judgment Countercl. at 11, ECF No. 11. L&L's First Amended Complaint reasons outlined in the Counterclaim filed a See FAC counterclaim of the exact Evanston now seeks to dismissed (i.e. , for the same L&L' s claim is not covered under the Policy) . 3 B. Contractual Provisions The current dispute centers around the interaction between the first two pages of the "BUSINESS INCOME (AND EXTRA EXPENSE) COVERAGE FORM" (CP 00 30 10 12), the single-paged "EXCLUSION OF LOSS DUE TO VIRUS OR BACTERIA" (CP 01 40 07 06), the two-paged "EXCLUSION - POLLUTION, ORGANIC PATHOGENS AND ASBESTOS" (MECP 1310 09 14), and the ten-paged "CAUSES OF LOSS - SPECIAL FORM" During the hearing on Evanston's Motion to Dismiss, Evanston agreed that by deciding its Renewed Motion to Dismiss (ECF No. 48), the Court would also be disposing of the Counterclaim 9ECF No. 11). March 24 Hearing Tr. 13:24-14:2, ECF No. 58. 3 3 (CP 10 30 10 12). The full text of the relevant provisions is provided in the Appendix. Business Income Coverage The "BUSINESS INCOME (AND EXTRA EXPENSE) COVERAGE FORM" states that Evanston [W] ill pay for the actual loss of Business Income you [i.e., the policyholder] 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 damage to property at premises which are described in the Declarations . The loss or damage must be caused by or result from a Covered Cause of Loss. EX. 1 ("Policy") at 77, ECF No. 13-1. But importantly, the loss or damage must be caused by a "Covered Cause of Loss" which is defined in the "CAUSES OF LOSS - SPECIAL FORM." Extra Expense Income Coverage The also "BUSINESS states that "necessary expenses INCOME Extra you EXTRA (AND Expense [i.e., the 'period of restoration' EXPENSE) Income COVERAGE coverage the policyholder] FORM" applies to incur during that you would not have incurred if there had been no direct physical caused by or resulting from a loss or damage to property Covered Cause of Loss." EX. 1 ("Policy") at 77, ECF No. 13-1 (emphasis added). Civil Authority Coverage And, finally, the "BUSINESS INCOME (AND EXTRA EXPENSE) COVERAGE FORM" states that Civil Authority coverage applies when 4 (1) "a Covered Cause of Loss causes damage to property other than the property at the described premises"; the area immediately surrounding the prohibited by civil authority as a (2) damaged result of "[a] ccess to property is the damage"; (3) "the described premises are within that area but are not more than one mile from the damaged property"; and of the civil authority is taken in "[t] he action (4) response to dangerous physical conditions resulting from the damage or continuation of the Covered Cause of Loss that caused the damage, or the action is taken to enable a civil authority to have unimpeded access to EX. the damaged property. " ("Policy") 1 at ECF No. 78, 13-1 (emphasis added). Covered Causes of Loss All relevant portions of the EXPENSE) Extra COVERAGE FORM,,, - Expense provisions - Income state that Special means is shown direct in (emphasis); (showing see also EX. table on EX. only 1 EXTRA Authority be coverage triggered by a ("Policy") at 77-78, ECF No. SPECIAL FORM," states that "[w] hen Declarations, loss limited in this policy." Civil can See EX. 1 the physical and coverage The "CAUSES OF LOSS - (AND the Business Income coverage, I coverage, "Covered Cause of Loss." 13-1. i.e. "BUSINESS EXPENSE unless 1 the loss ("Policy") {"Policy") "Commercial 5 Covered Causes at is at 89, 59, Property of Loss excluded ECF No. ECF No. Coverage or 13-1 13-1 Part Declarations" form [MDCP 1000 02 13] with "Special" listed under the "Covered Causes of Loss" column for the "Business Income with Extra Expense" row}. Virus Exclusions For the purposes of this case, exclusions: the Exclusion. Virus Exclusion there are two relevant loss and the Organic Pathogen Both exclusions apply to the "BUSINESS EXPENSE {AND EXTRA EXPENSE} COVERAGE FORM" which outlines the Business Income Loss, Extra Expense, the Policy. See EX. and Civil Authority coverage provided by 1 ("Policy' 1 } at 88-89, ECF No. 99, 13-1. However, the scope and applicability of each exclusion varies. Under the Virus Exclusion, Evanston "will not pay for loss or damage caused by or resulting from any virus, other microorganism that induces or physical distress, illness or disease. ECF No. is 11 bacterium or capable EX. 1 of inducing ("Policy"} at 88, The Virus Exclusion explicitly states 13-1. applies to "all coverage" under the policy. that it EX. 1 ("Policy"} at 88, ECF No. 13-1. Under pay for among the Organic loss other spread or or damage things, any Pathogen Exclusion, the activity caused directly "[p]resence, of 'organic or Evanston "will not indirectly by [, ] " growth, proliferation, pathogens[,]'" including viruses. EX. 1 ("Policy"} at 99, ECF No. 13-1 (emphasis added}. Moreover, "[s] uch loss or damage is excluded regardless of any 6 other cause or event that sequence to the loss." ( emphasis added) . The "CAUSES OF LOSS - contributes EX. 1 concurrently or ("Policy") Organic at 99, Pathogen ECF No. Exclusion amends including viruses. ("Policy") ECF No. 11-12, Pathogen Organic 77-78, Exclusion the by excluding losses caused by organic pathogens, 9, 13-1 which is the loss form that SPECIAL FORM" applies to the relevant provisions of the Policy - at in any 89, Thus, 13-1. to operates EX. remove 1 the "organic pathogens" from the definition of a "covered cause of loss." II. DISCUSSION A. Legal Standard 1. 12(b) (6) Motions A motion to dismiss pursuant to Fed. R. Columbia v. Haley, "tests the sufficiency of a complaint." F.3d 107, 116 the factual set 738 To survive a motion to dismiss, (4th Cir. 2013). allegations Civ. Pro. 12(b) (6) forth in the complaint must be sufficient to "'to raise a right to relief above the speculative level' and face. '" 555 'state a Id. claim to relief that is plausible on its (quoting Bell Atl. Corp. v. Twombly, "A (2007)) . claim is 'plausible on 550 U.S. 544, its face,' if a plaintiff can demonstrate more than 'a sheer possibility that a defendant has acted unlawfully. '" of Rockville, Ashcroft V. 891 Igbal' F.3d 556 141, U.S. 145 662, 7 Rockville Cars, (4th 678 Cir. (2009)). LLC v. 2018) City (quoting Nevertheless, "[a] complaint should not be dismissed pursuant to Rule 12{b) (6) . unless it appears to a certainty that the nonmoving party cannot prove any set of facts in support of its claim that would entitle it to relief." Chapman v. Clarendon Nat'l Ins., 299 F. Supp. 2d 559, 562 {E.D. Va. 2004). When considering a motion to dismiss under Fed. R. Civ. P. 12 (b) (6), a court "must accept the factual allegations of the complaint as true and construe them in the light most favorable to the nonmoving Rockville, party." 891 F.3d 141, 145 Rockville Cars, {4th Cir. 2018). LLC v. City However, of courts need not "accept as true a legal conclusion couched as a factual SD3, allegation." 412, 422 Canopy, (4th Inc., LLC v. Black Cir. 2015) 775 F. 3d 628, quotation marks omitted) . elements of a cause of Although allegations instrument a court's in is incorporated the United 632 n.1 (4th Cir. action, review as reference, Inc., States 801 F.3d v. 2015)) Triple {internal "[t] hreadbare recitals of supported by mere the conclusory Iqbal, 556 U.S. at 678. complaint, attached by {quoting And, statements, do not suffice." Decker {U.S.) & is generally where an exhibit the a limited copy to the instrument is complaint and a court may consider it. of a to written complaint part the of or the Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 166 {4th Cir. 2016); see also Fed. R. Civ. P. l0{c) {"A statement in a 8 pleading may be adopted by reference elsewhere pleading or motion. exhibit to a in the same pleading or in any other A copy of a written instrument that is an pleading is a part of the pleading for all purposes."). 2. California Contract Law Both parties California law. And, agree that the Policy March 24 Hearing Tr. under California law, policy is question of the 7: 12-8: 10, governed by ECF No. 58. interpretation of an insurance Hartford Cas. law. is Ins. Co. v. Swift Distribution, Inc., 326 P.3d 253, 259 (Cal. 2014). Under California's rules of contract interpretation, a court should interpret an insurance policy using "settled rules of contract interpretation," the most "fundamental" of which is that "a contract must give effect to the 'mutual intention' of the parties" as it existed at the time the parties entered into the contract . Ameren Internat. Corp. v. Ins. Co. of State of Pennsylvania, 242 P.3d 1020, 1024 (Cal. 2010), as modified (Jan. 19, 2011) (quoting Cal. Civ. Code§ 1636) (cleaned up). A court should determine the intent of the parties by first considering the text of the policy. Hartford, 326 P. 3d at 259. In so doing, a court should look for the plain meaning of the language used in the policy unless the parties used terms in a technical sense or gave them a special meaning. should also interpret the See id. language within the 9 But, a court context of the insurance policy as a whole, including intended to function in the policy. how the language was See id. A provision of an insurance policy is ambiguous if it is "susceptible of two or more reasonable constructions." 242 P. 3d at 1024. But the circumstances of the case; a ambiguous in the abstract." 900 P. 2d 619, 627 (Oct . 2 6 , 19 9 5 ) . ( Cal. ambiguity must be based on term should not be Waller v. Truck Ins. "found to be Exch., Inc., as modified on denial of reh' g 1995) , ambiguities still exist, the court must construe the ambiguous language against the insurer, policy the "[I]f, after the court evaluates the policy's language and context, the Ameren, and is held 'responsible' for the who wrote uncertainty." Ameren, 242 P.3d at 1024 (citation omitted). Similarly, narrowly exclusionary clauses are generally "interpreted against the insurer" because the insurer burden to phrase any exclusions in clear language. bears the MacKinnon v. Truck Ins. Exch., 73 P.3d 1205, 1213 (Cal. 2003), as modified on denial of reh'g (Sept. particular force when 17, the 2003). "This rule coverage portion of applies the with insurance policy would lead an insured to reasonably expect coverage for the claim purportedly excluded." 10 Id. B. Virus and Organic Pathogen Exclusions 1. Plain Language of the Contract Evanston argues that the clear and explicit language of the Policy's Virus and Organic Pathogen Exclusions prohibits L&L' s claim. DEFENDANTS' MEMORANDUM IN SUPPORT OF RENEWED MOTION TO DISMISS PLAINTIFF'S AMENDED DISMISS MEMORANDUM") Evanston's view of at the COMPLAINT 26, plain ECF No. meaning ("DEFENDANTS' 49. of The the MOTION Court two TO shares exclusions. First, the Virus Exclusion prohibits any claim caused by a virus - full not stop. apply, Second, the even if the Virus Exclusion somehow did Business Income, Extra Expense, and Civil Authority coverage provisions all only apply to "Covered Causes of Losses," and the Organic Pathogen Exclusion quite clearly excludes viruses from the realm of "covered causes," even where the loss or Insofar as the damage damage L&L' s it was only indirectly First Amended Complaint experienced was caused caused by a virus. clearly alleges either directly that or indirectly caused by a virus, 4 L&L's claim is barred on the face See, e.g., FAC ~ 46, ECF No. 13 ("These [COVID-19] Orders have the effect of prohibiting access to Plaintiff's Insured Properties due to contamination and physical damage caused by the Coronavirus to surrounding property.") (emphasis added); FAC 1 52, ECF No. 13 ("The Civil Authority Orders were entered because of the contamination and damage of property caused by the Coronavirus within one mile of Plaintiff's Insured Properties.") (emphasis added). 4 11 of the two virus exclusions - regardless of the meaning of "direct physical loss." That view of the virus exclusion language has been endorsed by numerous opinions. ~' California courts, though all DEFS.' MOT. TO DISMISS MEM. at 26, Franklin EWC, Inc. v. The Hartford in unpublished ECF No. 49; see, Financial Services Group, Inc., No. 3:20-cv-04434-JSC, 2020 U.S. Dist. LEXIS 234651 {N.D. Cal. Dec. 14, 2020), *2-6 (finding virus exclusion applies to COVID-19 in comparable case with exclusion language functionally identical to the Organic Pathogen Exclusion in this case); Roundin3rd Sports Bar LLC v. Hartford, No. 2:20-cv-05159SVW-PLA, 2021 U.S. Dist. LEXIS 33044, *4, *18-20 (C.D. Cal. Jan. 14, 2021) U.S. (same); Dist. BA LAX, LEXIS 10919, LLC v. *4, Hartford Fire Ins. *9-11 (C.D. Cal. Jan. Co., 12, 2021 2021) (same); l0E, LLC v. Travelers Indem. Co., 2020 U.S. Dist. LEXIS 217482, 2020) *3, *5-9 (C.D. Cal. Nov. 13, (finding virus exclusion applies to COVID-19 in comparable case with exclusion language functionally identical to the Virus Exclusion in this case); Travelers Cas. Ins. Co. of Am. v. Geragos & U.S. Oct. Dist. LEXIS 196932, *5, *9-10 (same); Mark's Engine Co. No. 2020 U.S. 2 o2 0 ) federal Dist. {same) . LEXIS It is Cal. 19, 2020) 28 Rest. v. Travelers Indem. Co., 188463, good (C.D. Geragos, 2020 *6, that a *13-14 (C.D. number of Cal. Oct. 2, California-based courts have come to the same conclusion in comparable 12 cases, but the Court need not rely on them to reach a decision in this case. unambiguous. The plain meaning of the contract is clear and See Hartford, 326 P.3d at 259. 2. L&L's Arguments To attempt contract, to get L&L makes a around the clear number of arguments: language {a) of the the Virus and Organic Pathogen Exclusions do not apply to the Civil Authority coverage; (b) denying coverage based on either the Virus or Organic Pathogen Exclusion would be contrary to the reasonable expectations of the {c) parties; the virus exclusion is ambiguous; and {d) Defendant's Renewed Motion to Dismiss is not See Resp. Mem at 18-24, ECF No. ripe. SO. None of these hold water. a. Civil Authority Coverage First, L&L says that the business income loss and extra expense that L&L incurred were caused by California's COVID-19 orders and not the COVID-19 virus itself. IN RESPONSE TO DEFENDANTS' See PLAINTIFF'S BRIEF MOTION IN SUPPORT OF RENEWED MOTION TO DISMISS PLAINTIFF'S AMENDED COMPLAINT ( "RESPONSE MEMORANDUM") at 18, argument. ECF No. To SO. begin, There as are noted several earlier, problems L&L's with own that amended complaint states multiple times that the coronavirus shut-down orders were necessary because of the coronavirus. L&L's assertion to the contrary, RESP. MEM. at 18, 13 And, despite ECF No. SO, the Virus whether and Organic COVID-19 losses. The Pathogen Exclusions was the language of direct or apply regardless indirect the Organic cause of of L&L's Pathogen Exclusion quite clearly states that Evanston "will not pay for loss or damage caused EX. virus. And, directly 1 or indirectly ("Policy") by [,] " at 99, among ECF No. other 13-1 things, a (emphasis added). " [s] uch loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence EX. to the loss." same time, 1 ("Policy") at 99, ECF No. the Virus Exclusion applies to any 13-1. At the "loss or damage that induces or is . caused by or resulting from any virus . capable of inducing physical distress, illness or disease." 1 ("Policy") at 88, ECF No. 13-1. EX. There is no language in the Virus Exclusion that would support a distinction between whether a virus was a direct or indirect cause of loss or damage. the plain meaning of the language used in the Policy, 19 was even an indirect cause of L&L' s losses, By if COVID- L&L' s claim cannot succeed. Next, L&L appears to believe that the Virus and Organic Pathogen Exclusions could not apply to Civil Authority coverage because loss Civil Authority or extra expense, virus." all the RESP. consistent MEM. with not at 18, the coverage is for "business the property damage ECF No. language 14 50. of income caused by the That belief is not at the Policy. The Civil Authority coverage would pay for "the actual loss of Business income you sustain and necessary Extra Expense caused by action of civil authority" under certain conditions. at 7 8, the ECF No. Virus Both the Organic Pathogen Exclusion and Exclusion clearly apply prohibit recovering through 13 -1. "loss the or Civil EX. 1 ("Policy") damage," caused Authority by coverage an a insurered from virus, including provision. EX. 1 ("Policy") at 77-78, 88, 99, ECF No. 13-1 Finally, L&L states that "Defendants have not cited any case law holding that the tenuous connection between an excluded cause of loss prompting a civil authority order, the institution of a civil authority order, expense resulting from and business income loss or extra civil authority order can preclude coverage [,]" and then L&L attempts to distinguish the case law See RESP. MEM. that Defendants did provide. 50. In point of the addressed provisions, fact, Evanston cited several decisions that interaction COVID-19 at 18-19, ECF No. of nearly shut-down orders, business income losses. identical exclusion and plaintiffs claiming See, e.g., BA LAX, LLC v. Hartford Fire Ins. Co., 2021 U.S. Dist. LEXIS 10919 (C.D. Cal. Jan. 12, 2021). But, if L&L intended to say that Evanston did not cite a decision that used the exact same Virus and/or Organic Pathogen exclusions, the exact same COVID-19 orders, Civil Authority coverage provision, 15 that and the exact same appears to be true, though as discussed in the next paragraph, that victory is rather hollow under the circumstances. While L&L is coverage dispute correct is that the outcome dependent on the facts of an insurance and the policy in each case, that argument is not a particularly persuasive reason to ignore First, many of the California cases cited by Evanston. the language used in the Policy in this case is nearly verbatim to language drafted by the ISO. Many insurers including many of the insurers involved in the other California COVID-19 insurance disputes - either use the ISO language as a model or downright copy the ISO language for their own policies. Second, the COVID-19 shut-down orders at issue affected so many California businesses at roughly the same time and in roughly the same way, that the facts of the cases that Evanston cites are extremely similar to those of this case. Thus, when looking to other California cases addressing COVID-19 insurance disputes about ISO-based insurance policies, we are, in fact, comparing apples to apples. b. Expectations of the Parties L&L argues that, because it "had no part in the drafting of any Policy language," its Policy should be favored." "reasonable interpretation of RESP. MEM. at 20, ECF No. SO. is not an entirely accurate statement of California law. the That The rule is that if a policy is ambiguous, then the policy should be 16 interpreted against the insurer. Employers' Surplus (Cal. App. Ct. Lines 1977). Healy Tibbitts Constr. Co. v. Ins. Co., 72 And, because Cal. App. 3d 741, 749 insurance policies are contracts of adhesion, any exclusions will be strictly construed Healy, against the insurer. noted earlier, Virus and 72 Cal. App. 3d at 749. Here, as the policy is not ambiguous with respect to the Organic Pathogen Exclusions, and even interpreting them narrowly, they still prohibit L&L's claims. Next, L&L looks to the intentions of the ISO when drafting the Virus Exclusion, claiming that the ISO created the exclusion to deal with contamination of an insured property. at 21, ECF No. 50. First, RESP. MEM. There are many problems with this argument. it ignores the fact that there are two exclusions: Virus Exclusion and the Organic Pathogen there were problem related to some the Exclusion. Virus Even Exclusion, the if the Organic Pathogen Exclusion still stands to block L&L' s claims. Second, intent under of language; the California parties by law, a first court should considering determine the text the of the if there is no ambiguity in the policy language, the Court will not look any further into the intent of the parties. Hartford, 326 P. 3d at 259. look at the parties' Third, even if the Court were to intentions, it is the parties' not the ISO's intentions, that would matter. 17 intentions, Fin ally, Policy said reasonable L&L essentially tries "virus" to think and that not to argue "pandemic" the Policy caused by a pandemic of COVID-19. that because the it would excluded damage not or be loss RESP . MEM . at 21, ECF No . 50 ( "It would be u n reasona ble to conflate a discre te contamination by a p a thogenic organism or virus that could have occurred either negl i gent l y or f ortuitously with a pandemic in which the business owner di l igen ce."). "that occurs countrie s or h ad no ability Not so . over a to prevent it with A pandemic is a disease, wide continents) geographic and area typically proportion of the population." 5 It is, here a virus, (such affects reasonab l e a as multiple s i gnificant in other words, that has affec ted a l ot of people in a lot of places. a v irus There is nothing in the Virus or Organic Pathogen Exclusions to suggest that either exclu sion become i noperative when a virus outbreak crosses some undi sclosed brightline and becomes a "pandemic . " c. Ambiguity of the Virus Ex clusion L&L argues that the Policy is ambiguous based on statements that the ISO al l egedly made to insurance regulators . However, California does not allow a court to consider extrinsic evidence where there is no Northbrook Prope rty 5 a mbiguity . & Casualty Ins. ACL Co ., Technologies, Inc . v. 22 Cal. Rptr . 2d 206, https : / / www . merri am webster . com/ dictionary/ pandemic (last v i sited Apr . 8, 2021) . Pandemic, MERRIAM-WEBSTER . COM , 18 214 n.39 (Cal. Ct. App. 1993) ("Some jurisdictions--but California- -allow extrinsic evidence even where are unambiguous . . . . "). and thus, the contract not terms Here, the language is not ambiguous, expectations of the parties yield to the plain meaning of the text. d. Ripeness In its Evanston's response motion is memorandum, not L&L ripe attempts because to there argue are that complex, material factual issues that must be fleshed out with discovery. See RESP. issues the MEM. include mechanism at 24-25, ECF No. L&L believes that these SO. "whether there exists physical by coronavirus which the loss and or damage, COVID-19 cause property damage and illness, the infectiousness and health risks of COVID-19, and remediation [.]" the RESP. expense MEM. at that 25, is ECF No. so. necessary However, for the factual issues to which L&L points need not be decided for the Court to conclude Complaint, L&L's caused the by that, losses based were coronavirus. on L&L's either In own directly either case, First or the Amended indirectly Virus and Organic Pathogen Exclusions would bar L&L's claim. III. CONCLUSION The Court finds policy is unambiguous, that the plain language of the insurance and by the unambiguous plain language of the policy, Plaintiff's claim based on the harm caused by COVID19 19, a virus, Exclusions or damage" is barred by the Virus and Organic Pathogen regardless of how the phrase "direct physical loss is interpreted. The DEFENDANTS' RENEWED MOTION TO DISMISS AMENDED COMPLAINT { "Renewed Motion to Dismiss") (ECF No. 48) will, therefore, be GRANTED. It is so ORDERED. /s/ Robert E. Payne Senior United States District Judge Richmond, Virginia Date: April 2021 J:i_, 20 APPENDIX Business Income (and Extra Expense) Coverage Form A. Coverage 1. Business Income *** We 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 damage to property at premises which are described in the Declarations and for which a Business Income Limit Of Insurance is shown in the Declarations. The loss or damage must be caused by or result from a Covered Cause of Loss. With respect to loss of or damage to personal property in the open or personal property in a vehicle, the described premises include the area within 100 feet of such premises. *** 2. Extra Expense a. Extra Expense Coverage is provided at the premises described in the Declarations only if the Declarations show that Business Income Coverage applies at that premises. b. Extra Expense means necessary expenses you incur during the "period of restoration" that you would not have incurred if there had been no direct physical loss or damage to property caused by or resulting from a Covered Cause of Loss. We will pay Extra Expense (other than the expense to repair or replace property) to: (1) Avoid or minimize the "suspension" of business and to continue operations at the described premises or at replacement premises or temporary locations, including relocation expenses and costs to equip and operate replacement location or temporary location. the (2) Minimize the "suspension" of business if you cannot continue "operations". We will also pay Extra Expense to repair or replace property, but only to the extent it reduces the amount of loss that otherwise would have been payable under this Coverage Form. *** 5. Additional Coverages a. Civil Authority In this Additional Coverage, Civil Authority, the described premises are premises to which this Coverage Form applies, as shown in the Declarations. When a Covered Cause of Loss causes damage to property other than property at the described premises, we will pay for the actual loss of Business Income you sustain and necessary Extra Expense caused by action of civil authority that prohibits access to the described premises, provided that both of the following apply: (1) Access to the area immediately surrounding the damaged property is prohibited by civil authority as a result of the damage, and the described premises are within that area but are not more than one mile from the damaged property; and (2) The action of civil authority is taken in response to dangerous physical conditions resulting from the damage or continuation of the Covered Cause of Loss that caused the damage, or the action is taken to enable a civil authority to have unimpeded access to the damaged property. Civil Authority Coverage for Business Income will begin 72 hours after the time of the first action of civil authority that prohibits access to the described premises and will apply for a period of up 2 to four consecutive weeks from the date on which such coverage began. Civil Authority Coverage for Extra Expense will begin immediately after the time of the first action of civil authority that prohibits access to the described premises and will end: (1) Four consecutive that action; or weeks (2) When your Civil Business Income ends; after Authority the date Coverage of for whichever is later. *** Ex 1 ("Policy") at 77-78 ("CP 00 30 10 12"), ECF No. 13-1. Covered "Premises" Described in the Above Two Sections DESCRIPTION OF PREMISES Prem. No. Bldg. No. Location Address 1 1 4936 Zambrano St, Commerce, CA 90040 Class Code: 1211 No. of Stories Year 1 1984 Occupancy Construction Warehouse Joisted Built Masonry Class Description: Freight Terminals Ex 1 ("Policy") at 59, ECF No. 13-1. "Covered Causes of Loss" Described in the Above Two Sections A. Covered Causes Of Loss When Special is shown in the Declarations, Covered Causes of Loss means direct physical loss unless the loss is excluded or limited in this policy. Ex 1 {"Policy") at 89, ECF No. 13-1. 3 Pathogen Exclusion EXCLUSION - POLLUTION, ORGANIC PATHOGENS AND ASBESTOS This endorsement modifies insurance provided under the following: BUILDING AND PERSONAL PROPERTY COVERAGE FORM BUILDERS RISK COVERAGE FORM CAUSES OF LOSS - BASIC FORM CAUSES OF LOSS - BROAD FORM CAUSES OF LOSS - SPECIAL FORM I. The BUILDING AND PERSONAL PROPERTY COVERAGE FORM is amended as follows: *** B. The Definitions section is amended as follows: *** 2. The following definition is added: "Organic pathogen" means: a. Any organic irritant or contaminant including, but not limited to, "fungus", wet or dry rot, bacteria, virus or other microorganism of any type, and their by-products such as spores or mycotoxin; or b. Any disease-causing agent as classified by the Environmental Protection Agency. II. The CAUSES OF LOSS - BASIC FORM, CAUSES OF LOSS - BROAD FORM and CAUSES OF LOSS - SPECIAL FORM are amended as follows: A. The Exclusions section is amended as follows: 1. The following replaces the "Fungus", Wet Rot, Dry Rot And Bacteria exclusion: 4 We 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. Organic Pathogens Presence, growth, proliferation, spread or any activity of "organic pathogens". This exclusion applies regardless of whether there is any: a. Direct physical Covered Property; loss or damage to b. Loss of use, occupancy or functionality or decreased valuation of Covered Property or loss of Business Income; c. Action required including, but not limited to, testing, repair, replacement, removal, clean-up, abatement, disposal, relocation, or actions taken to address medical or legal concerns; or d. Suit or administrative proceeding, action involving the insured. or *** Ex 1 ("Policy") at 99-100, ECF No. 13. Virus Exclusion THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. EXCLUSION OF LOSS DUE TO VIRUS OR BACTERIA This endorsement modifies insurance provided under the following: COMMERCIAL PROPERTY COVERAGE PART STANDARD PROPERTY POLICY 5 A. The exclusion set forth in Paragraph B. applies to all coverage under all forms and endorsements that comprise this Coverage Part or Policy, including but not limited to forms or endorsements that cover property damage to buildings or personal property and forms or endorsements that cover business income, extra expense or action of civil authority. B. We will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease. However, this exclusion does not apply to loss or damage caused by or resulting from "fungus", wet rot or dry rot. Such loss or damage is addressed in a separate exclusion in this Coverage Part or Policy. C. With respect to any loss or damage subject to the exclusion in Paragraph B., such exclusion supersedes any exclusion relating to "pollutants". D. The following provisions in this Coverage Part or Policy are hereby amended to remove reference to bacteria: 1. Exclusion of "Fungus", Wet Rot, Dry Rot And Bacteria; and Additional Coverage - Limited Coverage for "Fungus", Wet Rot, Dry Rot And Bacteria, including any endorsement increasing the scope or amount of coverage. 2. E. The terms of the exclusion in Paragraph B. , or the inapplicability of this exclusion to a particular loss, do not serve to create coverage for any loss that would otherwise be excluded under this Coverage Part or Policy. EX. 1 ("Policy") at 88, ECF No. 13. 6
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