Chief of Staff LLC v. Hiscox Insurance Company Inc.

Filing 60

MEMORANDUM Opinion and Order written by the Honorable Gary Feinerman on 3/31/2021.Mailed notice.(jlj, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CHIEF OF STAFF LLC, on behalf of itself and all others
similarly situated,
Plaintiff,
vs.
HISCOX INSURANCE COMPANY INC.,
Defendant.

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20 C 3169
Judge Gary Feinerman

MEMORANDUM OPINION AND ORDER
Chief of Staff, a hospitality support agency based in Connecticut, alleges in this putative
class action that Hiscox Insurance Company, its insurer, wrongfully denied coverage for losses
that it suffered due to government-ordered shutdowns arising from the COVID-19 pandemic.
Doc. 28. Hiscox moves to dismiss the complaint under Civil Rule 12(b)(6), arguing that the
policy does not cover Chief of Staff’s claimed losses. Doc. 31. The motion is granted.
Background
In resolving a Rule 12(b)(6) motion, the court assumes the truth of the operative
complaint’s well-pleaded factual allegations, though not its legal conclusions. See Zahn v.
N. Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). The court must also consider
“documents attached to the complaint, documents that are critical to the complaint and referred
to in it, and information that is subject to proper judicial notice,” along with additional facts set
forth in Chief of Staff’s brief opposing dismissal, so long as those additional facts “are consistent
with the pleadings.” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th Cir. 2013)
(internal quotation marks omitted). The facts are set forth as favorably to Chief of Staff as those
materials allow. See Pierce v. Zoetis, Inc., 818 F.3d 274, 277 (7th Cir. 2016). In setting forth the

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facts at the pleading stage, the court does not vouch for their accuracy. See Goldberg v. United
States, 881 F.3d 529, 531 (7th Cir. 2018).
In March 2020, near the outset of the COVID-19 pandemic, the Governor of Connecticut
issued a series of closure orders, one of which prohibited access to all nonessential businesses
throughout the state. Doc. 28 at ¶ 32; see Ned Lamont, Governor, State of Conn., Exec. Order
No. 7H: Protection of Public Health and Safety During COVID-19 Pandemic and Response—
Restrictions on Workplaces for Non-Essential Business, Coordinated Response Effort (Mar. 20,
2020), https://portal.ct.gov/-/media/Office-of-the-Governor/Executive-Orders/LamontExecutive-Orders/Executive-Order-No-7H.pdf. The orders forced Chief of Staff, located in
Hartford, to cease operations. Doc. 28 at ¶¶ 14-15. Chief of Staff sought to recover its lost
income under a commercial property insurance policy issued by Hiscox, id. at ¶ 48, the pertinent
terms of which are set forth below. Hiscox denied coverage. Id. at ¶¶ 48, 50.
Discussion
The parties agree that the Hiscox policy is governed by Connecticut law. Doc. 32 at 6 &
n.2; Doc. 37 at 5-6. Under Connecticut law, “[t]he terms of an insurance policy are to be
construed according to the general rules of contract construction.” Galgano v. Metro. Prop. &
Cas. Ins. Co., 838 A.2d 993, 997 (Conn. 2004); see also Hanks v. Powder Ridge Rest. Corp., 885
A.2d 734, 739 (Conn. 2005) (“[W]here there is definitive contract language, the determination of
what the parties intended by their contractual commitments is a question of law.”) (internal
quotation marks omitted). “[T]he 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.” Karas v. Liberty Ins. Corp., 228 A.3d 1012, 1020 (Conn. 2019)
(second, third, and fourth alterations in original). A court evaluating the parties’ expectations

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must be “mindful of the principle that provisions in insurance contracts must be construed as
laymen would understand [them] and not according to the interpretation of sophisticated
underwriters.” R.T. Vanderbilt Co. v. Hartford Accident & Indem. Co., 216 A.3d 629, 641
(Conn. 2019) (alteration in original).
Chief of Staff asserts coverage under three of the Hiscox policy’s coverage provisions:
the “Business Income” provision, the “Excess Expense” provision, and the “Civil Authority”
provision. Doc. 28 at ¶¶ 37-48, 69-115; Doc. 37 at 6-14. Hiscox contends that none of those
provisions applies, Doc. 32 at 6-13; Doc. 38 at 2-10, but argues that even if one or more do, the
policy’s virus exclusion defeats coverage, Doc. 32 at 13-15; Doc. 38 at 10-13. Because none of
the coverage provisions applies, there is no need to address the virus exclusion.
A.

Business Income Provision

The Business Income provision states:
[Hiscox] will pay for the actual loss of Business Income [Chief of Staff]
sustain[s] due to the necessary suspension of [its] “operations” during the
“period of restoration.” The suspension must be caused by direct physical
loss of or damage to property at the described premises. The loss or damage
must be caused by or result from a Covered Cause of Loss.
Doc. 32-1 at 14. “Business Income,” in turn, is defined (with irrelevant exceptions) as the net
income “that would have been earned or incurred if no physical loss or damage had occurred,”
plus normal operating expenses that continue to accrue. Id. at 15. Even assuming without
deciding that the Governor’s closure orders effected a “necessary suspension” of Chief of Staff’s
“operations” during some “period of restoration,” the Business Income provision does not
provide coverage because that suspension was not “caused by direct physical loss of or damage
to property at the described premises.” Id. at 14.
Chief of Staff contends that the closure of its business qualifies as a “direct physical loss
of … property at [its] premises”—though not “damage to” such property—because “it lost the
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use of its insured property for its intended purpose.” Doc. 37 at 7. Hiscox takes the contrary
view, contending that the term “direct physical loss” “unambiguously require[s] some physical
manifestation [of] change” to the property, which is not alleged to have happened here. Doc. 32
at 7 (alterations in original) (quoting England v. Amica Mut. Ins. Co., 2017 WL 3996394, at *6
(D. Conn. Sept. 11, 2017)). Hiscox’s reading is the far better one.
True enough, the noun “loss,” standing alone, can refer to “depriv[ation] of … a
possession.” Loss, Oxford English Dictionary (2d ed. 1989) (def. 2a); see also Loss, Webster’s
Third New International Dictionary (1961) (def. 1a) (“the act or fact of losing,” “failure to keep
possession,” “deprivation”). But the noun “loss” in the Business Income provision is modified
by the adjective “physical,” which in context means “tangible, concrete.” Physical, Oxford
English Dictionary (3d ed. updated Mar. 2006) (def. 6); see also Physical, Black’s Law
Dictionary (11th ed. 2019) (def. 2) (“pertaining to real, tangible objects”); Physical, Webster’s
Third New International Dictionary, supra (def. 2b) (“of or relating to natural or material things
as opposed to things mental, moral, spiritual, or imaginary”). So “physical loss” refers to a
deprivation caused by a tangible or concrete change in or to the thing that is lost. But the
complaint does not allege any such deprivation. Instead, the complaint alleges that Chief of
Staff’s loss of use of its property was due to the Governor’s closure orders, Doc. 28 at ¶¶ 4647—hardly a concrete or tangible “loss of … property at [its] premises,” Doc. 32-1 at 14.
Pressing the contrary result, Chief of Staff invokes the principle that “a policy should not
be interpreted so as to render any part of it superfluous.” Lexington Ins. Co. v. Lexington
Healthcare Grp., Inc., 84 A.3d 1167, 1184 (Conn. 2014) (internal quotation marks omitted).
Applying that principle—and noting that the Business Income provision covers losses “caused
by direct physical loss of or damage to property,” Doc. 32-1 at 14 (emphasis added)—Chief of

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Staff argues that “[i]f a loss could not occur without damage, then the Policy would contain
surplus language,” which means that “‘direct physical loss’ must mean something other than
‘direct physical damage.’” Doc. 37 at 7. Among those other meanings of “direct physical loss,”
Chief of Staff contends, is “loss of use,” for otherwise, all “loss” would be “damage” and there
would be no need for the provision to mention “loss” at all. Id. at 7-8.
Chief of Staff is correct that the phrases “direct physical loss” and “direct physical …
damage” are best read so as not to completely overlap and thereby render one or the other
superfluous. But it does not follow that mere loss of use—without any tangible alteration to the
physical condition or location of property at the insured’s premises—falls within the meaning of
either phrase. Read naturally, the two phrases can be read to exclude loss of use without
rendering either superfluous. To illustrate, consider a thief who attempts to steal a desktop
computer. If the thief succeeds, the computer is “physical[ly] los[t]” but not necessarily
“physical[ly] … damage[d].” If the thief cannot lift the computer, so instead of stealing it takes a
hammer to its monitor in frustration, the computer would be “physical[ly] … damage[d]” but not
“physical[ly] los[t].” Yet if the thief were only to change the password on the system so that
employees could not log in, there would be neither “physical … damage” nor “physical loss,”
though the computer would be unusable for some while. The Business Income provision might
cover the first two cases, but it does not cover the third.
In fact, it is Chief of Staff’s interpretation that would violate the surplusage-avoidance
principle by reading the word “physical” out of the Business Income provision. After all, if the
mere loss of use were covered, what would be the difference between “direct loss” and “direct
physical loss”? Chief of Staff does not say, and the court cannot tell.

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Chief of Staff’s interpretation is also difficult to square with the Business Income
provision’s “period of restoration” language. As noted, the provision covers losses “due to the
necessary suspension of [the business’s] ‘operations’ during the ‘period of restoration.’”
Doc. 32-1 at 14. The policy defines the “period of restoration” to “end[] on the earlier of:
(a) [t]he date when the property at the described premises should be repaired, rebuilt or replaced
with reasonable speed and similar quality; or (b) [t]he date when business is resumed at a new
permanent location.” Doc. 32-1 at 39. Under Chief of Staff’s theory—that the mere loss of use
of property at the premises, without any physical alteration to the condition or location of that
property, is covered—when would the period of restoration end? If there has been no physical
alteration to the condition or location of the property, there is nothing to “repair[], rebuil[d] or
replace[].” Ibid. Nor is there any reason to expect that, absent physical alteration to “property at
the [insured’s] premises,” the business would resume at “a new permanent location.” Ibid. The
uneasy fit between the “period of restoration” language and Chief of Staff’s reading of the
Business Income provision confirms that the better reading of the provision is the one that
requires some physical change to the condition or location of property at the insured’s premises.
Accord Phila. Parking Auth. v. Fed. Ins. Co., 385 F. Supp. 2d 280, 287 (S.D.N.Y. 2005)
(“‘Rebuild,’ ‘repair’ and ‘replace’ all strongly suggest that the damage contemplated by the
Policy is physical in nature.”).
Chief of Staff argues in the alternative that the Business Income provision is ambiguous,
and thus that its meaning should be resolved in Chief of Staff’s favor. Doc. 37 at 12-13; see
Conn. Ins. Guar. Ass’n v. Fontaine, 900 A.2d 18, 24 (Conn. 2006) (“[O]ur interpretation of
ambiguous policy language in favor of coverage under the doctrine of contra proferentem has
become near axiomatic in insurance coverage disputes.”). For the reasons just given, the

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provision’s language is not ambiguous, so the contra proferentem interpretive principle does not
come into play. In so holding, the court acknowledges that several district court decisions have
interpreted similar contractual language to cover losses due to government-imposed COVID-19
closure or shutdown orders. See, e.g., Derek Scott Williams PLLC v. Cincinnati Ins. Co., 2021
WL 767617, at *3-5 (N.D. Ill. Feb. 28, 2021); In re Soc’y Ins. Co. COVID-19 Bus. Interruption
Prot. Ins. Litig., 2021 WL 679109, at *8-10 (N.D. Ill. Feb. 22, 2021); Studio 417, Inc. v.
Cincinnati Ins. Co., 478 F. Supp. 3d 794, 800-03 (W.D. Mo. 2020). But contrary to Chief of
Staff’s submission, Doc. 37 at 12-13, disagreement among courts regarding the interpretation of
an insurance policy provision does not, by itself, render the provision ambiguous. See Erie Ins.
Grp. v. Sear Corp., 102 F.3d 889, 894 (7th Cir. 1996) (rejecting the argument that an insurance
policy term was ambiguous “on the basis of conflicting case law” interpreting the term); TMW
Enters. v. Fed. Ins. Co., 619 F.3d 574, 580 (6th Cir. 2010) (Sutton, J.) (“[A] disagreement among
three judges about whether a contractual provision is ambiguous does not establish that it is
ambiguous … .”); City of Austin v. Decker Coal Co., 701 F.2d 420, 426 n.17 (5th Cir. 1983)
(“[T]he fact that courts may disagree as to the import of a contract term does not, by that fact
alone, mean that it is ambiguous.”); Cont’l Ins. Co. v. Bones, 596 N.W.2d 552, 556-58 (Iowa
1999) (holding an insurance policy provision to be unambiguous even though other courts had
interpreted similar language differently).
In an effort to create ambiguity, Chief of Staff observes that in an entirely separate
portion of the policy—the section providing liability coverage, Doc. 32-1 at 40-55—the term
“[p]roperty damage” is defined to include both “[p]hysical injury to tangible property, including
all resulting loss of use of that property,” and “[l]oss of use of tangible property that is not
physically injured.” Id. at 54. Chief of Staff argues that in order “[f]or the Policy’s terms to

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have consistent meaning,” the phrase “physical loss of or damage to property” in the Business
Income provision “must include situations where property is rendered functionally unusable,
even if there is no alteration to that property.” Doc. 37 at 13. But the definition of “property
damage” cited by Chief of Staff, which by its terms applies only to the liability coverage,
Doc. 32-1 at 52, does not upset the court’s reading of the Business Income provision, which
appears in the section of the policy providing property coverage, id. at 10-39. As discussed
above, the conclusion that the Business Income provision is not implicated by losses arising from
the Governor’s closure orders is driven by the word “physical.” Although the policy may cover
“[l]oss of use of tangible property that is not physically injured” in the liability context, that has
no bearing on whether “physical loss of … property” in the Business Income provision requires a
physical alteration to the property or its location. And it is not at all anomalous that the phrase
“property damage,” with its explicit and expansive definition in the liability section of the policy,
would carry a different meaning from the pertinent, differently worded language in the Business
Income provision in the property section of the policy. See United Am. Ins. Co. v. Wilbracht,
825 F.2d 1196, 1203 (7th Cir. 1987) (presuming that differently worded provisions in an
insurance policy carry different meanings).
In sum, the policy’s Business Income provision does not apply where, as here, a
government closure order prohibits access to a business’s premises for reasons unconnected to
any change in the physical condition of those premises, or in the physical condition or location of
property at those premises. In so holding, this court joins the many other courts to have
interpreted materially identical provisions in the same manner. See, e.g., Am. Food Sys., Inc. v.
Fireman’s Fund Ins. Co., __ F. Supp. 3d __, 2021 WL 1131640, at *3-5 (D. Mass. Mar. 24,
2021) (“[C]onstruing the language ‘physical loss of’ to cover the deprivation of a property’s

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business use absent any tangible damage distorts the plain meaning of the Policy.”); Family
Tacos, LLC v. Auto Owners Ins. Co., __ F. Supp. 3d __, 2021 WL 615307, at *3-5 (N.D. Ohio
Feb. 17, 2021) (“As the trigger for coverage, this policy language excludes financial or monetary
losses resulting from the novel coronavirus, SARS-CoV-2, which occasioned this dispute for the
simple reason that the virus did not work any perceptible harm to the properties at issue … .”),
appeal docketed, No. 21-3224 (6th Cir. Mar. 9, 2021); Berkseth-Rojas v. Aspen Am. Ins. Co., __
F. Supp. 3d __, 2021 WL 101479, at *5 (N.D. Tex. Jan. 12, 2021) (“[D]irect physical loss or
damage requires something more than mere loss of use or function.”); 4431, Inc. v. Cincinnati
Ins. Cos., __ F. Supp. 3d __, 2020 WL 7075318, at *11 (E.D. Pa. Dec. 3, 2020) (“[F]or Plaintiffs
to assert an economic loss resulting from their inability to operate their premises as intended
within the coverage of the Policy’s ‘physical loss’ provision, the loss and the bar to operation
from which it results must bear a causal relationship to some physical condition of the
premises.”); Henry’s La. Grill, Inc. v. Allied Ins. Co. of Am., __ F. Supp. 3d __, 2020 WL
5938755, at *6 (N.D. Ga. Oct. 6, 2020) (“[T]he contract language issue here is not ambiguous,
and because the Governor’s Executive Order did not create a ‘direct physical loss of’ the
Plaintiffs’ [premises], the Business Income provision does not apply to the Plaintiffs’ claims.”),
appeal docketed, No. 20-14156 (11th Cir. Nov. 4, 2020); Mark’s Engine Co. No. 28 Rest.,
LLC v. Travelers Indem. Co. of Conn., __ F. Supp. 3d __, 2020 WL 5938689, at *3 (C.D. Cal.
Oct. 2, 2020) (“[L]osses from inability to use property do not amount to ‘direct physical loss of
or damage to property’ within the ordinary and popular meaning of that phrase. Physical loss or
damage occurs only when property undergoes a distinct, demonstrable, physical alteration.”)
(some internal quotation marks omitted), appeal docketed sub nom. Marks Engine Co. No. 28
Rest., LLC v. Travelers Prop. Cas. Co. of Am., No. 20-56031 (9th Cir. Oct. 6, 2020); see also

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Uncork & Create LLC v. Cincinnati Ins. Co., __ F. Supp. 3d __, 2020 WL 6436948, at *4 (S.D.
W. Va. Nov. 2, 2020) (“The majority of courts to address the issue … have found that COVID19 and governmental orders closing businesses to slow the spread of the virus do not cause
physical damage or physical loss to insured property.”); Docs. 40, 47-48, 50, 56-57 (citing these
and other similar decisions).
II.

Extra Expense Provision
The Extra Expense provision states:
[Hiscox] will pay necessary Extra Expense [Chief of Staff] incur[s] during the
“period of restoration” that [it] would not have incurred if there had been no
direct physical loss or damage to property at the described premises. The loss
or damage must be caused by or result from a Covered Cause of Loss.

Doc. 32-1 at 16. The parties agree that, given their similar language, the applicability of the
Extra Expense provision rises or falls with the applicability of the Business Income provision.
Doc. 32 at 7 (“Business Income and Extra Expense coverages require ‘direct physical loss of or
damage to Covered Property.’”); Doc. 37 at 6-7 (“Hiscox’s promise to pay Business Income and
Extra Expense coverage kicks in when Chief of Staff suffers a suspension of business operations
caused by direct physical loss of, or damage to, property at the described premises.”). Chief of
Staff offers no argument why the Extra Expense provision would provide coverage if the
Business Income provision does not. Accordingly, because the Business Income provision is
inapplicable, the Extra Expense provision is as well.
III.

Civil Authority Provision
The Civil Authority provision states:
When a Covered Cause of Loss causes damage to property other than property
at the described premises, we will pay for the actual loss of Business Income
you sustain and necessary Extra Expense caused by action of civil authority
that prohibits access to the described premises, provided that both of the
following apply:

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(1) Access to the area immediately surrounding the damaged property is
prohibited by civil authority as a result of the damage, and the described
premises are within that area but are not more than one mile from the
damaged property; and
(2) The action of civil authority is taken in response to dangerous
physical conditions resulting from the damage or continuation of the
Covered Cause of Loss that caused the damage, or the action is taken to
enable a civil authority to have unimpeded access to the damaged
property.
Doc. 32-1 at 16-17. By its plain terms, the provision applies only when the following have
occurred: (1) there is “damage to property” somewhere “other than,” but within one mile of, the
insured’s premises; (2) some government action prohibits “[a]ccess to the area immediately
surrounding th[at] damaged property”; and (3) that government action is taken either “in
response to dangerous physical conditions resulting from the damage” or “to enable a civil
authority to have unimpeded access to the damaged property.” Ibid.
Chief of Staff argues that “[f]or the same reasons [it] has suffered ‘physical loss of or
damage to’ its property as a result of … Connecticut’s closure orders such that the loss is
covered under the regular business interruption coverage, other property within one mile of the
insured property was likewise damaged by the orders.” Doc. 37 at 14. Even setting aside the
fact that Chief of Staff’s premise—that it has suffered “physical loss of or damage to” its own
property—is wrong, the argument fails. The reason is plain: the Civil Authority provision
requires that the “other property” have suffered “damage,” and the complaint does not allege, nor
does Chief of Staff argue, that the closure orders were due to some other property within one
mile of Chief of Staff’s premises having been damaged by the coronavirus. It necessarily
follows that the Civil Authority provision provides no coverage here.
As an analogy, consider a hurricane sweeping through inland Connecticut. Cf. Nancy
Finlay, Hurricane of 1938: Connecticut’s Worst Disaster, Conn. Hist. (Sept. 21, 2019),

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https://connecticuthistory.org/hurricane-of-1938-connecticuts-worst-disaster (discussing the
Hurricane of 1938, which made landfall near New Haven and placed “[p]ortions of Hartford,
Middletown, and other Connecticut River towns … completely underwater”). If the hurricane
were to blow the roof off a building and access to the street had to be completely closed to allow
the debris to be cleared and the building to be repaired, the Civil Authority provision likely
would cover losses suffered by nearby businesses on that street. But if the entire city were to
shut down prophylactically in anticipation of the hurricane—i.e., before there has been any
damage—the provision would not apply. The latter scenario mirrors the closure orders in this
case.
That is not to say that the Civil Authority provision necessarily would apply if Chief of
Staff had alleged that the coronavirus had been detected somewhere within one mile of its
premises. Undoubtedly, the virus existed within that radius. But even assuming the presence of
the coronavirus qualifies as “damage,” the complaint does not allege that the Governor’s closure
orders were “a result of,” or “taken in response to,” Doc. 32-1 at 16-17, the virus’s presence
within that radius. See Dickie Brennan & Co. v. Lexington Ins. Co., 636 F.3d 683, 686-87 (5th
Cir. 2011) (“The general rule is that ‘[c]ivil authority coverage is intended to apply to situations
where access to an insured’s property is prevented or prohibited by an order of civil authority
issued as a direct result of physical damage to other premises in the proximity of the insured’s
property.’”) (alteration in original) (second emphasis added) (quoting Clark Schirle, Time
Element Coverages in Business Interruption Insurance, Brief, Fall 2007, at 32, 38); see also,
e.g., 10012 Holdings, Inc. v. Sentinel Ins. Co., __ F. Supp. 3d __, 2020 WL 7360252, at *4
(S.D.N.Y. Dec. 15, 2020) (“It is plausible that the risk of COVID-19 being physically present in
neighboring properties caused state and local authorities to prohibit access to those properties.

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But the Complaint does not allege that these closures of neighboring properties ‘direct[ly]
result[ed]’ in closure of Plaintiff’s own premises, as the Civil Authority provisions require.”)
(alterations in original), appeal docketed sub nom. 10012 Holdings, Inc. v. Hartford Fire Ins.
Co., No. 21-80 (2d Cir. Jan. 14, 2021). Indeed, Chief of Staff’s complaint expressly alleges that
the closure orders did not result from the virus’s physical presence in any particular location
within or outside that radius. Doc. 28 at ¶ 46 (“[T]he sole and proximate cause of Plaintiff’s and
other Class members’ losses were the Closure Orders, not because coronavirus was found in or
on Plaintiff’s or the Class’[s] insured property.”).
Moreover, the complaint does not allege that the closure orders “prohibit[ed]” “[a]ccess
to the area immediately surrounding” any damaged premises, as required by the Civil Authority
provision. Doc. 32-1 at 16. That is, the complaint does not allege that the closure order
prevented people from accessing Hartford’s sidewalks and roads, including those adjacent to any
damaged premises, even if it did bar people from entering the premises of nonessential
businesses.
In holding that the Civil Authority provision does not provide coverage to Chief of Staff,
this court joins the many other courts to have interpreted materially identical provisions in the
same manner. See, e.g., Bluegrass Oral Health Ctr., PLLC v. Cincinnati Ins. Co., 2021 WL
1069038, at *4-5 (W.D. Ky. Mar. 18, 2021) (“The ‘Civil Authority’ coverage sought by [the
insured] requires a claim for a tangible loss to property other than the insured property, which
[the insured] has failed to identify.”); Kahn v. Pa. Nat’l Mut. Cas. Ins. Co., __ F. Supp. 3d __,
2021 WL 422607, at *8 (M.D. Pa. Feb. 8, 2021) (“Plaintiffs here do not allege any loss of or
damage to another property caused by any ‘covered cause of loss’ that triggered an action of civil
authority.”); O’Brien Sales & Mktg., Inc. v. Transp. Ins. Co., __ F. Supp. 3d __, 2021 WL

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105772, at *5 (N.D. Cal. Jan. 12, 2021) (“[I]t is apparent from the plain language of the cited
civil authority orders that such directives were issued to stop the spread of COVID-19 and not as
a result of any physical loss of or damage to property.”); Gerleman Mgmt., Inc. v. Atl. States Ins.
Co., __ F. Supp. 3d __, 2020 WL 8093577, at *6 (S.D. Iowa Dec. 11, 2020) (“Plaintiffs have not
alleged damage to another property.”), appeal docketed, No. 21-1082 (8th Cir. Jan. 12, 2021);
see also Docs. 40, 47-48, 50, 56-57 (citing these and other similar decisions). And the court
respectfully disagrees with those courts to have reached the contrary result. See, e.g., Studio 417,
478 F. Supp. 3d at 803-04.
Conclusion
Hiscox’s motion to dismiss is granted. Although it is difficult to imagine how Chief of
Staff might cure the deficiencies in its complaint, it will be given one chance to replead. See
Runnion ex rel. Runnion v. Girl Scouts of Greater Chi. & Nw. Ind., 786 F.3d 510, 519 (7th Cir.
2015) (“Ordinarily, … a plaintiff whose original complaint has been dismissed under Rule
12(b)(6) should be given at least one opportunity to try to amend … .”). The operative complaint
is dismissed without prejudice, and Chief of Staff is given until April 21, 2021, to file a second
amended complaint. If Chief of Staff does not do so, the dismissal will convert automatically to
a with-prejudice dismissal and judgment will be entered.

March 31, 2021

___________________________________
United States District Judge

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