Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 1 of 32
`
`
`
`Plaintiff,
`
`
`-against-
`
`
`
`
`
`
`
`Case No. 20-cv-3380 (AT)
`
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X
`THOR EQUITIES, LLC,
`:
`
`:
`:
`:
`:
`:
`:
`:
`:
`:
`- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X
`
`
`
`FACTORY MUTUAL INSURANCE COMPANY,
`
`
`Defendant.
`
`DEFENDANT FACTORY MUTUAL INSURANCE COMPANY’S COMBINED
`MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFF’S MOTION FOR
`PARTIAL JUDGMENT ON THE PLEADINGS AND IN SUPPORT OF DEFENDANT’S
`CROSS-MOTION FOR PARTIAL JUDGMENT ON THE PLEADINGS
`
`Harvey Kurzweil
`Kelly A. Librera
`George E. Mastoris
`Matthew A. Stark
`WINSTON & STRAWN LLP
`200 Park Avenue
`New York, NY 10166
`Tel.: (212) 294-6700
`HKurzweil@winston.com
`KLibrera@winston.com
`GMastoris@winston.com
`MStark@winston.com
`
`Robert F. Cossolini
`FINAZZO COSSOLINI O’LEARY
`MEOLA & HAGER, LLC
`67 East Park Place, Suite 901
`Morristown, NJ 07960
`Tel.: (973) 343-4960
`robert.cossolini@finazzolaw.com
`
`Attorneys for Defendant Factory Mutual
`Insurance Company
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 2 of 32
`
`
`
`TABLE OF CONTENTS
`
`Page
`
`TABLE OF AUTHORITIES ......................................................................................................... iii
`
`PRELIMINARY STATEMENT .................................................................................................... 1
`
`STATEMENT OF UNDISPUTED FACTS ................................................................................... 3
`
`I.
`
`PROCEDURAL BACKGROUND ..................................................................................... 3
`
`II.
`
`THE POLICY ..................................................................................................................... 5
`
`a.
`
`b.
`
`General Framework of the Policy ........................................................................... 5
`
`Relevant Policy Exclusions..................................................................................... 5
`
`i.
`
`ii.
`
`The Contamination Exclusion..................................................................... 6
`
`The Loss of Use Exclusion ......................................................................... 7
`
`c.
`
`The Policy’s Communicable Disease Coverages: Narrow Exceptions to
`the Contamination and Loss of Use Exclusions ..................................................... 7
`
`ARGUMENT .................................................................................................................................. 9
`
`I.
`
`LEGAL STANDARD ......................................................................................................... 9
`
`a.
`
`b.
`
`Standards Governing Motions for Judgment on the Pleadings ............................... 9
`
`General Principles Governing Interpretation of Insurance Policies ..................... 11
`
`II.
`
`THE POLICY’S CONTAMINATION EXCLUSION IS BROAD AND
`UNAMBIGUOUS............................................................................................................. 13
`
`a.
`
`b.
`
`The Contamination Exclusion Encompasses Covid-19 and Applies to Bar
`Thor’s Claimed Losses ......................................................................................... 13
`
`Thor’s Flawed Interpretation of the Contamination Exclusion Focuses on
`Just One Word and Fails to Give Effect to the Provision in its Entirety .............. 14
`
`i.
`
`ii.
`
`Thor’s Proposed Distinction Between “Cost” and “Loss” Fails
`When the Contamination Exclusion is Read as a Whole .......................... 15
`
`Thor’s Proposed Interpretation Ignores That, in Addition to Excluding
`“Any Cost Due to Contamination,” the Provision Also Broadly
`Excludes “Contamination” as a Free-Standing Term ............................... 18
`
`
`
`i
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 3 of 32
`
`
`
`c.
`
`The Contamination Exclusion Does Not Swallow the Communicable
` Disease Coverages, Which Are Narrow Exceptions to the Exclusion ................. 19
`
`III.
`
`THE POLICY’S UNAMBIGUOUS “LOSS OF USE” EXCLUSION ALSO
`EXPRESSLY BARS THOR’S CLAIMED LOSSES ...................................................... 21
`
`CONCLUSION ............................................................................................................................. 25
`
`
`
`ii
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 4 of 32
`
`
`
` Cases
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`7001 E. 71st St. LLC v. Chubb Custom Ins. Co.,
`417 F. Supp. 3d 150 (E.D.N.Y. 2019) .....................................................................................17
`
`Abrams v. Great Am. Ins. Co.,
`199 N.E. 15 (N.Y. 1935) ..........................................................................................................11
`
`Allianz Ins. Co. v. Lerner,
`416 F.3d 109 (2d Cir. 2005).....................................................................................................11
`
`Am. Motorists Ins. Co. v. Trane Co.,
`544 F. Supp. 669 (W.D. Wis. 1982) ........................................................................................17
`
`Am. Motorists Ins. Co. v. Trane Co.,
`718 F.2d 842 (7th Cir. 1983) .............................................................................................16, 17
`
`Apionishev v. Columbia Univ.,
`No. 09-cv-6471, 2011 WL 1197637 (S.D.N.Y. 2011) ..............................................................9
`
`Aramony v. United Way of Am.,
`254 F.3d 403 (2d Cir. 2001).....................................................................................................20
`
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) .................................................................................................................10
`
`Ashland Hosp. Corp. v. Affiliated FM Ins. Co.,
`No. 11-cv-0016, 2013 WL 4400516 (E.D. Ky. Aug. 14, 2013) ..............................................24
`
`Avondale Indus., Inc. v. Travelers Indem. Co.,
`697 F. Supp. 1314 (S.D.N.Y 1988)..........................................................................................12
`
`Bell Atl. Corp. v. Twombly,
`550 U.S. 544 (2007) .................................................................................................................10
`
`Berkowitz v. N.Y. Life Ins. Co.,
`10 N.Y.S.2d 106 (N.Y. App. Div. 1939) ...........................................................................11, 12
`
`Bhd. Mut. Ins. Co. v. Ludwigsen,
`No. 16-cv-6369, 2018 WL 4211319 (S.D.N.Y. Sept. 4, 2018) ...............................................21
`
`Burns Int’l Sec. Servs., Inc. v. Int’l Union,
`47 F.3d 14 (2d Cir. 1995)...........................................................................................................9
`
`Century Sur. Co. v. Franchise Contrs.,
`No. 14-cv-0277, 2016 WL 1030134 (S.D.N.Y. Mar. 10, 2016) ..............................................12
`
`
`
`iii
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 5 of 32
`
`
`
`Cronos Grp. Ltd. v XComIP, LLC,
`64 N.Y.S.3d 182 (N.Y. App. Div. 2017) .................................................................................20
`
`Diesel Barbershop, LLC v. State Farm Lloyds,
`No. 20-cv-00461, 2020 WL 4724305 (W.D. Tex. Aug. 13, 2020)....................................14, 18
`
`Duane Reade, Inc. v. St. Paul Fire & Marine Ins. Co.,
`279 F. Supp. 2d 235 (S.D.N.Y. 2003)......................................................................................22
`
`Global Reinsurance Corp. of Am. v. Century Indem. Co.,
`442 F. Supp. 3d 576 (S.D.N.Y. 2020)......................................................................................20
`
`Graham Cnty. Soil & Water Conservation Dist. v. United States ex rel. Wilson,
`559 U.S. 280 (2010) .................................................................................................................23
`
`Hugo Boss Fashions, Inc. v. Fed. Ins. Co.,
`252 F.3d 608 (2d Cir. 2001).....................................................................................................12
`
`Granite Ridge Energy, LLC v. Allianz Glob. Risk US Ins. Co.,
`No. 10-cv-2430, 2012 WL 13036791 (S.D.N.Y. July 30, 2012) .......................................17, 18
`
`Johnson v. Rowley,
`569 F.3d 40 (2d Cir. 2009).......................................................................................................10
`
`Kass v. Kass,
`696 N.E.2d 174 (N.Y. 1998) ....................................................................................................11
`
`L-7 Designs, Inc. v. Old Navy, LLC,
`647 F.3d 419 (2d Cir. 2011).....................................................................................................10
`
`Lantheus Med. Imaging, Inc. v. Zurich Am. Ins. Co.,
`255 F. Supp. 3d 443 (S.D.N.Y. 2015)................................................................................11, 12
`
`In re Lehman Bros. Holdings Inc.,
`761 F.3d 303 (2d Cir. 2014).....................................................................................................20
`
`In re McMahon,
`236 B.R. 295 (S.D.N.Y. 1999) .................................................................................................11
`
`Levy v. Nat’l Union Fire Ins. Co.,
`889 F.2d 433 (2d Cir. 1989).....................................................................................................22
`
`M.H. Lipiner & Son, Inc. v. Hanover Ins. Co.,
`869 F.2d 685 (2d Cir. 1989).....................................................................................................11
`
`Malaube v. Greenwich Ins. Co.,
`No. 20-cv-22615, 2020 WL 5051581 (S.D. Fla. Aug. 26, 2020) ............................................21
`
`
`
`iv
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 6 of 32
`
`
`
`Martinez v. Allied Ins. Co. of Am.,
`No. 20-cv-00401, 2020 WL 5240218 (M.D. Fla. Sept. 2, 2020) .......................................14, 18
`
`Mastrobuono v. Shearson Lehman Hutton, Inc.,
`514 U.S. 52 (1995) ...................................................................................................................21
`
`Maurice Goldman & Sons, Inc. v. Hanover Ins. Co.,
`607 N.E.2d 792 (N.Y. 1992) ....................................................................................................12
`
`Ment Bros. Iron Works Co. v. Interstate Fire & Cas. Co.,
`702 F.3d 118 (2d Cir. 2012).....................................................................................................13
`
`Neopharm Ltd. v. Wyeth-Ayerst Int’l LLC,
`170 F. Supp. 3d 612 (S.D.N.Y. 2016)......................................................................................11
`
`Niemuller v. Nat’l Union Fire Ins. Co.,
`No. 92-cv-0070, 1993 WL 546678 (S.D.N.Y. Dec. 30, 1993) ................................................22
`
`Parks Real Estate Purchasing Grp. v. St. Paul Fire & Marine Ins. Co.,
`472 F.3d 33 (2d Cir. 2006).......................................................................................................12
`
`Patel v. Contemporary Classics of Beverly Hills,
`259 F.3d 123 (2d Cir. 2001).....................................................................................................10
`
`Porco v. Lexington Ins. Co.,
`679 F. Supp. 2d 432 (S.D.N.Y. 2009)......................................................................................11
`
`Sazon Inc. v. State of New York,
`No. 11-cv-3666 (B), 2011 WL 5910171 (S.D.N.Y. Nov. 28, 2011) .......................................10
`
`Seneca Ins. Co. v. Kemper Ins. Co.,
`No. 02-cv-10088, 2004 WL 1145830 (S.D.N.Y. May 21, 2004) ............................................12
`
`State of New York v. Am. Mfrs. Mut. Ins. Co.,
`593 N.Y.S.2d 885 (N.Y. App. Div. 1993) ...............................................................................11
`
`Sunrise Mall Assocs. v. Import Alley of Sunrise Mall,
`621 N.Y.S.2d 662 (N.Y. App. Div. 1995) ...............................................................................18
`
`Svensson v. Securian Life Ins. Co.,
`706 F. Supp. 2d 521 (S.D.N.Y. 2010)..........................................................................11, 12, 18
`
`Travelers Prop. Cas. Co. of Am. v. Mixt Greens, Inc.,
`No. 13-cv-0957, 2014 WL 1246686 (N.D. Cal. Mar. 25, 2014) .............................................22
`
`In re Tribune Co. Fraudulent Conveyance Litig.,
`No. 12-cv-2652, 2019 WL 1771786 (S.D.N.Y. Apr. 23, 2019) ..............................................23
`
`
`
`v
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 7 of 32
`
`
`
`United Cap. Corp. v. Travelers Indem. Co.,
`237 F. Supp. 2d 270 (E.D.N.Y. 2002) .....................................................................................12
`
`WC Cap. Mgmt., LLC v. UBS Sec., LLC,
`711 F.3d 322 (2d Cir. 2013).....................................................................................................10
`
`Other Authorities
`
`FED. R. CIV. P. 12 ...................................................................................................................1, 9, 10
`
`
`
`
`
`
`
`
`
`
`
`
`
`vi
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 8 of 32
`
`
`
`Pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, Defendant Factory Mutual
`
`Insurance Company (“FM Global”), through its undersigned counsel, submits this combined
`
`memorandum of law in opposition to Plaintiff Thor Equities, LLC’s (“Thor”) Motion for Partial
`
`Judgment on the Pleadings (Dkt. 32-34) (“Motion”) and in support of its Cross-Motion for Partial
`
`Judgment on the Pleadings (“Cross-Motion”).
`
`PRELIMINARY STATEMENT
`
`Thor, which describes itself as a major commercial real estate company with properties
`
`throughout the United States and the world, brought this action against its property insurer FM
`
`Global, asserting that it is entitled to millions in coverage for monetary losses stemming from the
`
`novel coronavirus (Covid-19) pandemic and, in particular, “shut down” orders issued in response
`
`to the pandemic.
`
`Thor’s policy, however, specifically excludes “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.” Policy No. 1063282 (the “Policy”), Complaint (“Compl.”)
`
`Ex. A (Dkt. 1-1) at 241 (italics for emphasis added; terms in bold appear in bold in the Policy).2
`
`Contamination is defined in the Policy as “any condition of property due to the actual or suspected
`
`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.” Compl. Ex. A at 76 (italics added). The parties agree that this definition encompasses
`
`Covid-19. See Motion at 17. Separately, Thor’s Policy also excludes coverage for “loss of use”
`
`
`1 References to Policy page numbers are to the file-stamped ECF page numbers on Docket 1-1.
`
`2 Unless otherwise indicated, capitalization and emphasis in language quoted from the Policy
`appear in the original.
`
`
`
`1
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 9 of 32
`
`
`
`as a general matter. Both of these exclusions clearly and unambiguously apply to Thor’s losses
`
`and thus preclude the recovery that Thor seeks.
`
`That said, Thor is not without recourse. Specifically, the Policy contains an exception to
`
`these exclusions for “communicable disease response” and “interruption by communicable
`
`disease” and provides $1 million in coverage for same. But Thor’s Motion conveniently skates by
`
`that fact, likely because it is seeking more than twenty times that amount as part of this lawsuit.
`
`Instead, Thor has asked this Court to effectively read out of the Policy the explicit exclusions on
`
`coverage for contamination and “loss of use,” and rule that it may nonetheless recover “unpaid
`
`rent, significant decreases in percentage of rent paid, as well as lost profits and extra expenses in
`
`connection with the coronavirus outbreak.” Motion at 10-11.
`
`Thor’s position is directly at odds with the explicit language of the Policy. Accordingly,
`
`FM Global not only opposes the Motion, but also seeks a determination that the Policy’s
`
`unambiguous contamination and “loss of use” exclusions each apply to Thor’s losses. In an
`
`implicit nod to the weakness of its position, Thor falls back onto vague assertions regarding the
`
`parties’ intent, contending that the Policy was “designed to cover loss of revenue or profit”
`
`resulting from “a pandemic and ‘stay at home’ and business ‘shut down’ orders.” Id. at 1. But
`
`Thor adduces no evidence for this position, and there is none: indeed, the idea that the Policy could
`
`have been intentionally “designed” many years ago to account for an unprecedented and
`
`unexpected global pandemic strains credulity. More to the point, it is flatly inconsistent with any
`
`reasonable reading of a policy that contains the explicit exclusions described above and does not
`
`even mention the term “pandemic” (or “epidemic,” for that matter). To the extent the Policy
`
`contemplated an event of this sort at all, it did so by expressly excluding coverage for the
`
`contamination and “loss of use” that Thor has allegedly experienced to date, and that it “expect[s]
`
`
`
`2
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 10 of 32
`
`
`
`to continue for the indefinite future.” Id. at 11. Accordingly, FM Global respectfully requests that
`
`the Court deny Thor’s Motion and grant FM Global’s Cross-Motion.
`
`STATEMENT OF UNDISPUTED FACTS3
`
`I.
`
`PROCEDURAL BACKGROUND
`
`On or about March 15, 2020, FM Global issued Thor the Policy. Compl. Ex. A at 10. On
`
`March 26, 2020, Thor sent a letter to FM Global claiming that Thor had suffered “loss, expense,
`
`and/or damage in a number of forms covered under the Policy, including, but not limited to,
`
`cleaning and other remediation of property exposed to coronavirus, loss of earnings, loss of profit,
`
`extra expenses incurred to operate its business as normal, and loss of rental income.” FM Global
`
`Response to Thor’s Pre-Motion Letter (“FM Global Response Letter”) Ex. A at 1 (Dkt. 27-1).
`
`Thor admitted that the “scope and extent of covered loss, expense and/or damage that will result
`
`from these circumstances is not yet known” but “[o]nce determined, Thor requests that FM provide
`
`coverage for its loss, expense and/or damage.” Id.
`
`FM Global responded on April 14, acknowledging receipt of Thor’s letter, describing the
`
`Policy’s communicable disease coverages—“Communicable Disease Response” and “Interruption
`
`by Communicable Disease,” which, as mentioned above, are subject to a combined sublimit of $1
`
`million—and requesting information from Thor about its claim. See FM Global Response Letter
`
`Ex. B (Dkt. 27-2).
`
`Thor responded on April 24, stating that “[w]hile certain of Thor’s losses due to
`
`coronavirus may be covered under [the communicable disease] coverages,” it also believed some
`
`or all of its still-unidentified losses were also covered under “the general coverage grants for
`
`property damage and time element coverage, as well as multiple time element coverages including
`
`
`3 The facts cited herein are matters of public record, asserted by Thor, or undisputed.
`
`
`
`3
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 11 of 32
`
`
`
`civil authority and ingress/egress coverages.” FM Global Response Letter Ex. C at 1 (Dkt. 27-3).
`
`Thor also said it would “respond to all reasonable requests for information as soon as possible”
`
`and would submit a proof of loss to FM Global “as required by the policy.” Id. Instead, Thor filed
`
`this lawsuit for anticipatory breach of contract and declaratory judgment six days later, generally
`
`claiming coverage for, among other things, “communicable disease,” “extra expense,” “rental
`
`insurance,” “civil or military authority,” “contingent time element extended,” “logistics extra
`
`cost,” “attraction property,” “ingress/egress” and “delay in startup.” See Compl. ¶¶ 26, 37, 38, 41,
`
`42, 45, 46, 47, 49, 50.
`
`On July 7, 2020, Thor filed a letter with the Court providing the basis for its anticipated
`
`motion for judgment on the pleadings. In it, Thor asserted for the first time, without providing
`
`detail, that “[t]he majority of Thor’s losses have been caused not by the confirmed presence of
`
`coronavirus at its premises, but by orders of state or local authorities issued in response to the”
`
`pandemic. Thor Pre-Motion Letter at 3 (July 7, 2020) (Dkt. 26) (emphasis added). In fact, the
`
`scope of Thor’s alleged losses remains unclear to this day. On August 4, 2020, more than four
`
`months after first notifying FM Global of its claim, Thor sent FM Global an “initial proof of loss,”
`
`showing alleged losses as measured by projected lost rental income by tenant. Thor has not
`
`provided any further information relating to its proof of loss. Rather, in its Motion, Thor
`
`acknowledges that its “COVID-19 related losses from unpaid rent, significant decreases in
`
`percentage of rent paid, as well as lost profits and extra expenses . . . are expected to continue for
`
`the indefinite future given that, even after the orders are lifted, a return to normalcy will take many
`
`months if not years.” Motion at 11 (emphasis added).
`
`
`
`4
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 12 of 32
`
`
`
`II.
`
`THE POLICY
`
`a. General Framework of the Policy
`
`As Thor concedes, the Policy “covers property, as described in this Policy, against ALL
`
`RISKS OF PHYSICAL LOSS OR DAMAGE, except as hereinafter excluded . . . .” Compl. Ex.
`
`A at 10 (bold and italics added); Motion at 5. That is, to the extent there is physical loss or damage
`
`to property that is covered by the Policy, such loss or damage will be covered (assuming other
`
`specified factual predicates are met) unless a specified exclusion applies to bar coverage. The
`
`exclusions, in turn, are subject to exceptions specified in the Policy. As the preamble to the
`
`“EXCLUSIONS” provisions of the Property Damage section notes, “[i]n addition to the exclusions
`
`elsewhere in this Policy, the following exclusions apply unless otherwise stated[.]” Compl. Ex.
`
`A at 20 (emphasis added). Therefore, the basic functioning of the Policy is as follows: an event
`
`of physical loss or damage to a covered property will be covered if the factual predicate is met,
`
`unless an exclusion applies, and an exclusion applies unless an exception to that exclusion is
`
`“otherwise stated” elsewhere in the Policy. Id.
`
`The Policy details specific coverages (including coverage for business interruption
`
`stemming from an event of physical loss or damage) and the requirements to trigger those
`
`coverages, which are subject to any applicable exclusions, and specified limits and sublimits. The
`
`Policy also covers, as Thor correctly posits, “costs” and “losses,” Motion at 5, but Thor’s assertion
`
`that the Policy treats them as “distinct types of damages,” id., is unsupported by clear Policy terms
`
`(as described below).
`
`b. Relevant Policy Exclusions
`
`The Policy includes—and this Cross-Motion and Thor’s Motion turn on the applicability
`
`of—two unambiguous exclusions: the contamination exclusion and the “loss of use” exclusion.
`
`
`
`5
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 13 of 32
`
`
`
`Both exclusions appear under Section 3 of the Property Damage section of the Policy, but apply
`
`to the entire Policy, including coverages provided under the Time Element (also known as business
`
`interruption) section. The preamble to the Time Element section provides that:
`
`the TIME ELEMENT
`in
`TIME ELEMENT LOSS as provided
`COVERAGES and TIME ELEMENT COVERAGE EXTENSIONS of this
`section of the Policy:
`. . .
`C. is subject to the Policy provisions, including applicable exclusions and
`deductibles, all as shown in this section and elsewhere in this Policy.
`
`
`Compl. Ex. A at 45 (emphases added). Section 1 of the Time Element section further notes that
`
`the “Policy insures TIME ELEMENT loss . . . directly resulting from physical loss or damage of
`
`the type insured: 1) to property described elsewhere in this Policy and not otherwise excluded by
`
`this Policy.” Id. (emphasis added). And, for the avoidance of doubt, the “TIME ELEMENT
`
`EXCLUSIONS” section similarly notes that the exclusions detailed therein apply “[i]n addition
`
`to the exclusions elsewhere in this Policy.” Id. at 55 (emphasis added).
`
`i. The Contamination Exclusion
`
`The Policy contains an exclusion relating specifically to “contamination,” which is defined
`
`as:
`
`[A]ny condition of property due to the actual or suspected 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. at 76 (emphasis added). Thor agrees, as it must, that this definition, and its reference to “virus,”
`
`clearly encompasses Covid-19. See Motion at 17.
`
`With contamination defined, the Policy then specifies the following exclusion relating to
`
`contamination (the “Contamination Exclusion”):
`
`D. This Policy excludes the following unless directly resulting from other
`physical damage not excluded by this Policy:
`
`
`
`6
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 14 of 32
`
`
`
`
`1) 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. If contamination due only to the
`actual not suspected presence of contaminant(s) directly results from other
`physical damage not excluded by this Policy, then only physical damage
`caused by such contamination may be insured. This exclusion D1 does not
`apply to radioactive contamination which is excluded elsewhere in this
`Policy.
`
`
`Compl. Ex. A at 24 (emphases altered and added).
`
`
`ii. The Loss of Use Exclusion
`
`
`
`In addition to the Contamination Exclusion, the Policy contains another exclusion that is
`
`also relevant here. The Policy provides that it “excludes: . . . 3) loss of market or loss of use.” Id.
`
`at 20-21. Thor’s claimed losses stem from its inability to use its properties due to governmental
`
`orders or Covid-19 (Thor Pre-Motion Letter at 3; Motion at 1, 10-11, 21), and therefore directly
`
`implicate this exclusion (the “Loss of Use Exclusion”), which applies to bar coverage unless an
`
`exception is “otherwise stated” in the Policy.
`
`c. The Policy’s Communicable Disease Coverages: Narrow Exceptions to the
`Contamination and Loss of Use Exclusions
`
`While the Contamination Exclusion and Loss of Use Exclusion are implicated by Thor’s
`
`claimed losses, the Policy provides that exclusions “apply unless otherwise stated.” Compl. Ex.
`
`A at 20. As mentioned above, to the extent a particular coverage is carved out from applicable
`
`exclusions, that coverage could apply to Thor’s claimed losses. The Policy’s communicable
`
`disease coverages are two potentially-applicable narrow exceptions to the Contamination and Loss
`
`of Use Exclusions.
`
`The Policy defines “communicable disease,” in relevant part, as “disease which is . . .
`
`transmissible from human to human by direct or indirect contact with an affected individual or the
`
`individual’s discharges.” Id. at 75. It then provides two coverages specific to communicable
`
`
`
`7
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 15 of 32
`
`
`
`disease: (1) “Communicable Disease Response” and (2) “Interruption by Communicable Disease.”
`
`Both provisions provide that coverage is available:
`
`If a location owned, leased or rented by the Insured has the actual not
`suspected presence of communicable disease and access to such location
`is limited, restricted or prohibited by:
`
`1) an order of an authorized governmental agency regulating the actual not
`suspected presence of communicable disease; or
`
`2) a decision of an Officer of the Insured as a result of the actual not
`suspected presence of communicable disease.
`
`
`Id. at 32 & 64-65.
`
`
`If those requirements are met, the Communicable Disease Response:
`
`covers the reasonable and necessary costs incurred by the
`Insured at such location with the actual not suspected presence
`of communicable disease for the:
`
`1) cleanup, removal and disposal of the actual not suspected
`presence of communicable diseases from insured property; and
`
`2) actual costs of fees payable to public relations services or
`actual costs of using the Insured’s employees for reputation
`management resulting from the actual not suspected presence of
`communicable diseases on insured property.
`
`
`Id. at 32. Meanwhile, if Interruption by Communicable Disease is triggered, it “covers the Actual
`
`Loss Sustained and EXTRA EXPENSE incurred by the Insured during the PERIOD OF
`
`LIABILITY at such location with the actual not suspected presence of communicable disease.”
`
`Id. at 65. “Actual Loss sustained” under the Policy is measured either by the insured’s “Gross
`
`Earnings” or “Gross Profit” during the PERIOD OF LIABILITY, subject to certain deductions
`
`laid out in the Policy. Id. at 37 & 39.
`
`
`
`As Thor acknowledges, these coverages apply in “narrow and limited circumstances.”
`
`Motion at 3. While Thor repeatedly and misleadingly attempts to frame this fact as a “concession”
`
`
`
`8
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 16 of 32
`
`
`
`by FM Global (see id. at 3, 8, 11), it simply reflects the unambiguous language of the two
`
`communicable disease coverages. Per their plain terms, although these coverages do not require
`
`physical loss or damage, they are only triggered upon “the actual not suspected” presence of
`
`communicable disease along with the requisite “order of an authorized government agency” or “a
`
`decision of an Officer of the Insured” relating to the “actual not suspected” presence of
`
`communicable disease.
`
`Although Thor asserts that “there is not any dispute that Thor’s losses are potentially
`
`covered beyond the Policy’s narrow communicable disease coverages,” id. at 15, this is flat wrong.
`
`So too is Thor’s assertion that “both parties agree that [is a] factual issue [that] should be resolved
`
`after discovery is over.” Id. at 16. Whether Thor’s Covid-19 losses could constitute the “physical
`
`loss or damage” required to trigger other coverages beyond the communicable disease coverages
`
`is an issue which need not be addressed until and unless the full scope of Thor’s losses is
`
`determined through discovery.4
`
` The only issue before the Court, as teed up by Thor’s Motion and this Opposition and
`
`Cross-Motion, is whether the Contamination and Loss of Use Exclusions apply to Thor’s losses.
`
`I.
`
`LEGAL STANDARD
`
`ARGUMENT
`
`a. Standards Governing Motions for Judgment on the Pleadings
`
`Judgment pursuant to Rule 12(c) is appropriate where there exists no issue of material fact
`
`such that the moving party is entitled to judgment as a matter of law. See Burns Int’l Sec. Servs.,
`
`Inc. v. Int’l Union, 47 F.3d 14, 16 (2d Cir. 1995); Apionishev v. Columbia Univ., No. 09-cv-6471,
`
`
`4 As the Policy makes clear, it is Thor which bears the burden of proving that Covid-19 has actually
`caused “physical loss or damage” to one or more of its covered properties.
`
`
`
`9
`
`

`

`Case 1:20-cv-03380-AT Document 39 Filed 09/14/20 Page 17 of 32
`
`
`
`2011 WL 1197637, at *2 (S.D.N.Y. Mar. 25, 2011). A motion under Rule 12(c) for judgment on
`
`the pleadings may be filed as soon as the pleadings are closed and the standard is the same as the
`
`standard for dismissal under Rule 12(b)(6). FED. R. CIV. P. 12(c); see also Johnson v. Rowley, 569
`
`F.3d 40, 43 (2d Cir. 2009); Patel v. Contemporary Classics of Beverly Hills, 259 F.3d 123, 125-
`
`26 (2d Cir. 2001). Thus, to survive a motion for judgment on the pleadings, “a complaint must
`
`contain sufficient factual matter . . . to state a claim to relief that is plausible on its face.” Ashcroft
`
`v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted); accord WC Cap. Mgmt.,
`
`LLC v. UBS Sec., LLC, 711 F.3d 322, 328 (2d Cir. 2013).
`
`In evaluating the sufficiency of the complaint, courts employ