Case 1:22-cv-00626-PTG-TCB Document 1 Filed 06/01/22 Page 1 of 32 PageID# 1
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`MARS, INCORPORATED,
`
`
`Plaintiff,
`
`v.
`
`FACTORY MUTUAL INSURANCE
`COMPANY, d/b/a FM GLOBAL,
`
`
`Defendant.
`
`
`
`Civil Action No. ________________
`
`
`
`Plaintiff Mars, Incorporated (“Mars”) alleges the following against defendant Factory
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`COMPLAINT
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`Mutual Insurance Company (“FM”):
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`NATURE OF THE ACTION
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`1.
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`Mars seeks rulings on factual questions, scientific issues, and questions of insurance
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`contract interpretation from the Court so that it can obtain bargained-for insurance recoveries under
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`an all-risks commercial property insurance policy issued to Mars by FM (the “Policy”) for losses
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`suffered due to physical loss and damage to property in 2020. The Policy was issued for the
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`January 1, 2020 to January 1, 2021 policy period, and is attached as Exhibit 1. FM disputes the
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`factual and legal predicates necessary for Mars to obtain the recoveries to which it is owed. Actual
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`controversies therefore exist between the parties, making declaratory relief necessary to resolve
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`their disputes.
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`2.
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`Mars is a global manufacturer of confectionery, pet foods, and other food products,
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`and is also a leading provider of animal care services. Mars has some of the best-known (and
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`loved) brands in the world: M&M’s, Snickers, Twix, Milky Way, Skittles, and Ben’s Original.
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`Mars is not just synonymous with food; it has brought its science-powered business to pet care,
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`creating products and services that pets, too, love: brands like Pedigree, Royal Canin, and Whiskas,
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`and pet-health services through Banfield Pet Hospital and VCA, Inc., among others. It employs
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`more than 130,000 people in more than thirty countries.
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`3.
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`Mars’ operations suffered substantial losses in 2020 following site closures
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`resulting from the COVID-19 pandemic. Multiple employees reported that they were working at
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`a Mars location covered by the Policy when infected with COVID-19.
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`4.
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`In addition to confirmed actual cases of COVID-19 on Mars’ premises, and the
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`high percentage of asymptomatic cases of COVID-19, it is statistically certain that the actual
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`number of individuals present at Mars’ insured locations, and at applicable third-party property,
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`who contracted COVID-19 was substantially greater than the number of individuals that reported
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`COVID-19 to the company.
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`5.
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`In addition to confirmed actual cases of COVID-19 on Mars’ premises, general
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`statistical modeling confirms to a high degree of certainty that COVID-19 was present in or around
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`commercial and industrial properties generally.1 It is statistically and scientifically certain that
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`COVID-19 was being continuously introduced, dispersed, and reintroduced into and altering the
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`air and on surfaces of property in or around Mars’ locations, including at businesses and amenities
`
`
`1 See, e.g., Expert Report of Joseph Lewnard as filed in Treasure Island, LLC v. Affiliated FM
`Insurance Co. (“Treasure Island”), No. 20-00965, ECF No. 205-3 at 126-128 (D. N.V.), attached
`as Exhibit 2; COVID-19 Event Risk Assessment Planning Tool, Georgia Institute of Technology.
`https://covid19risk.biosci.gatech.edu; Covid-19 Projections, IHME
`https://covid19.healthdata.org/united-states-of-america?view=total-deaths&tab=trend; Covid-19
`Risk Mapping, Columbia University,
`https://columbia.maps.arcgis.com/apps/webappviewer/index.html?id=ade6ba85450c4325a12a5b
`9c09ba796c; Covid-19 Modeling, NORTHEASTERN UNIVERSITY,
`https://covid19.gleamproject.org; LANL Covid-19 Cases and Deaths Forecasts, LOS ALAMOS
`NATIONAL LABORATORY, https://covid-19.bsvgateway.org.
`
`2
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`Case 1:22-cv-00626-PTG-TCB Document 1 Filed 06/01/22 Page 3 of 32 PageID# 3
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`in the vicinity of Mars’ locations. It is also statistically and scientifically certain that COVID-19
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`altered the air and surfaces at and around Mars’ locations.
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`6.
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`As a result of physical loss or damage to its property and risks of physical loss or
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`damage to its property, Mars suffered loss of earnings and business income and incurred covered
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`“extra expense” including without limitation the cost of personal protective equipment (e.g.,
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`masks, shields, gloves), physical modifications to stores and other locations (e.g., the installation
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`of shields, printed collateral, window clings, and social distancing items), the costs of disinfectants,
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`extra cleaning services and sanitation products, logistics extra costs to address the disruption of
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`the normal movement of goods and materials (including such things as the purchase of additional
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`back stock bins and stations to hold quarantined product) and additional security costs.
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`7.
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`Mars purchased the Policy to obtain broad multi-risk protection for the risk of loss
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`it might incur due to various causes of loss or damage to property.
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`8.
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`The FM “all-risk” policies are among the “best-in-class” of the “all-risk” property
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`coverage available on the commercial insurance market. They contain, for example, affirmative
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`grants of coverage for communicable disease. They do not contain what other insurers call a
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`“virus” exclusion, but instead contain only a “contamination” exclusion that excludes coverage for
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`“contamination, and any cost due to contamination.” Among other things, Mars does not seek
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`recovery from FM for “contamination” or “any cost due to contamination.” The communicable
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`disease of COVID-19 is not a “contaminant” as the term is defined in the Policy. And, as noted
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`above, communicable disease is expressly covered as “physical loss or damage” under the Policy.
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`This differentiates the Policy from the insurance policies involved in most insurance coverage
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`litigation matters concerning COVID-19.
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`3
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`9.
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`FM disputes that the Policy covers Mars’ claims for losses resulting from physical
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`loss or damage. It contends in coverage litigation throughout the United States that COVID-19
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`lost income coverage is limited to small “sub-limits”, that the presence of SARS-CoV-2 or
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`COVID-19 is not “physical loss or damage” to property, and that coverage is otherwise barred by
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`the “contamination” and loss of use or loss of market exclusions. Actual controversies exist
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`between the parties concerning the extent to which Mars is entitled to recover under the Policy for
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`its COVID-19 losses.
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`THE PARTIES
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`10. Mars is a Delaware corporation with a principal place of business in McLean,
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`Virginia.
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`11.
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`FM is a Rhode Island corporation with a principal place of business in Johnston,
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`Rhode Island.
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`JURISDICTION AND VENUE
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`12.
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`Jurisdiction over FM is based on diversity of citizenship under 28 U.S.C.
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`§ 1332(a)(1) in that the matter in controversy exceeds the sum of $75,000 and the matter is between
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`“citizens of different States.”
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`13.
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`Personal jurisdiction over FM exists because it has sufficient minimum contacts
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`with Virginia. FM currently conducts business in this judicial district and has done so for many
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`years.
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`14.
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`Venue is proper in this Court pursuant to 28 U.S.C. §1391(b)(2) as events giving
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`rise to Mars’ claim took place in this district where Mars has its principal place of business.
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`4
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`15.
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`Actual controversies exist between the parties as to the predicate facts necessary
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`for Mars to obtain what it believes to be the full amount of coverage owed under the Policy for its
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`COVID-19-related losses.
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`THE FM POLICY
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`16.
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`FM is a large international property insurer. It expends substantial resources on
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`analyzing risks, including those that may in the future cause loss to its policyholders and deciding
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`which risks it intends to cover or avoid. FM has issued property insurance coverage to Mars for
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`decades. It is extremely knowledgeable about the nature and scope of Mars’ business and the nature
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`of the risks against which it was insuring.
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`17.
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`FM is part of the FM Global group of insurance companies. FM Global says its
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`approach to claims is different from other insuring organizations: “[y]ou’ll discover that our
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`approach to claims is different, too. We work closely with you before, during and after a loss—
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`no matter where in the world that loss occurs. And we ground our recommendations in world-
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`class scientific research and on-the-ground engineering services.”2
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`18.
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`FM introduced its standard property policy form long ago. As shown in its various
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`regulatory filings with state insurance departments, FM modified its standard form from time to
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`time, typically with enhancements to coverage, but sometimes simply to clarify the coverage. The
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`modifications over time have not restricted coverage.
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`The Broad Coverage the Policy Grants for All Risks of Physical Loss or Damage to Property
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`19.
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`The Policy is fundamentally different than most commercial property insurance
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`policies because it expressly covers physical loss or damage by a communicable disease, putting
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`to rest FM’s position that a communicable disease is not a risk, cause, or type of physical loss or
`
`
`2 https://www.fmglobal.com/about-us/why-fm-global (emphasis original).
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`5
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`Case 1:22-cv-00626-PTG-TCB Document 1 Filed 06/01/22 Page 6 of 32 PageID# 6
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`damage covered by the Policy. The Policy provides insurance for property loss and business
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`interruption loss resulting from all risks of physical loss or damage to covered property. The Policy
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`“covers property, as described in this Policy, against ALL RISKS OF PHYSICAL LOSS OR
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`DAMAGE, except as hereinafter excluded, while located as described in this Policy.” Ex. 1 at 1.
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`20.
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`The Policy’s coverage extends to losses resulting from the “risks of” physical “loss”
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`or “damage” to Mars’ property, and, in some instances, to third-party property within designated
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`distances, and applies regardless of whether Mars’ property, or third-party property, suffered any
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`alteration to its physical structure.
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`21.
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`The Policy’s coverage encompasses circumstances where Mars’ use of its property
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`is limited, restricted, or prohibited to prevent the spread of communicable disease and resulting
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`loss or damage to property.
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`22.
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`The Policy also covers Mars for business interruption losses where access to a
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`covered Mars’ location is prohibited by an order of a civil authority issued in response to physical
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`loss or damage to third-party property within five miles of a covered Mars’ location.
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`23.
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`The Policy covers Mars’ losses because ingress to or egress from covered locations
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`is physically prevented, either partially or totally, because of physical loss or damage to property
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`“whether or not the premises or property of the Insured is damaged.”
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`24.
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`In the Policy, the term “physical loss” is separate, distinct, and has an independent
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`meaning from the term “physical damage.”
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`25.
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`26.
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`27.
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`28.
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`The Policy does not define “physical.”
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`The Policy does not define “loss.”
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`The Policy does not define “physical loss.”
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`The Policy does not define “damage.”
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`6
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`29.
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`30.
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`31.
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`32.
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`The Policy does not define “physical damage.”
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`The Policy does not define the phrase “physical loss or damage.”
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`The Policy does not define the terms “risks” or “risks of.”
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`The Policy does not define the phrase “risks of physical loss or damage.”
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`33. When undefined, the “physical loss or damage” and “risks of physical loss or
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`damage” phrases are susceptible to more than one reasonable interpretation under the
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`circumstances of this action.
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`34. When the undefined phrases “physical loss or damage” and “risks of physical loss
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`or damage” are susceptible to more than one reasonable interpretation, they should be construed
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`against the drafter – FM.
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`35.
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`Dictionary definitions of “loss” include:
`
`
`
`a. “[T]he harm or privation resulting from losing or being separated from
`someone
`or
`something.”
`Loss,
`Merriam-Webster,
`https://www.merriam-webster.com/dictionary/loss
`
`b. “[D]ecrease in amount, magnitude, value, or degree.” Id.
`
`c. “[T]he fact that you no longer have something or have less of
`something.” Loss, Cambridge Dictionary,
`https://dictionary.cambridge.org/us/dictionary/english/loss?q=Loss
`
`
`d. “[H]aving less than before.” Loss, Macmillan Dictionary,
`https://www.macmillandictionary.com/us/dictionary/american/loss
`
`
`e. “[T]he state of no longer having something or as much of something[.]” Loss,
`Oxford Advanced Learner’s Dictionary,
`https://www.oxfordlearnersdictionaries.com/us/definition/english/loss?q=loss
`
`
`At the very least, Mars has incurred “loss” “from losing,” from a “decrease,” or
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`36.
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`from “having less” of its covered property due to COVID-19 and/or the Pandemic.
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`7
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`37.
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`Courts have long held that the presence of a dangerous invisible substance at or on
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`property, including within its airspace, constitutes “physical loss or damage” to property. Many
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`courts also hold that the restriction of use of property due to an imminent risk of danger to its
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`inhabitants constitutes “physical loss” to property.3 FM adopted this position prior to the COVID-
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`19 pandemic.
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`38.
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`For example, on November 19, 2019, FM filed a brief in a dispute with another
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`property insurer asserting that “[n]umerous courts have concluded that loss of functionality or
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`reliability . . . constitutes physical loss or damage,” regardless of whether the property also suffered
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`tangible, structural alteration. Exhibit 4 at 3. FM’s argument was neither novel nor aggressive.
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`“[N]umerous courts,” in fact, issued the rulings FM ascribed to them. The scope of potentially
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`covered losses resulting from the Pandemic caused FM to change its position to attempt to
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`minimize its coverage obligations.
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`39.
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`Sixty years ago, an appellate court rejected an insurer’s attempt to construe its
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`property policy as requiring “tangible injury to the physical structure” for coverage potentially to
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`exist. Per the court: “Common sense requires that a policy should not be so interpreted in the
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`absence of a provision specifically limiting coverage in this manner.” Hughes v. Potomac Ins.
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`Co., 199 Cal. App. 2d 239, 248 (1962).
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`40. More recently, in Port Authority of New York and New Jersey v. Affiliated FM
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`Insurance Co., -- a pre-Pandemic case in which FM’s sister company, Affiliated FM Insurance
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`Company (“AFM”), was a party and that was decided on summary judgment -- the court
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`acknowledged that “physical loss or damage” under a property policy can be established where
`
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`3 See, e.g., Richard P. Lewis, Lorelie S. Masters, Scott D. Greenspan & Chris Kozak, Couch’s
`‘Physical Alteration’ Fallacy: Its Origins and Consequences, 56 Tort & Ins. L. J. 621 (Fall, 2021),
`attached hereto as Exhibit 3.
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`8
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`the imminent release of an invisible substance into the airspace of a covered property presents a
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`significant enough health hazard to people occupying the premises that it impairs the building’s
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`function, utility, or habitability. 311 F.3d 226, 235 (3d Cir. 2002).
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`41.
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`Despite “common sense,” FM chose not to define the phrase “physical loss or
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`damage” or otherwise state that the phrase means that coverage is dependent on proof of “tangible
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`injury” to a physical structure. The entire insurance industry has done this for decades. One
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`federal court, in a COVID-19 coverage case, thus commented: “[c]arriers have utilized the phrase
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`direct physical loss for over fifty (50) years and courts have begged carriers to define the phrase
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`to avoid the precise issue before the Court now.” Cherokee Nation v. Lexington Ins. Co., 2021
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`WL 506271, at *3-6 (Okla. Dist. Ct. Jan. 28, 2021) (emphasis original), attached as Exhibit 5; see
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`also Snoqualmie Entertainment Authority v. Affiliated FM Ins. Co., 2021 WL 4098938, at *5
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`(Wash. Super. Sep. 03, 2021) (finding one reasonable interpretation of the term “physical loss”
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`was the inability to maintain a presence on the property).
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`FM Has Made Numerous Statements Concerning
`“Communicable Disease” that Contradict its Current Reading
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`For more than a decade, FM and AFM made public admissions regarding the so-
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`42.
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`called communicable disease coverages in their policies. They repeatedly represented to state
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`regulators that the presence of and spread of communicable disease at property is considered
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`“direct physical damage” under their policies’ coverage grants for communicable disease. These
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`statements are not “extrinsic” evidence of intent nor are they “parol evidence.” They are
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`statements by the drafters of the Policy as to how their policies apply, and the considerations upon
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`which certain provisions in the Policy were based. These admissions refute the contrary positions
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`FM has taken in numerous lawsuits pending across the United States.
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`9
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`43.
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`In or about 2010, FM submitted Form FMG7446, an endorsement for
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`“Communicable Disease Cleanup, Removal and Disposal,” to state insurance regulators.
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`FMG7446 states that, “[f]or the purpose of this Additional Coverage, the presence of and spread
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`of communicable disease will be considered direct physical damage and the expenses listed above
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`will be considered expenses to repair such damage.” Exhibit 6 (emphasis added).
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`44.
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`AFM’s 2015 regulatory filings concerning coverages for “Communicable Disease
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`Cleanup, Removal And Disposal” and “Interruption by Communicable Disease” repeated that
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`statement admitting that “[f]or the purpose of this coverage [or extension], the presence [of] and
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`[the] spread of communicable disease will be considered direct physical damage” and the expenses
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`“will be considered expenses to repair such damage.” Id. Exhibit 7 at 1-2.
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`45.
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`FM and AFM revised their property policies in 2016 for grammatical and structural
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`reasons. FM did not include any new and pertinent coverage limitations but did include
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`“expansions” of coverage, including with respect to the Communicable Disease Coverages.
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`46.
`
`In securing approval of the 2016 version of its Global Advantage policy form, FM
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`stated the following regarding the coverages under its prior policy form FMG7446:
`
`This [“Communicable Disease Response”] endorsement was
`previously approved in filing FMIC-2011-13 as Communicable
`Disease Cleanup, Removal and Disposal Endorsement. The
`replaced Endorsement was previously available to insureds with
`healthcare occupancies only. Grammatical and editorial changes
`have been made to remove the healthcare facility terms because
`this coverage is now offered as optional to all clients. The coverage
`also now allows for an officer of the Insured to trigger the coverage.
`This is an expansion in coverage.
`
`
`Exhibit 8 at 6 (boldface in original, italics added for emphasis); see also id. at 9 (“FMG7450:
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`Interruption by Communicable Disease Endorsement”).
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`10
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`47.
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`AFM’s 2016 filings with respect to its standard policy form substantially repeat the
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`statements made above concerning the Policy and note that the Communicable Disease Coverages
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`now provide “core coverage” to insureds. Exhibit 9 at 2, 4. As “core” coverages, they are not
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`“exceptions” to exclusions that otherwise preclude coverage.
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`48.
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`FM’s explanatory memorandum for the 2019 update states that coverage for
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`“Interruption By Communicable Disease” had only received an “[e]ditorial clarification. There is
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`no material change in coverage.” Exhibit 10 at 4; Exhibit 11 (redlined version of “Interruption By
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`Communicable Disease” coverage).
`
`49.
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`As attested to by expert David L. Stegall in the case Cinemark Holdings, Inc. et al.
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`v. Factory Mutual Ins. Co., No. 4:21-cv-00011-ALM (E.D. Tex.), the FM Global insurers
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`acknowledged for years that the presence of and spread of communicable disease at property is
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`direct physical damage to property, regardless of their changes in position engendered by the
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`Pandemic:
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`As FM admits in this litigation, these two coverage “expansions” are
`not triggered by physical loss or damage to the property insured.
`This is a change from the Communicable Disease coverages that FM
`previously offered to healthcare clients. Those endorsements
`explained that “the presence of and spread of communicable disease
`will be considered direct physical damage and the expenses listed
`above will be considered expenses to repair such damage.” In other
`words, FM understood that in some cases, as [the insured] has
`presented here, the presence of a Communicable Disease and its
`causative viral agent can cause loss or damage to property and that
`the repair and remediation efforts should be considered repair costs.
`FM represented to regulators that its decision to remove this phrase
`in 2016 was a “grammatical and editorial change[ ]” to expand
`coverage. Thus, FM never changed its position that “the presence
`of and spread of communicable disease will be considered direct
`physical damage and the expenses listed above will be considered
`expenses to repair such damage.”
`
`
`Exhibit 12 at 8 (emphasis original).
`
`
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`11
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`50.
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`Reinforcing these prior admissions, at the outset of the COVID-19 pandemic, FM
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`issued an internal document called “Talking Points on the 2019 Novel Coronavirus (2019-nCov).”
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`Exhibit 13 (the “Talking Points”). Among other things, the document states that the actual
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`presence of communicable disease at property is a Property Damage “trigger of coverage.” Id. at
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`1. The Talking Points close by acknowledging that the FM Global Advantage form, upon which
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`the Policy is written, “offers some of the broadest property coverage available.” Id. at 2.
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`51.
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`The Talking Points also state – in an attempted effort at inoculation – that coverage
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`extensions such as “Civil or Military Authority” coverage and “Supply Chain (ProVision)” do not
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`“apply” because “[t]he presence of a communicable disease does not constitute physical damage”
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`because a “virus” is an excluded “contaminant.” Id. Those two statements are false and contrary
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`to the prior admissions discussed above.
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`52.
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`FM stated repeatedly for years that “the presence of and spread of communicable
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`disease will be considered direct physical damage.” The changes made in the coverages in the
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`2016 and 2019 iterations of the policy forms were either structural, grammatical or expansive in
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`scope. FM did not restrict or limit the so-called Communicable Disease Coverages since their
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`introduction in or about 2011, nor did the assumptions upon which these coverages were based
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`change over time.
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`53. Most recently, in Treasure Island LLC v. Affiliated FM Ins. Co., 2:20-cv-00965-
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`JCM-EJY (D. Nev.), two pieces of evidence confirm that the internal conduct policies of AFM are
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`contradictory to coverage denials and litigation positions.
`
`54.
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`The first piece of evidence is an internal email from AFM’s Operations Vice
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`President & Senior General Adjuster, Jason Wing (“Mr. Wing”) dated March 21, 2020, admitting
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`that COVID-19 can cause physical loss or damage by quoting an internal loss code noting that
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`
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`12
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`Case 1:22-cv-00626-PTG-TCB Document 1 Filed 06/01/22 Page 13 of 32 PageID# 13
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`“physical loss or damage” “results from the actual presence of a communicable disease” at
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`property:
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`Physical loss or damage which results from the actual presence of a communicable
`disease and the associated business interruption as defined in the policy.4
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`
`
`55.
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`The second piece of evidence is a voicemail message from Brian Cook (“Mr.
`
`Cook”), AFM’s Senior General Adjuster, to John Baker, another Senior General Adjuster, together
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`with an email attaching the same. The voicemail message states in full:
`
`Hey John, this is Brian. Remember we had a discussion about changing the words
`that COVID-19 would not constitute physical loss or damage to something that
`gives us more wiggle room and I would recommend changing the ‘would’ to ‘may
`not’, but give me a call back and see where we are, alright? I got a denial order
`from Paz and I made that change in his letter and he was questioning it because he
`used exactly what’s [sic] he believes is in the template and still in the template so
`I’m wondering are we going to change the template to be the softer language or not.
`So give me a call. Thanks.5
`
`
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`56. Mr. Cook, in the voicemail, strategizes how AFM should publicly address COVID-
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`19-related claims in its template response to policyholders. Mr. Cook does not say that COVID-
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`19 “would not” constitute physical loss or damage; rather, Mr. Cook advises that they should use
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`words that give AFM “more wiggle room,” and say that COVID-19 “may not” constitute physical
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`loss or damage. This evidence shows the ambiguity inherent in FM’s virtually identical Policy as
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`it relates to physical loss or damage caused by COVID-19. FM’s sister company, AFM,
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`recognizing the language was not clear, strategized internally how to spin the ambiguity in its
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`correspondence with policyholders.
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` The evidence also shows
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`the deliberate “spin”
`
`
`4 Notice of Supplemental Evidence as filed in Treasure Island at ECF No. 243-1 at 2, attached as
`Exhibit 14.
`5 Id. at 3.
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`13
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`Case 1:22-cv-00626-PTG-TCB Document 1 Filed 06/01/22 Page 14 of 32 PageID# 14
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`in which the FM Global insurers have been engaging surrounding COVID-19 coverage issues—
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`seeking to find “wiggle room” in responding to COVID-19 claims.
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`The Policy’s Coverage Against the “Risk of” the Pandemic
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`57.
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`The Policy covers “physical loss or damage” to property, but also losses resulting
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`from “all risks of physical loss or damage” to property.
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`58.
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`The undefined term “risks” in the Policy is defined by many dictionaries to mean
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`“possibility.”6
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`59.
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`The Policy insures against losses caused by “all risks,” such as, the imminent threat
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`or possibility of physical loss or damage to property, as well against losses after such physical loss
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`or damage to property has occurred.
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`60.
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`FM elected to use this broad “all risks” language, instead of more restrictive policy
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`language drafted in 2013 by the Insurance Services Office (“ISO”), the leading insurance industry
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`drafting organization, and utilized by numerous insurers since then. Most property policies written
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`on post-2013 ISO forms have been at issue in COVID-19 coverage cases. Those policies are
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`responsible for many of the pro-insurer rulings that FM trumpets as being supposedly applicable
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`to its far broader and far more costly coverage.
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`61.
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`This Policy is unique from the standard-form ISO policies involved in most
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`COVID-19 coverage litigation because it includes different policy wording (most contain explicit
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`and broad virus exclusions), different facts (most do not allege physical damage caused by the
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`6 See, e.g., Risk, Merriam-Webster, www.merriam-webster.com/dictionary/risk (“[P]ossibility of
`loss or injury”); Risk, Collins Dictionary, www.collinsdictionary.com/us/dictionary/english/risk
`(synonymous with “danger, chance, threat, possibility”); Risk, Cambridge English Dictionary,
`https://dictionary.cambridge.org/us/dictionary/english/risk (“[T]he possibility of something bad
`happening”); Risk, The American Heritage Dictionary of
`the English Language,
`https://www.ahdictionary.com/word/search.html?q=risk (“The possibility of suffering harm or
`loss; danger.”).
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`Case 1:22-cv-00626-PTG-TCB Document 1 Filed 06/01/22 Page 15 of 32 PageID# 15
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`presence of COVID-19), and an explicit grant of coverage making communicable disease a
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`covered cause of loss.
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`62.
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`The few cases concerning this Policy recognize its unique form and coverages. See,
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`e.g., Cinemark Holdings, Inc. v. Factory Mut. Ins. Co., 2021 WL 1851030 (E.D. Tex. May 5, 2021)
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`(denying FM’s motion for judgment on the pleadings because this policy “is governed by different
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`contract terms,” “is much broader,” and “expressly covers loss and damaged caused by
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`‘communicable disease.’”); Snoqualmie Entertainment Authority v. Affiliated FM Ins. Co., 2021
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`WL 4098938, at *2, *5 (Wash. Super. Sep. 03, 2021) (granting the policyholder’s motion for
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`partial summary judgment because the AFM policy provides “broad property and business
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`interruption coverage” and “all risks of physical loss” includes the inability “to physically use,
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`operate, or manipulate its properties.”).
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`63.
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`The result is that, unlike most COVID-19 insurance coverage cases, courts
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`evaluating the broader coverage provided by FM’s high-end policy form, find a plausible claim
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`for relief, and either deny that this Policy’s exclusions apply or find that an ambiguity requires
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`further factual investigation. See Live Nation Ent., Inc. v. Factory Mut. Ins. Co., 2022 WL 390712,
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`at *7 (C.D. Cal. Feb. 3, 2022) (denying FM’s motion for partial judgment on the pleadings because
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`the “Complaint sufficiently alleges that COVID-19 caused physical damage that would be covered
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`by the provisions of the Policy pertaining to physical loss and damage. Thus, on its face, the
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`Contamination Exclusion does not exclude physical damage caused by COVID-19.”); Regents v.
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`Factory Mutual Insurance Company, Case No. 21-CV-30206 (D. Colo. January 26, 2022)
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`(denying FM’s motion for partial judgment on the pleadings because “a more developed record is
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`required to determine whether [the insured’s] alleged losses are covered or excluded by the
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`Policy.”); Rowan Univ. v. Factory Mut. Ins., No. GLO-L-000250-21, (N.J. Super. Ct. Law Div.
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`Case 1:22-cv-00626-PTG-TCB Document 1 Filed 06/01/22 Page 16 of 32 PageID# 16
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`Jan. 24, 2022) (denying FM’s motion to dismiss because the plaintiff alleged physical loss or
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`damage, and that COVID-19 is a physical substance resulting in a cycle of infection); Thor
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`Equities, LLC v. Factory Mut. Ins. Co., 531 F. Supp. 3d 802, 810 (S.D.N.Y. 2021) (denying FM’s
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`motion for judgment on the pleadings because it cannot be determined that the contamination
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`exclusion “unambiguously forecloses recovery on [the insured’s] losses due to contamination”).
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`FM cannot hide behind rulings based on other facts, other law, and other policies.
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`64.
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`ISO’s standard “Businessowners Coverage Form,” prior to 2013, defined “Covered
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`Causes of Loss” as “[r]isks of direct physical loss unless the loss is . . . [e]xcluded . . . or
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`[l]imited[.]” Exhibit 15 at 2. In 2013, ISO issued revised Businessowners Coverage Forms that
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`redefined “Covered Causes of Loss,” by removing the term “risks of.” ISO now defines “Covered
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`Causes of Loss” as “[d]irect physical loss unless the loss is excluded or limited[.]” Exhibit 16 at
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`2. In support, ISO issued an “Important Notice to Policyholders” that insurers could send to their
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`insureds to explain the changes in policy wording of the form that stated that “the term ‘risk of’ is
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`removed from the Covered Causes of Loss provision.” Exhibit 17 at 3.
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`65.
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`Insurers therefore have had the opportunity, since at least 2013, to incorporate (and
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`many have incorporated) an insuring agreement that deletes any reference to covering losses
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`created by the “risks of” insured perils. For example, Cincinnati Insurance Company, in revising
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`its standard property policy form number FM 101, issued its own “Notice to Policyholders” in
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`2016 stating, “As ISO has done in reaction to court decisions, we are deleting the word ‘Risks’
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`from the preamble to the Covered Causes of Loss section of FM 101.” Exhibit 18 at 2.
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`66.
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`The court decisions issued in the years preceding ISO’s revision of its
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`Businessowners Coverage Form included 401 Fourth St., Inc. v. Inv’rs. Ins. Grp., 879 A.2d 166,
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`169-70 (Pa. 2005) (policy language covering “risks of” direct physical loss involving collapse, by
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`Case 1:22-cv-00626-PTG-TCB Document 1 Filed