Case: 4:20-cv-01503-HEA Doc. #: 26 Filed: 01/14/21 Page: 1 of 37 PageID #: 254
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MISSOURI
`EASTERN DIVISION
`
`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. 4:20-cv-01503
`)
`) Hon. Henry E. Autrey
`)
`)
`)
`)
`)
`
`______________________________________________________________________________
`
`DEFENDANT ZURICH AMERICAN INSURANCE COMPANY’S
`MOTION TO DISMISS PLAINTIFF’S COMPLAINT
`______________________________________________________________________________
`
`

`

`Case: 4:20-cv-01503-HEA Doc. #: 26 Filed: 01/14/21 Page: 2 of 37 PageID #: 255
`
`TABLE OF CONTENTS
`TABLE OF AUTHORITIES .......................................................................................................... ii
`INTRODUCTION .......................................................................................................................... 1
`BACKGROUND ............................................................................................................................ 3
`I. Lindenwood’s Allegations .................................................................................................. 3
`II. Lindenwood’s Property-Insurance Policy........................................................................... 4
`LEGAL STANDARDS .................................................................................................................. 7
`ARGUMENT .................................................................................................................................. 8
`I. Lindenwood Has Not Stated And Cannot State A Claim For Breach Of Contract. ........... 8
`A. Lindenwood Fails To Allege Physical Loss Of Or Damage To Property. ................... 8
`1. The COVID-19 Orders Themselves Did Not Cause Physical Loss Of
`Or Damage To Property As A Matter of Law. ....................................................... 11
`2. The “Threat” Or “Presence” Of The Coronavirus Does Not Constitute
`Physical Loss Of Or Damage To Property As A Matter of Law. .......................... 13
`B. Coverage Under The Policy Does Not Extend To Financial Losses Caused
`By The Virus. .............................................................................................................. 16
`1. The Contamination Exclusion Precludes Coverage. .............................................. 16
`2. The Louisiana Endorsement Does Not Apply To Lindenwood’s Covered
`Properties, None of Which Are Located In Louisiana. .......................................... 18
`C. “Civil Or Military Authority” Coverage Fails For Additional Reasons. .................... 23
`D. “Decontamination Costs” Coverage Fails For Additional Reasons. .......................... 25
`E. “Expediting Costs” Coverage Fails For Additional Reasons. .................................... 26
`II. Lindenwood’s “Declaratory Judgment” Claim Must Be Dismissed. .............................. 26
`III. Plaintiffs’ Claims Should Be Dismissed With Prejudice. .............................................. 27
`CONCLUSION ............................................................................................................................. 27
`
`i
`
`

`

`Case: 4:20-cv-01503-HEA Doc. #: 26 Filed: 01/14/21 Page: 3 of 37 PageID #: 256
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`
`10E, LLC v. Travelers Indem. Co. of Conn.,
`2020 WL 5359653 (C.D. Cal. Sept. 2, 2020) ..........................................................................24
`
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) .............................................................................................................7, 13
`
`Axis Reins. Co. v. Telekenex, Inc.,
`913 F. Supp. 2d 793 (N.D. Cal. 2012) .....................................................................................23
`
`Baker v. Or. Mut. Ins. Co.,
`2021 WL 24841 (N.D. Cal. Jan. 4, 2021) ..................................................................................9
`
`Ballas Nails & Spa, LLC v. Travelers Cas. Ins. Co.,
`2021 WL 37984 (E.D. Mo. Jan. 5, 2021) (Perry, J.) ........................................................ passim
`
`BBMS, LLC v. Cont’l Cas. Co.,
`2020 WL 7260035 (W.D. Mo. Nov. 30, 2020) ................................................................ passim
`
`Black & Veatch Corp. v. Wellington Syndicate,
`302 S.W.3d 114 (Mo. Ct. App. 2009) ................................................................................20, 21
`
`Blue Springs Dental Care, LLC v. Owners Ins. Co.,
`2020 WL 5637963 (W.D. Mo. Sept. 21, 2020) .......................................................................15
`
`BMW of N. Am., Inc. v. Gore,
`517 U.S. 559 (1996) .................................................................................................................21
`
`Border Chicken AZ LLC v. Nationwide Mut. Ins. Co.,
`2020 WL 6827742 (D. Ariz. Nov. 20, 2020) .............................................................................2
`
`Boxed Foods Co. v. Cal.Cap. Ins. Co.,
`2020 WL 6271021 (N.D. Cal. Oct. 26, 2020), as amended (Oct. 27, 2020) ...........................18
`
`CB Com’l Real Estate Grp., Inc. v. Equity P’ships Corp.,
`917 S.W.2d 641 (Mo. Ct. App. 1996) ......................................................................................22
`
`Diesel Barbershop LLC v. State Farm Lloyds,
`2020 WL 4724305 (W.D. Tex. Aug. 13, 2020) .......................................................................17
`
`Eichholz v. Secura Supreme Ins. Co.,
`735 F.3d 822 (8th Cir. 2013) .....................................................................................................8
`
`Evanston Ins. Co. v. Gaddis Corp.,
`145 F. Supp. 3d 1140 (S.D. Fla. 2015) ....................................................................................23
`
`ii
`
`

`

`Case: 4:20-cv-01503-HEA Doc. #: 26 Filed: 01/14/21 Page: 4 of 37 PageID #: 257
`
`TABLE OF AUTHORITIES — continued
`
`Founder Inst. Inc. v. Hartford Fire Ins. Co.,
`2020 WL 6268539 (N.D. Cal. Oct. 22, 2020)............................................................................2
`
`Franklin EWC, Inc. v. Hartford Fin. Servs. Grp., Inc.,
`2020 WL 5642483 (N.D. Cal. Sept. 22, 2020) ........................................................1, 11, 17, 18
`
`FTC v. Travelers Health Ass’n,
`362 U.S. 293 (1960) .................................................................................................................22
`
`Gavrilides Mgmt. Co. v. Mich. Ins. Co.,
`No. 20-258-CB (Mich. Cir. Ct. July 1, 2020) ......................................................................1, 11
`
`Ghoman v. New Hampshire Ins. Co.,
`159 F. Supp. 2d 928 (N.D. Tex. 2001) ....................................................................................26
`
`Harvest Moon Distribs., LLC v. S.-Owners Ins. Co.,
`2020 WL 6018918 (M.D. Fla. Oct. 9, 2020) ...........................................................................13
`
`HealthNOW Med. Ctr., Inc. v. State Farm Gen. Ins. Co.,
`2020 WL 7260055 (N.D. Cal. Dec. 10, 2020) .......................................................................1, 2
`
`Henry’s La. Grill, Inc. v. Allied Ins. Co. of Am.,
`2020 WL 5938755 (N.D. Ga. Oct. 6, 2020) ........................................................................1, 11
`
`Infinity Exhibits, Inc. v. Certain Underwriters at Lloyd’s London,
`2020 WL 5791583 ...................................................................................................................14
`
`Johnson v. Hartford Fin. Servs. Grp., Inc.,
`2021 WL 37573 (N.D. Ga. Jan. 4, 2021) .................................................................................14
`
`K D Unlimited Inc. v. Owners Ins. Co.,
`2021 WL 81660 (N.D. Ga. Jan. 5, 2021) ...................................................................................9
`
`K.C. Hopps, Ltd v. Cincinnati Ins. Co., Inc.,
`2020 WL 6483108 (W.D. Mo. Aug. 12, 2020) ........................................................................15
`
`Kamp v. Empire Fire & Marine Ins. Co.,
`2013 WL 310357 (D.S.C. Jan. 25, 2013).................................................................................19
`
`LJ New Haven LLC v. AmGUARD Ins. Co.,
`2020 WL 7495622 (D. Conn. Dec. 21, 2020) ..........................................................................18
`
`Malaube, LLC v. Greenwich Ins. Co.,
`
`2020 WL 5051581 (S.D. Fla. Aug. 28, 2020)................................................................9, 12, 14
`
`Mama Jo’s, Inc. v. Sparta Ins. Co.,
`823 F. App’x 868 (11th Cir. Aug. 18, 2020) ...........................................................................14
`
`iii
`
`

`

`Case: 4:20-cv-01503-HEA Doc. #: 26 Filed: 01/14/21 Page: 5 of 37 PageID #: 258
`
`TABLE OF AUTHORITIES — continued
`
`Menard v. Gibson Applied Tech. & Eng’g, Inc.,
`2017 WL 6610466 (E.D. La. Dec. 27, 2017) .....................................................................19, 20
`
`Mendota Ins. Co. v. Lawson,
`456 S.W.3d 898 (Mo. Ct. App. 2015) ..................................................................................8, 20
`
`Michael Cetta, Inc. v. Admiral Indem. Co.,
`2020 WL 7321405 (S.D.N.Y. Dec. 11, 2020) ...........................................................................9
`
`Morningstar, LLC v. Hardee’s Food Sys., Inc.,
`2009 WL 36406 (E.D. Mo. Jan. 6, 2009) ................................................................................27
`
`Mortar & Pestle Corp. v. Atain Specialty Ins. Co.,
`2020 WL 7495180 (N.D. Cal. Dec. 21, 2020) .........................................................................13
`
`Mudpie, Inc. v. Travelers Cas. Ins. Co. of Am.,
`2020 WL 5525171 (N.D. Cal. Sept. 14, 2020) ..................................................................12, 24
`
`NeCo, Inc. v. Owners Ins. Co.,
`No. 2:20-cv-04211 (W.D. Mo. Dec. 2, 2020) (Bough, J.) .............................................1, 10, 16
`
`Nestlé Purina PetCare Co. v. Blue Buffalo Co. Ltd.,
`129 F. Supp. 3d 787 (E.D. Mo. 2015)........................................................................................7
`
`Newchops Rest. Comcast LLC v. Admiral Indem. Co.,
`2020 WL 7395153 (E.D. Pa. Dec. 17, 2020) .....................................................................17, 18
`
`Not Home Alone, Inc. v. Phila. Indem. Ins. Co.,
`2011 WL 13214381 (E.D. Tex. Mar. 30, 2011) ......................................................................23
`
`NTD I, LLC v. Alliant Asset Mgmt. Co.,
`2017 WL 605324 (E.D. Mo. Feb. 15, 2017) ............................................................................26
`
`Palmdale Estates, Inc. v. Blackboard Ins. Co.,
`2021 WL 25048 (N.D. Cal. Jan. 4, 2021) ................................................................................18
`
`Palmer Holdings & Invests. Inc. v. Integrity Ins. Co,
`
`2020 WL 7258857 (S.D. Iowa Dec. 7, 2020) ..........................................................................12
`
`Pappy’s Barber Shops, Inc. v. Farmers Grp., Inc.,
`2020 WL 5500221 (S.D. Cal. Sept. 11, 2020) ...............................................................9, 25, 27
`
`Plan Check Downtown III, LLC v. Amguard Ins. Co.,
`2020 WL 5742712 (C.D. Cal. Sept. 10, 2020) ........................................................................16
`
`Promotional Headwear Int’l v. The Cincinnati Ins. Co.,
`2020 WL 7078735 (D. Kan. Dec. 3, 2020) ........................................................................14, 25
`
`iv
`
`

`

`Case: 4:20-cv-01503-HEA Doc. #: 26 Filed: 01/14/21 Page: 6 of 37 PageID #: 259
`
`TABLE OF AUTHORITIES — continued
`
`Real Hosp. LLC v. Travelers Cas. Ins. Co. of Am.,
`2020 WL 6503405 (S.D. Miss. Nov. 4, 2020) ...........................................................................9
`
`Riverwalk Seafood Grill, Inc. v. Travelers Cas. Ins. Co. of Am.,
`2021 WL 81659 (N.D. Ill. Jan. 7, 2021) ........................................................................1, 17, 18
`
`S. Fla. Ent Assocs., Inc. v. Hartford Fire Ins. Co.,
`2020 WL 6864560 (S.D. Fla. Nov. 13, 2020)............................................................................1
`
`Sandy Point Dental, PC v. Cincinnati Ins. Co.,
`2020 WL 5630465 (N.D. Ill. Sept. 21, 2020) ..........................................................7, 14, 16, 25
`
`Santo’s Italian Cafe LLC v. Acuity Ins. Co.,
`2020 WL 7490095 (N.D. Ohio Dec. 21, 2020) ...................................................................1, 11
`
`Seaton v. Shelter Mut. Ins. Co.,
`574 S.W.3d 245 (Mo. 2019) ..................................................................................................7, 8
`
`St. Paul Fire & Marine Ins. Co. v. Lippincott,
`287 F.3d 703 (8th Cir. 2002) .....................................................................................................8
`
`Studio 417, Inc. v. Cincinnati Ins. Co.,
`2020 WL 4692385 (W.D. Mo. Aug. 12, 2020) ........................................................................15
`
`T&E Chi. LLC, v. Cincinnati Ins. Co.,
`2020 WL 6801845 (N.D. Ill. Nov. 19, 2020) ..........................................................................16
`
`Tappo of Buffalo, LLC v. Erie Ins. Co.,
`2020 WL 7867553 (W.D.N.Y. Dec. 29, 2020) ..........................................................................9
`
`Tellabs, Inc. v. Makor Issues & Rights, Ltd.,
`551 U.S. 308 (2007) ...................................................................................................................7
`
`Terry Black’s Barbecue, LLC v. State Auto. Mut. Ins. Co.,
`2020 WL 7351246 (W.D. Tex. Dec. 14, 2020) .........................................................................9
`
`Tomars v. United Fin. Cas. Co.,
`2015 WL 3772024 (D. Minn. June 17, 2015) ..........................................................................19
`
`Transit Cas. Co. v. Selective Ins. Co. of Se.,
`137 F.3d 540 (8th Cir. 1998) ...................................................................................................21
`
`Trs. of Clayton Terrace Subdivision v. 6 Clayton Terrace, LLC,
`585 S.W.3d 269 (Mo. 2019) ....................................................................................................21
`
`Turek Enters., Inc. v. State Farm Mut. Auto. Ins. Co.,
`2020 WL 5258484 (E.D. Mich. Sept. 3, 2020) ........................................................................16
`
`v
`
`

`

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`
`TABLE OF AUTHORITIES — continued
`
`Uncork & Create LLC v. Cincinnati Ins. Co.,
`2020 WL 6436948 (S.D. W. Va. Nov. 2, 2020) ......................................................9, 13, 14, 16
`
`Universal Image Prods., Inc. v. Fed. Ins. Co.,
`475 F. App’x (6th Cir. 2012) ...................................................................................................14
`
`Urban Hotel Dev. Co. v. President Dev. Grp., L.C.,
`535 F.3d 874 (8th Cir. 2008) .....................................................................................................7
`
`Vandelay Hosp. Grp. LP v. Cincinnati Ins. Co.,
`2020 WL 5946863 (N.D. Tex., Oct. 7, 2020) ..........................................................................27
`
`W. Coast Hotel Mgmt. v. Berkshire Hathaway Guard Ins. Cos.,
`2020 WL 6440037 .......................................................................................................12, 16, 18
`
`Water Sports Kauai, Inc. v. Fireman’s Fund Ins. Co.,
`2020 WL 6562332 (N.D. Cal. Nov. 9, 2020) ......................................................................9, 13
`
`Westchester Surplus Lines Ins. Co. v. Interstate Underground Warehouse &
`Storage, Inc.,
`946 F.3d 1008 (8th Cir. 2020) ...................................................................................................8
`
`Whiskey River on Vintage, Inc. v. Ill. Cas. Co.,
`2020 WL 7258575 (S.D. Iowa Nov. 30, 2020) ..................................................................13, 23
`
`Zwillo V, Corp. v. Lexington Ins. Co.,
`2020 WL 7137110 (W.D. Mo. Dec. 2, 2020) .................................................................. passim
`
`Statutes
`
`Ga. Code Ann. § 33-32-1(a) ..........................................................................................................19
`
`La. Rev. Stat. § 22:1311.................................................................................................................19
`
`McCarran-Ferguson Act, 15 U.S.C. § 1012 ...................................................................................19
`
`Rules
`
`Fed. R .Civ. P. Rule 11 ..............................................................................................................2, 15
`
`Fed. R. Civ. P. Rule 12(b)(6) ...........................................................................................................7
`
`vi
`
`

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`Case: 4:20-cv-01503-HEA Doc. #: 26 Filed: 01/14/21 Page: 8 of 37 PageID #: 261
`
`INTRODUCTION
`
`Plaintiff Lindenwood University seeks coverage under its property insurance policy with
`
`Defendant Zurich American Insurance Company for business losses allegedly incurred as a result
`
`of the COVID-19 pandemic. Courts to date have dismissed more than 100 similar cases at the
`
`pleading stage, often with prejudice and without allowing the insured a single opportunity to
`
`amend. Four courts applying Missouri law have joined the ranks of judges across the country
`
`rejecting policyholder attempts to plead a plausible case for coverage under commercial property
`
`policies for pandemic-related business losses, including one from this Court and three from the
`
`Western District of Missouri, on grounds equally fatal to Lindenwood’s claims here.1
`
`Nothing differentiates Lindenwood’s claims for breach of contract and declaratory
`
`judgment from the claims that courts around the country have denounced in unusually blunt
`
`terms. Some of those courts have gone so far as to describe insureds’ arguments as “at best,
`
`nonsensical,” “def[ying] common sense,” “just simply nonsense,” “exceed[ing] any reasonable
`
`bounds of possible
`
`[policy] construction,” and “linguistic sophistry with
`
`illogical
`
`consequences.”2 Other courts have gone even further and invoked a state statute that provides
`
`for attorneys’ fees and costs when a claim is “brought without substantial justification,”
`
`See Ballas Nails & Spa, LLC v. Travelers Cas. Ins. Co., 2021 WL 37984 (E.D. Mo. Jan.
`1
`5, 2021) (Perry, J.); BBMS, LLC v. Cont’l Cas. Co., 2020 WL 7260035 (W.D. Mo. Nov. 30,
`2020) (Phillips, C.J.); ECF No. 20, NeCo, Inc. v. Owners Ins. Co., No. 2:20-cv-04211 (W.D. Mo.
`Dec. 2, 2020) (Bough, J.); Zwillo V, Corp. v. Lexington Ins. Co., 2020 WL 7137110, at *1 (W.D.
`Mo. Dec. 2, 2020) (Ketchmark, J.).
`2
`See Franklin EWC, Inc. v. Hartford Fin. Servs. Grp., Inc., 2020 WL 5642483, at *2
`(N.D. Cal. Sept. 22, 2020); Henry’s La. Grill, Inc. v. Allied Ins. Co. of Am., 2020 WL 5938755,
`at *4 (N.D. Ga. Oct. 6, 2020); Declaration of Bronwyn F. Pollock (“Pollock Decl.”) Exs. 12, 13
`[Order and Hr’g Tr. 20:10-18, Gavrilides Mgmt. Co. v. Mich. Ins. Co., No. 20-258-CB (Mich.
`Cir. Ct. July 1, 2020)]; S. Fla. Ent Assocs., Inc. v. Hartford Fire Ins. Co., 2020 WL 6864560, at
`*11 (S.D. Fla. Nov. 13, 2020); Santo’s Italian Cafe LLC v. Acuity Ins. Co., 2020 WL 7490095, at
`*10 (N.D. Ohio Dec. 21, 2020); Riverwalk Seafood Grill, Inc. v. Travelers Cas. Ins. Co. of Am.,
`2021 WL 81659, at *3 (N.D. Ill. Jan. 7, 2021); HealthNOW Med. Ctr., Inc. v. State Farm Gen.
`Ins. Co., 2020 WL 7260055, at *2 (N.D. Cal. Dec. 10, 2020).
`
`1
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`

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`conditioned leave to amend on the insured being able to “do so consistent with its Rule 11
`
`obligations,” or warned counsel that the “theory of coverage appears frivolous.”3
`
`Lindenwood’s complaint should be among those dismissed with prejudice for a host of
`
`reasons based on the plain language of Lindenwood’s policy—as supported by overwhelming
`
`authority.
`
`First, seven of the eight coverage provisions Lindenwood invokes require “direct
`
`physical loss of or damage to property,” and the eighth requires “actual or imminent physical
`
`loss or damage.” Missouri law, consistent with case law across the country, requires a physical
`
`or material loss or destruction of property; indeed, equating purely pecuniary damages based on
`
`loss of use without any accompanying physical force or alteration has been rejected by courts
`
`because that would negate the policy’s insertion of the term “physical.”
`
`Lindenwood, however, does not identify any “physical” loss or damage to its property
`
`from COVID-19. Nor could it, because no matter whether Lindenwoood characterizes its cause
`
`of loss as the virus itself, the “imminent risk” of the virus, the “presence” of the virus, the
`
`COVID-19 orders themselves, the COVID-19 pandemic, or “droplets” or “aerosols” containing
`
`the virus, none are forces capable of having a “direct physical effect” that results in property
`
`damage, much less a total loss of property, as numerous courts have concluded in dismissing
`
`COVID-19 property-insurance cases, including those applying Missouri law. .
`
`Second, the policy’s “Contamination” exclusion precludes all coverage to the extent
`
`Lindenwood alleges losses based on the “actual presence” of the virus. Compl. ¶ 21. The policy
`
`excludes “Contamination,” including the “inability to use or occupy property or any cost of
`
`3
`Border Chicken AZ LLC v. Nationwide Mut. Ins. Co., 2020 WL 6827742, at *6 (D. Ariz.
`Nov. 20, 2020); HealthNOW, 2020 WL 7260055, at *2; Founder Inst. Inc. v. Hartford Fire Ins.
`Co., 2020 WL 6268539, at *1 (N.D. Cal. Oct. 22, 2020).
`
`2
`
`

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`making property safe or suitable for use or occupancy” and expressly defines “Contamination”
`
`as “[a]ny condition of property due to the actual presence of any . . . virus.” “COVID-19 is
`
`plainly a virus,” and therefore, the Contamination exclusion “expressly excludes damage . . . and
`
`even loss of use of property caused by [the COVID-19] virus.” Zwillo, 2020 WL 7137110, at *6.
`
`Multiple courts have found allegations like Lindenwood’s to trigger similar exclusions to
`
`Zurich’s Contamination exclusion.
`
`Third, Lindenwood’s request for “Civil or Military Authority” coverage fails for two
`
`additional reasons. First, the COVID-19 orders were not issued in “response” to “direct physical
`
`loss of or damage” to property “not owned, occupied, leased or rented by” Lindenwood, but
`
`instead to the threat that further spread of the virus posed to human health. See BBMS, 2020 WL
`
`7260035, at *6. Second, the orders did not “prohibit access” to Lindenwood’s campuses (i.e.,
`
`places of business), even if they limited its business operations. Multiple courts have reached
`
`these conclusions in COVID-19 property insurance cases.
`
`For these and the additional reasons discussed below, the Court should dismiss
`
`Lindenwood’s complaint with prejudice.4
`
`I.
`
`Lindenwood’s Allegations
`
`BACKGROUND
`
`Lindenwood is a private college. Zurich issued Lindenwood a property-insurance policy
`
`for the period July 1, 2019, to July 1, 2020, covering Lindenwood’s main campuses in Saint
`
`Charles, Missouri, a second campus in Belleville, Illinois, and its smaller locations throughout
`
`Missouri. Compl. Ex. A, ECF 1-1, (“Policy”) at 165; see also Compl. at ¶¶ 16, 55. Lindenwood
`
`For the convenience of the Court, Zurich has compiled the more than 100 orders
`4
`dismissing COVID-19 property insurance cases like this one in an exhibit to this Motion. See
`Pollock Decl. Ex. 14.
`All references to page numbers in the Policy refer to the ECF page number.
`5
`
`3
`
`

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`Case: 4:20-cv-01503-HEA Doc. #: 26 Filed: 01/14/21 Page: 11 of 37 PageID #: 264
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`alleges that, as a result of the COVID-19 pandemic and ensuing COVID-19 government orders,
`
`the college “ceased normal operations and effectively closed its campus in mid-March 2020.”
`
`Id. ¶¶ 17-19. It seeks first-party property-insurance coverage under the policy for “substantial
`
`losses” caused by COVID-19. Id. ¶ 24. Lindenwood alleges that “COVID-19 was and has been
`
`physically present on [its] campuses” and that “persons infected with COVID-19 have been
`
`present on [its] campuses and surrounding areas.” Id. ¶ 21. It alleges that the “imminent risk of
`
`the presence of COVID-19” and “[t]he presence of COVID-19 on property and in the air at
`
`property effectively eliminates the utility and habitability of such property sufficient to constitute
`
`direct physical loss of or damage to property within the meaning of the Policy.” Id. ¶ 22. On
`
`behalf of itself, two putative nationwide classes, and two subclasses, Lindenwood asserts causes
`
`of action for breach of contract and declaratory judgment based on eight coverage provisions.
`
`Id. ¶¶ 9-10, 89-102.
`
`II.
`
`Lindenwood’s Property-Insurance Policy
`
`The policy insures against “direct physical loss of or damage to Property . . . caused by a
`
`Covered Cause of Loss.”6 Policy at 30. A “Covered Cause of Loss” is defined as “[a]ll risks of
`
`direct physical loss of or damage from any cause unless excluded.” Id. at 67. If an insured
`
`suffers direct physical loss or damage to covered property, the Policy also provides coverage for
`
`the business-income losses that result from the loss or damage during the time required to repair
`
`or replace the lost or damaged property (known as “Time Element” coverages):
`
`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.
`
`6
`
`The Policy uses bold typeface to identify defined terms.
`
`4
`
`

`

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`Id. at 30. The “Time Element” coverages apply only during the “Period of Liability,” which the
`
`Policy defines in pertinent part as the time beginning when the “physical loss or damage”
`
`happens and ending when the “building and equipment could be repaired or replaced.” Id. at 34.
`
`Lindenwood seeks coverage under five “Time Element” provisions:
`
`1. “Gross Earnings,” which covers a loss of “Gross Earnings” as calculated per the Policy’s
`terms (id. 3 at 31; see also Compl. ¶ 73);
`
`2. “Extended Period of Liability,” which applies only if there is “Gross Earnings” loss
`coverage and extends that coverage beyond the “Period of Liability” up to an additional year
`or until Lindenwood “could restore its business with due diligence, to the condition that
`would have existed had no direct physical loss or damage occurred” to the insured property,
`whichever occurs first (Policy at 31; see also Compl. ¶ 78);
`
`3. “Extra Expense,” which covers the reasonable and necessary additional costs needed to
`“resume and continue as nearly as practicable” Lindenwood’s “normal business activities
`that otherwise would be necessarily suspended, due to direct physical loss of or damage
`caused by a Covered Cause of Loss” to the insured property (Policy at 32; see also Compl.
`¶ 74);
`
`4. “Civil or Military Authority,” which covers loss “resulting from the necessary Suspension
`of the Insured’s business activities” at its insured location “if the Suspension is caused by
`order of civil or military authority that prohibits access to the Location” and the order
`“result[s] 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” Lindenwood
`(Policy at 37-38; see also Compl. ¶ 75); and
`
`5. “Ingress/Egress,” which covers loss “resulting from the necessary Suspension of
`[Lindenwood’s] business activities” at an insured location if “ingress or egress” to that
`location by Lindenwood’s “suppliers, customers or employees is prevented by physical
`obstruction due to direct physical loss of or damage caused by a Covered Cause of Loss to
`property not owned, occupied, leased or rented” by Lindenwood (Policy at 42; see also
`Compl. ¶ 76).
`
`The remaining three coverages that Lindenwood invokes generally provide coverage for the
`
`protection and repair of property. They are as follows:
`
`6. “Decontamination Costs,” which covers the increased “cost of decontamination and/or
`removal” of “Contaminated” property, but only if the property is “Contaminated from
`direct physical loss of or damage caused by a Covered Cause of Loss” to the insured
`property and costs were incurred to “satisfy” an “in force” “law or ordinance regulating
`
`5
`
`

`

`Case: 4:20-cv-01503-HEA Doc. #: 26 Filed: 01/14/21 Page: 13 of 37 PageID #: 266
`
`Contamination due to the actual not suspected presence of Contaminant(s)” (Policy at 39-
`40; see also Compl. ¶ 77);
`
`7. “Expediting Costs,” which covers the “reasonable and necessary costs incurred to pay for
`the temporary repair of direct physical loss of or damage caused by a Covered Cause of
`Loss” to insured property and “to expedite the permanent repair or replacement of such
`damaged property” (Policy at 40; see also Compl. ¶ 78); and
`
`8. “Protection and Preservation of Property,” which covers the (i) “reasonable and necessary
`costs incurred for actions to temporarily protect or preserve” the insured property, provided
`that “such actions are necessary due to actual or imminent physical loss or damage due to a
`Covered Cause of Loss” to the insured property, and (ii) “Gross Earnings loss . . . sustained
`by the Insured” for a limited time “after the Insured first tak[es] reasonable action for the
`temporary protection and preservation of Covered Property.” Policy at 45; Compl. ¶ 78.
`
`Accordingly, all of the foregoing provisions require “direct physical loss of or damage to
`
`property” caused by a “Covered Cause of Loss” for coverage to be triggered, except for the
`
`“Protection and Preservation of Property” coverage, which is similar, but requires “actual or
`
`imminent physical loss or damage due to a Covered Cause of Loss.”
`
`The Policy excludes as a “Covered Cause of Loss” any loss or damage caused by, 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.” Policy at 26, § 3.03.01.
`
`The Policy excludes the following unless it results from direct physical loss or
`damage not excluded by this Policy.
`
`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.
`
`Id. “Contamination” is defined to include “[a]ny condition of property due to the actual presence
`
`of any . . . virus” or “disease causing or illness causing agent.” Id. at 67, § 7.09.
`
`Contamination(Contaminated) - Any condition of property due to the actual
`presence of any foreign substance, impurity, pollutant, hazardous material,
`poison, toxin, pathogen or pathogenic organism, bacteria, virus, disease causing
`or illness causing agent, Fungus, mold or mildew. (Id.)
`
`6
`
`

`

`Case: 4:20-cv-01503-HEA Doc. #: 26 Filed: 01/14/21 Page: 14 of 37 PageID #: 267
`
`The Policy also contains exclusions for loss or damage that (1) “aris[es] from the
`
`enforcement of any law, ordinance, regulation, or rule regulating or restricting. . . occupancy,
`
`operation[,] or other use” of the insured property; (2) “aris[es] from delay, loss of market, or loss
`
`of use”; (3) is “[i]ndirect or remote”; and (4) “result[s] from the Insured’s suspension of business
`
`activities, except to the extent provided by this Policy.” Id. 26-28.
`
`LEGAL STANDARDS
`
`To survive a motion to dismiss under Rule 12(b)(6), “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 (2009) (quotations omitted) (emphasis added). “Threadbare recitals of
`
`the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.
`
`“Determining whether a complaint states a plausible claim for relief [is] a context-specific task
`
`that requires the reviewing court to draw on its judicial expe