Farmington Village Dental Associates, LLC v. Cincinnati Insurance Company

Filing 55

ORDER granting 13 Motion to Dismiss. For the reasons outlined in the attached Ruling and Order, Defendant's motion to dismiss is GRANTED. Under the condition provided in the attached Ruling and Order, Plaintiff shall have until August 20, 2021 to file an Amended Complaint. Signed by Judge Victor A. Bolden on 7/19/2021. (Tisdale, I.)

Case 3:20-cv-01647-VAB Document 55 Filed 07/19/21 Page 1 of 26

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

FARMINGTON VILLAGE DENTAL
ASSOCIATES, LLC,
Plaintiff,
No. 3:20-cv-01647 (VAB)
v.
CINCINNATI INSURANCE COMPANY,
Defendant.

RULING AND ORDER ON MOTION TO DISMISS
Farmington Village Dental Associates, LLC (“Farmington” or “Plaintiff”) has sued
Cincinnati Insurance Company (“Cincinnati” or “Defendant”) for Cincinnati’s alleged refusal to
pay Farmington for losses suffered due to the COVID-19 Pandemic. Compl., ECF No. 1 (Oct.
30, 2020).
Cincinnati has moved to dismiss the Complaint in its entirety. Def. the Cincinnati Ins.
Co.’s Mot. to Dismiss, ECF No. 13 (Dec. 18, 2020) (“Def. Mot.”).
For the reasons stated below, Defendant’s motion to dismiss is GRANTED.
To the extent something more than the presence of COVID-19 alone can be alleged as a
loss and a basis for insurance coverage, Farmington may file an Amended Complaint by August
20, 2021. If they cannot do so by this date, the dismissal of this Complaint will be with prejudice.
I.

FACTUAL AND PROCEDURAL BACKGROUND
A. Factual Allegations
On or around March 22, 2018, “Cincinnati [allegedly] issued Policy No. ECPCP 047 90

05 to [Farmington], for a policy period of March 22, 2018 to March 22, 2021,” “[i]n return of the

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payment of a premium.” Compl. ¶ 14; see Policy No. ECPCP 047 90 05, Ex. A to Compl., ECF
No. 1-1 (Oct. 30, 2020) (the “Policy”).
“SARS-CoV-2 [or “COVID-19”] is [allegedly] a highly contagious virus that has rapidly
spread and continues to spread across the United States.” Compl. ¶ 35. “The presence of any
SARS-CoV-2 particles [allegedly] renders items of physical property unsafe and the premises
unsafe[, and] . . . impairs value, usefulness and/or normal function.” Id. ¶¶ 42-43. “The [alleged]
imminent threat of SARS-CoV-2 particles on physical property [allegedly] impairs value,
usefulness and/or normal function.” Id. ¶ 44. Furthermore, the “presence” and alleged “imminent
threat of particles of SARS-CoV-2 particles [allegedly] causes direct physical harm, direct
physical damage, and direct physical loss to property.” Id. ¶¶ 45-46.
“The effects of COVID-19 have resulted in the World Health Organization declaring the
existence of a Pandemic. The Pandemic is a public health crisis that has [allegedly] profoundly
impacted American society, [allegedly] including the public’s ability to safely obtain dental
care.” Id. ¶¶ 50-51.
Farmington allegedly “suffered direct loss from the probable presence of a deadly virus
that also damages property; or the imminent risk of such on-site contamination; or government
orders limiting the use of Plaintiff’s property; and stay at home orders or some combination of
the foregoing.” Id. ¶ 20. The Policy allegedly “require[s,] in the event of a loss[,] that the
policyholder take all reasonable steps to protect the Covered Property from further covered
damages, and keep a record of the expenses necessary to protect the Covered Property, for
consideration in the settlement of the claim.” Id. ¶ 33. Farmington allegedly “submitted a notice
of loss to [Cincinnati] under the Policy due to the probable presence of SARS-CoV-2 and the

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COVID-19 Pandemic,” and Cincinnati allegedly “denied those claims by letter dated April 27,
2020.” Id. ¶ 70.
This dispute stems from the parties’ interpretations of the “Business Income, Extra
Expense, Civil Authority, Ingress and Egress and Sue and Labor provisions” of the Policy. Id.
¶ 34. These clauses and their respective definitions are as f ollows.
i.

Definitions

Importantly, the Policy provides the following definitions for key terms:
“‘Covered Causes of Loss’ means direct ‘loss’ unless the ‘loss’ is excluded or limited in
this Coverage Part.” Policy, Building & Personal Property Coverage Form, at 5 § A(3)(a).1
“‘Business Income’ means the: a) Net Income (net profit or loss before income taxes) that
would have been earned or incurred; and b) Continuing normal operating expenses sustained,
including payroll.” Id. at 38 § G(2).
“‘Loss’ means accidental physical loss or accidental physical damage.” Id. at 38 § G(8).
“Period of restoration” means the period of time that: a) Begins at
the time of direct “loss”. b) Ends on the earlier of: 1) The date when
the property at the “premises” should be repaired, rebuilt or replaced
with reasonable speed and similar quality; or 2) The date when
business is resumed at a new permanent location.
Id. at 38-39 § G(11).
ii.

The Business Income Provision

According to the Policy, Cincinnati
will pay for the actual loss of “Business Income” and “Rental Value”
[the insured] sustain[s] due to the necessary “suspension” of [its]
“operation” during the “period of restoration”. The “suspension”
must be caused by direct “loss” to property at a “premises” caused
by or resulting from any Covered Cause of Loss.

1

This opinion cites to the original pagination of this Form. The Form begins on page 23 of the Policy’s ECF
pagination.

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Id. at 18 § E(b)(C)(1).
iii.

The Extra Expense Provision

According to the Policy, Cincinnati
will pay for Extra Expense [the insured] sustain[s] during the
“period of restoration”. Extra Expense means necessary expenses
[the insured] sustain[s] . . . during the “period of restoration” that
[it] would not have sustained if there had been no direct “loss” to
property caused by or resulting from a Covered Cause of Loss.
Id. at 19 § E(b)(C)(2)(a). Subparagraph (b) of the Extra Expense provision states,
If these expenses reduce the otherwise payable “Business Income”
“loss”, we will pay expenses . . . to: 1) Avoid or minimize the
“suspension” of business and to continue “operations” either: At the
“premises”; or At replacement “premises” or temporary locations,
including relocation expenses and costs to equip and operate the
replacement location or temporary location; or 2) Minimize the
“suspension” of business if [the insured] cannot continue
“operations”.
Id. at 19 § E(b)(C)(2)(b).
The Policy also states that Cincinnati “will also pay expenses to: 1) Repair or replace
property; or 2) Research, replace or restore the lost information on damaged ‘valuable papers and
records’; but only to the extent this payment reduces the otherwise payable ‘Business Income’
‘loss’.” Id. at 19 § E(b)(C)(2)(c).
iv.

The Civil Authority Provision

The Policy provides that
[w]hen a Covered Cause of Loss causes damage to property other
than Covered Property at a “premises”, [Cincinnati] will pay for the
actual loss of “Business Income” and necessary Extra Expense [the
insured] sustain[s] caused by action of civil authority that prohibits
access to the “premises”, provided that both of the following apply:
(a) Access to the area immediately surrounding the damaged
property is prohibited by civil authority as a result of the damage;
and (b) The action of civil authority is taken in response to
dangerous physical conditions resulting from the damage or
continuation of the Covered Cause of Loss that caused the damage,
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or the action is taken to enable a civil authority to have unimpeded
access to the damaged property.
Id. at 19 § E(b)(C)(3).
v.

The Ingress and Egress Provision

According to the Policy, Cincinnati
will pay for the actual loss of “Business Income” [the insured]
sustain[s] and necessary Extra Expense [the insured] sustain[s]
caused by the prevention of existing ingress or egress at a
“premises” shown in the Declarations due to direct “loss” by a
Covered Cause of Loss at a location contiguous to such “premises”.
However, coverage does not apply if ingress or egress from the
“premises” is prohibited by civil authority.
Policy, Business Income (and Extra Expense) Form, at 5 § A(5)(e).2
vi.

The Sue and Labor Provision3

According to the Policy,
[i]n the event of “loss” to Covered Property, [the insured] must . . .
[t]ake all reasonable steps to protect the Covered Property from
further damage. If feasible, set the damaged property aside and in
the best possible order for examination. Keep a record of [the
insured]’s expenses necessary to protect the Covered Property for
consideration in the settlement of the claim. This will not increase
[the insured]’s limit of insurance. However, in no event will we pay
for any subsequent “loss” resulting from a cause of loss that is not a
Covered Cause of Loss.
Policy, Building & Personal Property Coverage Form, at 30-31 § D(3)(a)(4).

2

This opinion cites to the original pagination of this Form. The Form begins on page 111 of the Policy’s ECF
pagination.
3
The “Sue and Labor coverage is not a separate coverage. Instead, it is a provision that appears in the section of the
Policy titled ‘Duties in the Event of Loss or Damage.’” Def. the Cincinnati Ins. Co.’s Mem. of L. in Supp. of its
Mot. to Dismiss, ECF No. 13-1, at 7 n.1 (Dec. 18, 2020) (“Def. Mem.”). See Compl. ¶ 33 (“[S]ections titled ‘Duties
in the Event of Loss’, require in the event of a loss that the policyholder take all reasonable steps to protect the
Covered Property from further covered damages, and keep a record of the expenses necessary to protect the Covered
Property, for consideration in the settlement of the claim. This is commonly referred to as ‘Sue and Labor’
coverage.”).

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B. Procedural History
On October 30, 2020, Farmington filed its Complaint against Cincinnati. Compl.
On December 18, 2020, Cincinnati filed a motion to dismiss Farmington’s Complaint.
Def. Mot.; Def. Mem.
On January 14, 2021, Farmington filed an opposition to Cincinnati’s motion to dismiss.
Mem. of L. in Opp’n to the Def.’s Mot. to Dismiss, ECF No. 19 (Jan. 14, 2021) (“Pl. Opp’n”).
On January 28, 2021, Cincinnati filed a reply to Farmington’s opposition to its motion to
dismiss. Reply in Supp. of Def. the Cincinnati Ins. Co.’s Mot. to Dismiss, ECF No. 21 (Jan. 28,
2021) (“Def. Reply”).
On February 10, 2021, Farmington filed a sur-reply. Pl.’s Sur-reply in Opp’n to Mot. to
Dismiss, ECF No. 25 (Feb. 10, 2021).
On February 24, 2021, Cincinnati filed the first of several notices of supplemental
authorities in support of its motion to dismiss. Cincinnati Ins. Co.’s Mot. to File Suppl. Auth.,
ECF No. 28 (Feb. 24, 2021); see also ECF No. 35 (Mar. 10, 2021); ECF No. 38 (Mar. 26, 2021);
ECF No. 41 (Apr. 2, 2021); ECF No. 50 (June 22, 2021); ECF No. 51 (July 2, 2021).
On March 2, 2021, Farmington filed the first of two notices of supplemental authorities in
support of its opposition to Cincinnati’s motion to dismiss. Mot. to Cite Additional Auth., ECF
No. 33 (Mar. 2, 2021); see also ECF No. 37 (Mar. 25, 2021).
On July 7, 2021, a motion hearing was held by videoconference to address the pending
motion to dismiss. Min. Entry, ECF No. 53 (July 7, 2021).
II.

STANDARD OF REVIEW
A complaint must contain a “short and plain statement of the claim showing that the

pleader is entitled to relief.” Fed. R. Civ. P. 8(a). Any claim that fails “to state a claim upon

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which relief can be granted” will be dismissed. Fed. R. Civ. P. 12(b)(6). In reviewing a
complaint under Rule 12(b)(6), a court applies a “plausibility standard” guided by “two working
principles.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
First, “[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Id.; see also Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007) (“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need
detailed factual allegations . . . a plaintiff’s obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.” (internal citations omitted)). Second, “only a
complaint that states a plausible claim for relief survives a motion to dismiss.” Iqbal, 556 U.S. at
679. Thus, the complaint must contain “factual amplification . . . to render a claim plausible.”
Arista Records LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010) (quoting Turkmen v. Ashcroft,
589 F.3d 542, 546 (2d Cir. 2009)).
When reviewing a complaint under Federal Rule of Civil Procedure 12(b)(6), the court
takes all factual allegations in the complaint as true. Iqbal, 556 U.S. at 678. The court also views
the allegations in the light most favorable to the plaintiff and draws all inferences in the
plaintiff’s favor. Cohen v. S.A.C. Trading Corp., 711 F.3d 353, 359 (2d Cir. 2013); see also York
v. Ass’n of the Bar of the City of N.Y., 286 F.3d 122, 125 (2d Cir. 2002) (“On a motion to dismiss
for failure to state a claim, we construe the complaint in the light most favorable to the plaintiff,
accepting the complaint’s allegations as true.”).
A court considering a motion to dismiss under Rule 12(b)(6) generally limits its review
“to the facts as asserted within the four corners of the complaint, the documents attached to the
complaint as exhibits, and any documents incorporated in the complaint by reference.” McCarthy

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v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007). A court may also consider
“matters of which judicial notice may be taken” and “documents either in plaintiffs’ possession
or of which plaintiffs had knowledge and relied on in bringing suit.” Brass v. Am. Film Techs.,
Inc., 987 F.2d 142, 150 (2d Cir. 1993); Patrowicz v. Transamerica HomeFirst, Inc., 359 F. Supp.
2d 140, 144 (D. Conn. 2005).
III.

DISCUSSION
Farmington alleges claims against Cincinnati for: (1) breach of contract, (2) breach of the

covenant of good faith and fair dealing, and (3) violations of the Connecticut Unfair Insurance
Practices Act (“CUIPA”) and the Connecticut Unfair Trade Practices Act (“CUTPA”). Compl.
Defendants have moved to dismiss the Complaint in its entirety. Def. Mot.
The Court will address each claim in turn. 4
A. The Breach of Contract Claim
As the Connecticut Supreme Court recently affirmed:
An insurance policy is to be interpreted by the same general rules
that govern the construction of any written contract. In accordance
with those principles, the determinative question is the intent of the
parties, that is, what coverage the insured expected to receive and
what the insurer was to provide, as disclosed by the provisions of
the policy.

Both parties cite to and appear to agree that Connecticut law applies here. See Def. Mem. at 7 (“Under Connecticut
law, proper insurance contract interpretation requires the Court to read the contract as a whole, consider all relevant
portions together and give operative effect to every provision.”); Pl. Opp’n at 1 -2 (“As Farmington . . . shall show,
using Connecticut rules of contract interpretation, a policyholder could reasonably interpret and expect ‘physical
loss or physical damage’ to mean the loss of use of tangible property that is not structurally altered.”). In any event,
“courts sitting in diversity may properly rely on the forum state’s law where neither party asserts that another
jurisdiction’s law meaningfully differs.” Johnson v. Priceline.com, Inc., 711 F.3d 271, 276 n.2 (2d Cir. 2013).
While, as discussed below, this Court does not find the application of Connecticut’s substantiv e law to be “uncertain
or ambiguous,” if it had, “the job of the federal court is carefully to predict how the highest court of the forum state
would resolve the uncertainty or ambiguity.” Travelers Ins. Co. v. 633 Third Assocs., 14 F.3d 114, 119 (2d Cir.
1994).
4

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Jemiola Tr. of Edith R. Jemiola Living Tr. v. Hartford, 335 Conn. 117, 128 (2019) (alterations
omitted) (quoting Lexington Ins. Co. v. Lexington Healthcare Grp., Inc., 311 Conn. 29, 37-38
(2014)). If the insurance contract’s language is “clear and unambiguous, then the language, from
which the intention of the parties is to be deduced, must be accorded its natural and ordinary
meaning.” Id. at 128-29. In interpreting this language, the Court “must look at the contract as a
whole, consider all relevant portions together and, if possible, give operative effect to every
provision in order to reach a reasonable overall result.” Id. at 129.
Indeed, the Connecticut Supreme Court was clear it “will not” – “torture words to import
ambiguity [when] the ordinary meaning leaves no room for ambiguity. . . . Similarly, any
ambiguity in a contract must emanate from the language used in the contract rather than from
one party’s subjective perception of the terms.” Id. (internal quotation marks and citations
omitted). “[A] provision in an insurance policy is ambiguous when it is reasonably susceptible to
more than one reading. . . . Under those circumstances, any ambiguity in the terms of an
insurance policy must be construed in favor of the insured because the insurance company
drafted the policy.” Id. (internal quotation marks and citations omitted).
Farmington argues that “[the] Policy is a contract under which Cincinnati was paid
premiums in exchange for its promise to pay Plaintiff’s losses for claims covered by the Policy.”
Compl. ¶ 74. More specifically, Farmington argues that “[i]n the Building and Personal Property
Coverage Form and Business Income (And Extra Expense) Coverage Form, Cincinnati agreed to
pay for its insureds’ actual loss of Business Income sustained due to the necessary suspension of
its operations during the ‘period of restoration.’” Id. ¶ 75.
Farmington argues Governor Lamont of the State of Connecticut issued “Connecticut
Closure Orders” on March 10, 2020, March 20, 2020, March 26, 2020, September 1, 2020, and

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February 9, 2021, and “the Connecticut Department of Public Health . . . issued directives and
guidance related to COVID-19 commencing on March 16, 2020,” “causing the suspension of
[Farmington’s] routine operations.” Id. ¶¶ 49-57. Farmington argues that “[t]he Pandemic has
constituted a disaster,” id. ¶ 62, and [t]he Governor of the State of Connecticut and the State of
Connecticut Public Health Department are civil authorities contemplated by Defendant’s
Policy,” id. ¶ 61.
According to Farmington, “[l]osses caused by SARS-CoV-2, the COVID-19 Pandemic
and the related orders issued by state, and federal authorities triggered the Business Income,
Extra Expense, Civil Authority, Ingress and Egress and Sue and Labor provisions of Defendant’s
policies.” Id. ¶ 34. Farmington argues that, “[b]y denying coverage for loss of Business Income
and necessary Extra Expense sustained by action of a Civil Authority, Defendant has breached
its coverage obligations under the Policy.” Id. ¶ 92.
In sum, Farmington argues that the “definition of loss . . . includes a plain reading of
‘accidental physical loss or accidental physical damage’ of property, that the plaintiff’s losses are
covered, and there are no exclusions that apply[, and alleges that] [t]his language is very broad
and inclusive.” Pl. Opp’n at 10 (emphasis omitted). In support, Farmington relies on Studio 417,
Inc. v. Cincinnati Insurance Company, No. 20-CV-03127-SRB, 2020 WL 4692385 (W.D. Mo.
Aug. 12, 2020), where the Western District of Missouri held that “the Policies provide coverage
for accidental physical loss or accidental physical damage, and . . . Cincinnati conflates loss and
damage.” Pl. Opp’n at 14 (emphasis omitted) (quoting Studio 417, 2020 WL 4692385, at *5).
Farmington alleges that “[r]ejecting this argument, the court held that it ‘must give meaning to
both terms.’” Id. (quoting Studio 417, 2020 WL 4692385, at *5).

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Farmington also relies on Yale University v. Cigna Insurance Company, 224 F. Supp. 2d
402 (D. Conn. 2002), in which Chief Judge Underhill explained that:
The insurer also fails even to consider, let alone distinguish, the
substantial body of case law in which a variety of contaminating
conditions have been held to constitute “physical loss of or damage
to property.” . . . Yale has sustained its burden of demonstrating that
it has suffered “physical loss of or damage to property” as required
under the all risk policies for the presence of asbestos or lead
contamination in its buildings.
Def. Opp’n at 17-18 (quoting Yale Univ., 224 F. Supp. 2d at 413-12). Farmington also argues
that “[c]ourts [] have found ‘direct physical loss’ when property was rendered uninhabitable due
to the imminent risk of harm.” Id. at 19 (collecting cases).
Alternatively, Farmington argues that if coverage should not be provided under a plain
reading of the insurance policy, and the Court “finds that the grant of coverage is ambiguous
insofar as ‘physical loss’ is not defined in the policy, the Court must resolve this ambiguity
against the insurer as the drafter of the policy.” Id. (citing Lexington Ins. Co., 311 Conn. at 37-38
(2014)). It argues that
[a]t a minimum, the plaintiff’s interpretation of the policy is
certainly plausible under the circumstances as covering the
plaintiff’s accidental physical loss. Accepting all factual allegations
in the Complaint as true, and drawing all reasonable inferences in
the plaintiff’s favor, it would not be appropriate, fair, or just to
dispense with the case at the motion to dismiss stage.
Id. at 11. Farmington further alleges “[t]he plausibility threshold is such that it presents the
opportunity for discovery into policy language, underwriting, and claims handling which should
be of assistance to the Court on the merits.” Id. at 32.
Cincinnati argues that no such breach occurred. Def. Mot; Def. Mem. It argues that “[t]he
expectations of an insured cannot control over the unambiguous language of the policy.” Def.
Mem at 7. Cincinnati argues that Farmington’s “commercial property policy provides coverage
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for physical loss or physical damage to covered property[, and] [the Policy] simply does not
provide coverage for the purely economic loss allegedly suffered by [Farmington].” Def. Reply
at 10. According to Cincinnati, Farmington has “acknowledge[d] that direct physical loss or
physical damage to property is required for coverage under the Policy.” Def. Mem. at 8.
Cincinnati argues that “these words are not ambiguous” and Farmington “does not allege any
facts establishing a distinct, demonstrable, physical alteration of property at its premises.” Id.
Cincinnati further argues that “[t]here is no Connecticut decision holding that the presence of a
virus constitutes direct physical loss to property.” Id.
Cincinnati further argues that “Civil Authority coverage requires direct physical loss or
damage to property other than Plaintiff’s property. And, that physical loss or damage must cause
a civil authority to issue an order prohibiting access to the Plaintiff’s premises.” Id. at 25.
According to Cincinnati, “[j]ust as the virus is not causing direct physical loss or damage to
Plaintiff’s premises, it is not causing direct physical loss or damage to other property. Likewise,
the virus and the Orders are not prohibiting access to Plaintiff’s premises.” Id. In its view,
“[t]here are no alleged facts showing any change or alteration of anybody’s physical property by
the Coronavirus or the Orders.” Id. at 26.
Cincinnati finally argues there is Farmington is not entitled to “Ingress and Egress
coverage[, because such coverage] requires both a direct physical loss at a location contiguous to
the insured’s property, and the prevention of access to the insured’s property as a result of that
direct physical loss.” Id. at 28. Cincinnati argues that “[i]t is undisputed that access [to
Farmington’s premises] was never prohibited.” Id. at 25.
According to Cincinnati, Connecticut law “construes direct physical loss or damage to
require an actual alteration or change in property,” and Second Circuit caselaw “requires an

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alteration or change and does not afford coverage for intangible economic losses.” Id. at 8
(collecting cases). Cincinnati highlights the district court’s decision in England v. Amica Mut.
Ins. Co., No. 3:16-CV-1951 (MPS), 2017 WL 3996394 (D. Conn. Sept. 11, 2017), in which
Judge Shea explained that
to the extent [the plaintiff] is seeking coverage for a ch emical
reaction alone as a “direct physical loss,” [her] claim fails. While the
resultant cracking within [the plaintiff]’s walls likely qualifies as
“direct physical loss” to the Property, and “loss” as used in the
Policies embraces the financial consequences thereof . . . the
chemical reaction itself, absent any physical manifestation in the
Property marking a change to an unsatisfactory state, is not a “direct
physical loss” or other “loss” under the Policy.
Id. at *8; see Def. Mem. at 9; see also Capstone Bldg. Corp. v. American Motorists Ins. Co., 308
Conn. 760, 782 (2013) (“The policy defines property damage as physical injury to tangible
property, including all resulting loss of use of that property. . . . We hold that under the plain
language of the commercial general liability policy, the escape of carbon monoxide, without
more, is not property damage.” (internal alterations and quotation marks omitted)); Best Friends
Pet Care, Inc. v. Design Learned, Inc., 77 Conn. App. 167, 183 (2003) (“We find no indication
that the term property insurance was intended to encompass intangibles; to the contrary, the
contract language refers specifically to ‘physical loss.’”).
Cincinnati then argues that Farmington “does not allege facts demonstrating that the virus
(or the Orders) caused any physical alteration to its property.” Def. Mem. at 11. It further argues
that “direct physical loss requires actual, tangible, permanent, physical alteration of property.”
Id. Cincinnati references many recent, albeit out of district, court decisions that have addressed
Cincinnati’s policies specifically and “h[e]ld that the Coronavirus and related orders do not cause
actual, tangible, structural loss or damage to property.” Id. at 12 (citing Catlin Dental, P.A. v.
The Cincinnati Indem. Co., No. 20-CA-004555 (20th Cir. Ct., Lee Cnty., Fl. Dec. 11, 2020);
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Promotional Headwear Int’l v. The Cincinnati Ins. Co., No. 20-cv-2211(JAR) (GEB), 2020 WL
7078735 (D. Kan. Dec. 3. 2020; 4431, Inc. v. Cincinnati Ins. Cos., No. 5:20-cv-04396, 2020 WL
7075318 (E.D. Pa. December 3, 2020); T&E Chicago LLC v. The Cincinnati Ins. Co., No. 20 C
4001, 2020 WL 6801845 (N.D. Ill. Nov. 19, 2020); Uncork and Create LLC v. The Cincinnati
Ins. Co., No. 2:20-cv-00401, 2020 WL 6436948 (S.D. W.V. November 2, 2020); Vandelay
Hospitality Grp. LP v. The Cincinnati Ins. Co., No. 3:20-cv-1348-D, ECF No. 41 (N.D. Tex.
Oct. 7, 2020); Oral Surgeons, P.C. v. Cincinnati Ins. Co., No. 4-20-CV-222 (CRW) (SBJ), 2020
WL 5820552 (S.D. Iowa Sept. 29, 2020); Sandy Point Dental, P.C. v. The Cincinnati Ins. Co.,
No. 20-CV-2160, 2020 WL 5630465 (N.D. Ill., September 21, 2020)). According to Cincinnati,
these “holdings are consistent with the national consensus of authority holding that Coronavirus
and related orders do not constitute direct physical loss or damage to property as a matter of
law.” Id. at 12-14 (listing cases).
In Cincinnati’s view, Studio 417 “is an outlier” and the Western District of Missouri
“expressly indicated that its determination that the virus and/or the orders may cause direct
physical loss might need to change as additional authorities develop.” Def. Reply at 8-9
(emphasis omitted) (citing Studio 417, No. 20-cv-03127-SRB, 2020 WL 4692385, at *8).
Cincinnati also argues that Yale University v. Cigna Insurance Company “actually advance[s]
[its] argument because [in the case] there was physical harm or alteration” existed. Def. Reply at
6. Cincinnati points to the fact that the court there found that “[t]here is little doubt that Yale
could not properly seek coverage under the all risk policies for costs incurred due to the mere
presence of asbestos-and lead containing materials in its buildings.” Id. (quoting Yale Univ., 224
F. Supp. 2d at 412). In Yale University, the plaintiff was forced to replace windows, strip and
repaint trim and strip and repaint doors due to the presence of asbestos. Id. Cincinnati asserts that

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this case is unlike Yale University, because “in Yale, there was evidence of physical harm to
property that required repair.” Id. 6-7.
The Court agrees.
Under the terms of the operative property insurance policy, Cincinnati has an obligation
to provide insurance coverage for “direct ‘loss’ to Covered Property at the premises’ caused by
or resulting from any Covered Cause of Loss.” Policy, Building & Personal Property Coverage
Form at 5 § A(3)(a). “’Loss’ means accidental physical loss or accidental physical damage.” Id.
at 38 § G(8). If there is a “loss” within the meaning of the policy, the insured is entitled to the
recovery of “actual loss of ‘Business Income’ and ‘Rental Value,’” as well as “Extra Expense”
incurred due to time of business disruption until the “period of restoration.” See id. at 18
§ E(b)(C)(1); id. 19 § E(b)(C)(2)(a).
Under this insurance policy, an entitlement to insurance coverage is predicated on any
alleged loss being within the scope of the term “loss” under the meaning of the contract. See e.g.,
Policy, Business Income (and Extra Expense) Form, at 4 § A(5)(e). (“We will pay for the actual
loss of ‘Business Income’ you sustain and necessary Extra Expense you sustain caused by the
prevention of existing ingress or egress at a ‘premises’ shown in the Declarations due to direct
‘loss’ by a Covered Cause of Loss at a location contiguous to such ‘premises’. However,
coverage does not apply if ingress or egress from the ‘premises’ is prohibited by civil
authority.”); see also Policy, Building & Personal Property Coverage Form, at 19 § E(b)(C)(3).
(“When a Covered Cause of Loss causes damage to property other than Covered Property at a
‘premises’, we will pay for the actual loss of ‘Business Income’ and necessary Extra Expense
you sustain caused by action of civil authority that prohibits access to the ‘premises’.”). Because
there is no actual physical loss or damage to Farmington Village’s property caused by the

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presence of the coronavirus or COVID-19, Farmington Village instead argues that because they
could not – and to some degree, still cannot – operate fully, because of the ongoing pandemic,
they nevertheless are entitled to recover under the insurance policy because their property cannot
be used to the extent it had been before the pandemic. See Compl. ¶ 67 (“The State of
Connecticut, through the Governor and Department of Public Health, have issued and continue
to issue authoritative orders governing Connecticut citizens and businesses, including the
Plaintiff’s business, in response to COVID-19 and the Pandemic, the effect of which have caused
and continue to cause Plaintiff to cease and/or significantly reduce operations at the premises.”).
And as a result, they allegedly have suffered a “physical loss or damage” within the
meaning of the insurance policy. See id. ¶ 66 (“The existence of SARS-CoV-2 caused direct
‘physical loss’ and/or risk of ‘physical damage’ to the covered property or ‘premises’ under the
Plaintiff’s Policy, by denying use of and damaging the covered property, and by causing a
necessary suspension (in whole or in part) of operations during a period of restoration and
requiring prevention and restoration measures”).
Under Connecticut law, however, losses due to a property’s inoperability without any
physical loss or damage to the property itself are not recoverable with this type of property
insurance coverage. Significantly, the Connecticut Supreme Court’s decision in Capstone held
that “under the plain language of the commercial general liability policy, the escape of carbon
monoxide, without more, is not property damage.” 308 Conn. at 782. As a result, “the loss of the
use of the defective chimneys, standing alone, did not constitute property damage under either of
the policy’s definitions.” Id. at 783. Thus, “the escape of carbon monoxide alone does not qualify
as property damage.” Id.

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As a result, after Capstone, Farmington Village’s alleged “loss” from the presence of
COVID-19, like the escape of carbon monoxide, “alone does not qualify as property damage.”
Capstone, 308 Conn. at 783; see England, 2017 WL 3996394 at *8 (applying Capstone and
recognizing “that, to the extent [the policyholder] is seeking coverage for a chemical reaction
alone as a ‘direct physical loss,’ [her] claim fails”); see also Mazzarella v. Amica Mut. Ins. Co.,
No. 3:17-CV-598 (SRU), 2018 WL 780217, at *3 (D. Conn. Feb. 8, 2018), aff'd, 774 F. App'x 14
(2d Cir. 2019) (“Though [the defendants] allege that the damage . . . . was caused by oxidation
due to water and oxygen in the concrete . . . two important questions still remain: (1) what
damage was caused to the concrete basement walls (i.e., cracking, bulging, etc.); and (2) how
were the other named areas of the house . . . damaged by this oxidation . . . [A]ny claim by the
[defendants] that the oxidation itself is the direct physical loss is without merit.” (emphasis in
original) (quotation marks and citations omitted)).
While Farmington Village argues that the loss of the use of its property due to COVID-19
warrants a different result from the loss of the use of the property in Capstone due to “the escape
of carbon monoxide,” there is no doctrinal basis for providing a different result. In both
circumstances, an external condition resulted in the loss of the use of the property, but did not
result in physical damage or physical loss to the property. See Capstone, 308 Conn. at 783.
Indeed, the Connecticut Supreme Court’s holding in Capstone, and its straightforward
application by two other judges in this District in similar contexts, distinguishing between loss of
the use of the property only, from loss of the use of the property due to actual physical loss or
damage to the property, see England, 2017 WL 3996394, at *8; Mazzarella, 2018 WL 780217, at
*3, also forecloses Farmington Village’s secondary argument for coverage: that the Cincinnati
policy language is ambiguous and therefore, “must be construed in favor of the insured because

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the insurance company drafted the policy,” Jemiola Tr., 335 Conn. at 129 (internal quotation
marks and citations omitted). 5 Instead, because “any ambiguity in a contract must emanate from
the language used in the contract rather than from one party’s subjective perception of the
terms,” Id. at 129 (internal quotation marks and citations omitted), this interpretation of similar,
if not the same, insurance policy language leaves Farmington Village with no plausible
ambiguity regarding this loss language in its property insurance policy.
Because this definition of loss, where the presence of COVID-19 alone without any other
physical damage or loss to the property, is not covered under Farmington Village’s insurance
policy, all of Farmington Village’s other arguments for coverage under this same insurance
policy, whether it be for Civil Authority coverage or the Ingress and Egress coverage, also fail.
Accordingly, Cincinnati’s motion to dismiss the breach of contract claim will be granted.
B. The Breach of the Covenant of Good Faith and Fair Dealing Claim
In Connecticut, the majority of contracts carry “an implied covenant of good faith and
fair dealing,” which requires both parties to refrain from doing “anything that will injure the right
of the other to receive the benefits of the agreement.” Hudson United Bank v. Cinnamon Ridge
Corp., 81 Conn. App. 557, 576 (Conn. App. 2004); see also Magnan v. Anaconda Indus., Inc.,
193 Conn. 558, 566 (1984) (noting that the Restatement (Second) of Contracts recognizes this
covenant in every contract “without limitation”). “The covenant . . . presupposes that the terms
and purpose of the contract are agreed upon by the parties and what is in dispute is a party's
discretionary application or interpretation of a contract term.” De La Concha of Hartford, Inc. v.
Aetna Life Ins. Co., 269 Conn. 424, 433 (2004). To fulfill its duty, a party may not “do anything
that will injure the right of the other to receive the benefits of the agreement.” Id. at 432 (internal

5

The application of Connecticut law and its clarity distinguishes this case from the contrary Studio 417 decision in
the Western District of Missouri.

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quotation marks omitted) (quoting Gaudio v. Griffin Health Servs. Corp., 249 Conn. 523, 564
(1999) .
Under Connecticut law, a party asserting a breach of the covenant of good faith and fair
dealing must prove three elements:
[F]irst, that the plaintiff and the defendant were parties to a contract
under which the plaintiff reasonably expected to receive certain
benefits; second, that the defendant engaged in conduct that injured
the plaintiff's right to receive some or all of those benefits; and third,
that when committing acts by which it injured the plaintiff's right to
receive benefits he reasonably expected to receive under the
contract, the defendant was acting in bad faith.
Bagley v. Yale Univ., 42 F. Supp. 3d 332, 359-60 (quoting Franco v. Yale, 238 F. Supp. 2d 449,
455 (D. Conn. 2002)). Bad faith implies “both ‘actual or constructive fraud, or a design to
mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual
obligation . . . prompted . . . by some interested or sinister motive.’” Habetz v. Condon, 224
Conn. 231, 237 (1992) (citation omitted).
Farmington argues that Cincinnati
violated the covenant of good faith and fair dealing by using a
predetermined decision not to cover any claim; failing to properly
inquire into relevant facts supporting their denial; failing to take the
appropriate procedures for handling Plaintiff’s claim; declining to
make clear, and good faith efforts to resolve the contractual
relationship between Plaintiff and Defendant.
Compl. ¶ 99.
Cincinnati argues that “a plaintiff cannot recover for bad faith if the insurer denies a
claim that is ‘fairly debatable,’ i.e., if the insurer had some arguably justifiable reason for
refusing to pay or terminating the claim.” Def. Mem. at 29 (quoting McCulloch v. Hartford Life
& Accident Ins. Co., 363 F. Supp. 2d 169, 177 (D. Conn.), adhered to on reconsideration sub
nom., 2005 WL 8165602 (D. Conn. Sept. 29, 2005)).
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The Court agrees.
Because, as noted above, Farmington Village’s breach of contract claim fails, its breach
of the covenant of good faith and fair dealing claim fails as well. See Valls v. Allstate Ins. Co.,
No. 3:16-CV-01310 (VAB), 2017 WL 4286301, at *5 (D. Conn. Sept. 27, 2017), aff'd, 919 F.3d
739 (2d Cir. 2019) (“While each contract imposes a duty of good faith and fair dealing on the
parties, Connecticut law requires a breach of contract in order to plead bad faith.”); see also
Manseau v. Allstate Ins. Co., No. 3:16-CV-1231 (MPS), 2017 WL 3821791, at *5 (D. Conn.
Aug. 31, 2017) (dismissing breach of implied covenant claim in concrete case after court
dismissed breach of contract claim); Agosti v. Merrimack Mut. Fire Ins. Co., 279 F. Supp. 3d
370, 380 (D. Conn. 2017) (same).
Accordingly, Cincinnati’s motion to dismiss the breach of the covenant of good faith and
fair dealing claim will be granted.
C. The CUTPA/CUIPA Claims
A plaintiff may bring a private cause of action under the Connecticut Unfair Trade
Practices Act, “CUTPA,” to enforce alleged violations of the Connecticut Unfair Insurance
Practices Act, “CUIPA.” Kim v. State Farm Fire & Cas. Co., No. 3:15-cv-879 (VLB), 2015 WL
6675532, at *5 (D. Conn. Oct. 30, 2015) (citing Mead v. Burns, 199 Conn. 651, 663 (1986)).
CUTPA/CUIPA claims “are premised on finding a breach of contract.” Kim v. State Farm Fire
& Cas. Ins. Co., 751 F. App'x 127, 128 n.1 (2d Cir. 2018); Zulick v. Patrons Mut. Ins. Co., 287
Conn. 367, 378 (2008) (“The foregoing analysis disposes of the plaintiffs' claim that the trial
court improperly rendered summary judgment in favor of the defendant on the plaintiffs' CUTPA
and CUIPA claims. Because we have concluded that the defendant’s interpretation of the
policy’s coverage limitation was correct, there can be no genuine issue of material fact as to

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whether the application of that interpretation as a general business practice constituted
oppressive, unethical or unscrupulous conduct in violation of the statutes.”).
CUTPA provides that “[n]o person shall engage in . . . unfair or deceptive acts or
practices in the conduct of any trade or commerce.” Conn. Gen. Stat. § 42-110b(a). It further
provides that “[a]ny person who suffers any ascertainable loss of money or property, real or
personal, as a result of the use or employment of a method, act or practice prohibited by section
42-110b, may bring an action.” Conn. Gen. Stat. § 42-110g(a).
A plaintiff must meet two requirements to bring a CUTPA claim. “First, the plaintiff
must establish conduct that constitutes an unfair or deceptive trade practice. Second, the plaintiff
must establish a basis for a reasonable estimate of damages.” Chem-Tek, Inc. v. Gen. Motors
Corp., 816 F. Supp. 123, 130 (D. Conn. 1993) (citing A. Secondino & Son, Inc. v. LoRicco, 215
Conn. 336, 576 A.2d 464 (Conn. 1990)); see also McNeil v. Yale Univ., 436 F. Supp. 3d 489,
534-36 (D. Conn. 2020) (dismissing CUTPA claims for failure to meet threshold
requirements); Bellemare v. Wachovia Mortg. Corp., 94 Conn. App. 593, 606 n.6 (2006)
(“CUTPA provides a statutory cause of action for any person who has suffered an ascertainable
loss of money or property as a result of an unfair trade practice.”).
There are generally “two methods a court uses for determining whether a practice
violates CUTPA.” Locascio v. Imports Unlimited, Inc., 309 F. Supp. 2d 267, 271 (D. Conn.
2004). “First, and simplest, the Commissioner of Consumer Protection sets forth certain
regulations a violation of which is a per se violation.” Id. (citing Conn. Gen. Stat. § 42-110b(c)
(the Commissioner may “establish by regulation acts, practices or methods which shall be
deemed to be unfair or deceptive”)); Conn. Agencies Regs. § 42-110b-28). “Second, if no
regulation covers the practice in question, the court applies the so-called ‘cigarette rule.’” Id.; see

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also Aztec Energy Partners, Inc. v. Sensor Switch, Inc., 531 F. Supp. 2d 226, 232 (D. Conn.
2007). The factors weighed under the cigarette rule are
(1) whether the practice, without necessarily having been previously
considered unlawful, offends public policy as it has been established
by statutes, the common law, or otherwise—whether, in other
words, it is within at least the penumbra of some common law,
statutory, or other established concept of unfairness; (2) whether it
is immoral, unethical, oppressive, or unscrupulous; (3) whether it
causes substantial injury to consumers (or competitors or other
business[persons]).
Fabri v. United Techs. Int'l, Inc., 387 F.3d 109, 120 (2d Cir. 2004) (internal quotation marks
omitted). “All three criteria do not need to be satisfied to support a finding of
unfairness.” Cheshire Mortg. Serv., Inc. v. Montes, 223 Conn. 80, 105-06 (1992).
“CUIPA identifies and prohibits a number of ‘unfair methods of competition and unfair
and deceptive acts or practices in the business of insurance.’” Kim, 2015 WL 6675532, at *5
(citing Conn. Gen. Stat. § 38a-316.) “Among these are ‘[u]nfair claim settlement practices’ such
as ‘not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in
which liability has become reasonably clear.’” Id. (quoting Conn. Gen. Stat. § 38a-316(6)(F)).
To prevail on a CUIPA claim, a plaintiff must show that “the unfair settlement practice was
committed or performed with such frequency as to indicate a general business practice.”
McCulloch, 363 F. Supp. 2d at 182.
Farmington argues that Cincinnati has violated CUTPA by “refusing to pay claims
without conducting a reasonable investigation based upon all available information, failing to
attempt in good faith to effectuate prompt, fair and equitable settlements of claims in which
liability is reasonably clear, and compelling insureds to institute litigation to recover amounts
due under an insurance policy.” Compl. ¶ 102.

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Farmington also argues that Cincinnati “told investors that it will not honor business
interruption claims connected to the COVID-19 virus and has a predetermined strategy to deny
all COVID-19 related claims.” Id. ¶ 104. Furthermore, Farmington argues “[Cincinnati]’s actions
. . . constitute violations of the Connecticut Unfair Practices Act . . . and were committed with
such frequency as to indicate a general business practice.” Id. ¶ 107. According to Farmington,
these practices included:
(a) Misrepresenting pertinent facts or insurance policy provisions
relating to coverage at issue; (b) failing to acknowledge and act with
reasonable promptness upon communications with respect to claims
arising under insurance policies; (c) failing to adopt and implement
reasonable standards for the prompt investigation of claims arising
under insurance policies; (d) refusing to pay claims without
conducting a reasonable investigation based upon all available
information; (e) failing to affirm or deny coverage of claims within
a reasonable time after proof of loss statements have been
completed; (f) not attempting in good faith to effectuate prompt, fair
and equitable settlements of claim in which liability has become
reasonably clear; (g) compelling insureds to institute litigation to
recover amounts due under an insurance policy by offering
substantially less than the amounts ultimately recovered in actions
brought by such insureds.
Id. ¶ 106. Farmington argues that “[a]s a result of [Cincinnati]’s deceptive acts . . . [Farmington]
failed to receive the coverage and benefits required by the policy of insurance at issue herein,
and otherwise have incurred severe ascertainable losses as a direct and proximate result.” Id. ¶
110.
In response, Cincinnati argues that “[s]ince Plaintiff cannot assert a viable breach of
contract claim, Plaintiff does not have an actionable extra-contractual claim for bad faith or
unfair insurance practices.” Id. (citing Hurlburt v. Massachusetts Homeland Ins. Co., 310 F.
Supp. 3d 333, 345 (D. Conn. 2018) (“Connecticut law requires a breach of contract in order to
plead bad faith.” “[B]ecause [the insureds] have failed to plead a plausible breach of contract
claim, no CUTPA or CUIPA claim can follow.”).
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The Court agrees.
Again, because Farmington Village’s breach of contract claim fails, its CUTPA and
CUIPA claims fail as well. See Roberts v. Liberty Mut. Fire Ins. Co., 264 F. Supp. 3d 394, 416
(D. Conn. 2017) (“As with breach of the implied covenant of good faith and fair dealing, a claim
for violation of CUTPA/CUIPA cannot succeed in the absence of a viable claim for breach of
contract.”); see also Agosti, 279 F. Supp. 3d at 381 (“Because I dismiss [Plaintiffs’] claim
against Allstate for breach of contract, I also dismiss [their] claim for violation of CUTPA and
CUIPA pursuant to Rule 12(b)(6).”)
Accordingly, Cincinnati’s motion to dismiss the CUTPA and CUIPA claims will be
granted.
D. Leave to Amend
Under Federal Rule of Civil Procedure 15(a),
[a] party may amend its pleading once as a matter of course within:
(A) 21 days after serving it, or (B) if the pleading is one to which a
responsive pleading is required, 21 days after service of a responsive
pleading or 21 days after service of a motion under Rule 12(b), (e),
or (f), whichever is earlier.
Fed. R. Civ. P. 15(a)(1). “In all other cases, a party may amend its pleading only with the
opposing party's written consent or the court's leave. The court should freely give leave when
justice so requires.” Fed. R. Civ. P. 15(a)(2). The district court has broad discretion to decide a
motion to amend. See Local 802, Assoc. Musicians of Greater N.Y. v. Parker Meridien Hotel,
145 F.3d 85, 89 (2d Cir. 1998).
Reasons for denying leave to amend include “undue delay, bad faith or dilatory motive
on the part of the movant, repeated failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of allowance o f the amendment, [or]
futility of amendment[.]” Foman v. Davis, 371 U.S. 178, 182 (1962); see also Lucente v. Int'l
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Bus. Machines Corp., 310 F.3d 243, 258 (2d Cir. 2002) (noting leave to amend may be denied
when amendment is “unlikely to be productive,” such as when an amendment is “futile” and
“could not withstand a motion to dismiss [under] Fed. R. Civ. P. 12(b)(6)”). “[A] motion for
leave to amend a complaint may be denied when amendment would be futile.” Tocker v. Phillip
Morris Cos., Inc., 470 F.3d 481, 491 (2d Cir. 2006) (citing Ellis v. Chao, 336 F.3d 114, 127 (2d
Cir. 2003)); see also Kimm, 884 F.3d and 105-06 (“Therefore, because the proposed amendments
would have no impact on the basis for the district court's dismissal and would consequently be
futile, the district court did not abuse its discretion in denying [plaintiff] leave to amend.”
(citing Ellis, 336 F.3d at 127)).
As explained above, under Connecticut law, Farmington’s alleged loss based on the
presence of COVID-19 alone, without more, is not within the definition of “physical loss or
damages” under its insurance policy with Cincinnati. To the extent, however, something more
than the presence of COVID-19 alone can be alleged as a loss and a basis for insurance coverage,
then this motion to dismiss will be granted without prejudice. See Acito v. IMCERA Grp., Inc.,
47 F.3d 47, 55 (2d Cir. 1995) (“One good reason to deny leave to amend is when such leave
would be futile.”).
Accordingly, Farmington’s Complaint will be dismissed with leave to amend, but only if
the deficiency expressly defined above can be remedied by further pleading.
IV.

CONCLUSION
For the reasons stated above, Defendant’s motion to dismiss is GRANTED.
To the extent something more than the presence of COVID-19 alone can be alleged as a

loss and a basis for insurance coverage, Farmington may file an Amended Complaint by August
20, 2021. If they cannot do so by this date, the dismissal of this Complaint will be with prejudice.

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.
SO ORDERED at Bridgeport, Connecticut, this 19th day of July, 2021.
/s/ Victor A. Bolden
VICTOR A. BOLDEN
UNITED STATES DISTRICT JUDGE

26