Monday Restaurants LLC v. Intrepid Insurance Company et al

Filing 81

MEMORANDUM AND ORDER re: #78 MOTION to Dismiss & Briefing in Support :Plaintiff's Second Amended Complaint filed by Consolidated Filer Defendant Tri-State Insurance Company of Minnesota, #34 MOTION to Dismiss Under Rule 12(b)(6) :Plaintiff's Amended Complaint filed by Defendant Intrepid Insurance Company, #77 MOTION to Dismiss & Briefing in Support :Plainitff's Second Amended Complaint filed by Defendant Intrepid Insurance Company: IT IS HEREBY ORDERED that defendant Intrepid Insurance Company's motion to dismiss [Doc. #77] is GRANTED. IT IS FURTHER ORDERED that plaintiff Monday Restaurant LLC's second amended complaint [Doc. #75] is DISMISSED with prejudice. IT IS FURTHER ORDERED that defendant Tri-State Insurance Company of Minnesota's motion to dismiss [Doc. #78] is GRANTED. IT IS FURTHER ORDERED that plaintiff Andrew Dill, DMD, Amy Varble, DMD and Michael Wong, DMD, P.C.'s second amended complaint [Doc. #76] is DISMISSED with prejudice. IT IS FINALLY ORDERED that defendants' prior motions to dismiss plaintiffs' first amended complaints [Doc. #34, No. 4:20 CV 767, and Doc. #29, No. 4:20 CV 1015] are DENIED as moot.Signed by District Judge Stephen N. Limbaugh, Jr on 06/02/2021. (CMH)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
MONDAY RESTAURANTS LLC, on
behalf of itself and all others similarly
situated,
Plaintiff,
v.
INTREPID INS. CO.,
Defendant.

ANDREW DILL, DMD, AMY VARBLE,
DMD, AND MICHAEL WONG, DMD,
P.C., on behalf of itself and all others
similarly situated,
Plaintiff,
v.
TRI-STATE INS. CO. OF MINNESOTA,
Defendant.

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Case No. 4:20 CV 767 SNLJ

Case No. 4:20 CV 1015 SNLJ

MEMORANDUM AND ORDER
Plaintiff Monday Restaurants LLC owns two restaurants in the St. Louis area.
Consolidated plaintiff Andrew Dill, DMD, Amy Varble, DMD, and Michael Wong, DMD,
P.C. is a dental practice in the St. Louis area. Plaintiffs filed putative class action suits
against their insurers, defendants Intrepid Insurance Company and Tri-State Insurance
Company of Minnesota, respectively, seeking damages and declarations that their

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commercial insurance policies covered business income losses and extra expenses caused
by the COVID-19 pandemic. Defendants move to dismiss, arguing the plain language of
the insurance contracts shows plaintiffs are not entitled to coverage. On plaintiff’s motion,
the Court consolidated these cases. The Court will now grant both motions to dismiss.
BACKGROUND
Plaintiffs allege the following facts, which the Court accepts as true. See Ashford
v. Douglas Cnty., 880 F.3d 990, 992 (8th Cir. 2018) (per curiam). In March 2020, St.
Charles County, Missouri—where plaintiff Monday’s restaurants are located—declared a
public health emergency due to the rapid spread of the disease COVID-19. In the days that
followed, because of the COVID-19 pandemic, government officials advised people to
avoid dining in restaurants. Relevant state and county officials issued orders prohibiting
on-premises consumption at restaurants and requiring people to stay home except for
essential activities, which did not include dining in restaurants. When restaurants were
permitted to resume on-premises dining, they were subject to restrictions, including social
distancing requirements. St. Charles County continued to discourage people from eating
in restaurants to contain the spread of COVID-19. Restaurant sales, including at plaintiff
Monday’s restaurants, plummeted because of COVID-19 and the related restrictions.
Plaintiff Monday made a claim on its insurance policies for loss of business income and
extra expenses. Defendant Intrepid had not responded when plaintiff Monday filed this
suit, which plaintiff Monday took as a denial.

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Plaintiff Dill also claims losses resulting from the COVID-19 pandemic. In March
2020, various authorities recommended dentists take steps to limit the spread of the
coronavirus, including limiting their services. Plaintiff Dill closed its practice in March
2020 due to the pandemic and reopened with a limited schedule in May 2020. When the
CDC issued guidance on resuming non-emergency dental care in May 2020, it
recommended specific steps for dentists, including increased protective equipment and
screening. Plaintiff Dill claims loss of income due to its closure and reduction in business
plus extra expenses it incurred. Plaintiff Dill made a claim on its policy, which defendant
Tri-State denied. Plaintiff Dill then filed suit.
Both plaintiffs bring suit on behalf of themselves and various putative classes and
subclasses. They claim breach of contract and breach of the implied covenant of good faith
and fair dealing for defendants’ non-payment of their claims.
Defendants move to dismiss plaintiffs’ claims under Federal Rule of Civil Procedure
12(b)(6) on two grounds. First, they argue the policies’ “Exclusion of Loss Due to Virus
or Bacteria” endorsement applies to exclude plaintiffs’ claims because plaintiffs’ alleged
damages were caused by a virus—the coronavirus. Second, defendants argue plaintiffs
have not alleged a “direct physical loss of or damage to property” caused by a “Covered
Cause of Loss,” meaning coverage does not apply at all.
LEGAL STANDARD
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,

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556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)). If “the allegations show on the face of the complaint there is some insuperable
bar to relief, dismissal under Rule 12(b)(6) is appropriate.” Benton v. Merrill Lynch & Co.,
524 F.3d 866, 870 (8th Cir. 2008). The Court can consider the insurance policies in
deciding the motion. See Ashford, 880 F.3d at 992; M.M. Silta, Inc. v. Cleveland Cliffs,
Inc., 616 F.3d 872, 876 (8th Cir. 2010).
Where, as here, federal jurisdiction is based on diversity of citizenship, “[s]tate law
governs the interpretation of insurance policies.” Secura Ins. v. Horizon Plumbing, Inc.,
670 F.3d 857, 861 (8th Cir. 2012). The parties agree Missouri law governs. In Missouri,
interpretation of an insurance policy is a question of law. Schmitz v. Great Am. Assur. Co.,
337 S.W.3d 700, 705 (Mo. banc 2011). The “‘cardinal rule”” for interpretation is to
“‘ascertain the intention of the parties and to give effect to that intention.’” Secura, 670
F.3d at 861 (quoting J.E. Hathman, Inc. v. Sigma Alpha Epsilon Club, 491 S.W.2d 261,
264 (Mo. 1973)). “The parties’ intent is presumptively expressed by the plain and ordinary
meaning of the policy’s provisions, read in the context of the policy as a whole.” Id.
(cleaned up). If the policy is unambiguous, it is “enforced according to its terms.” Schmitz,
337 S.W.3d at 706. “If the policy is ambiguous, it will be construed against the insurer.”
Id. An ambiguity exists if there is “‘duplicity, indistinctness, or uncertainty’” in the
meaning of the policy language or if it is “‘reasonably open to different constructions.’”
Seeck v. Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007) (quoting Gulf Ins. Co.
v. Noble Broadcast, 936 S.W.2d 810, 814 (Mo. banc 1997)). “Definitions, exclusions,

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conditions and endorsements are necessary provisions in insurance policies. If they are
clear and unambiguous within the context of the policy as a whole, they are enforceable.”
Todd v. Mo. United Sch. Ins. Council, 223 S.W.3d 156, 163 (Mo. banc 2007). It is the
insured’s burden to establish coverage and the insurer’s burden to show that an exclusion
to coverage applies. Manner v. Schiermeier, 393 S.W.3d 58, 62-63 (Mo. banc 2013).
THE POLICIES
Plaintiffs claim coverage for loss of business income and extra expenses under their
commercial insurance policies. The language at issue is the same in all policies.
The Business Income Coverage provisions read:
We will pay for the actual loss of Business Income you sustain due to the
necessary “suspension” of your “operations” during the “period of
restoration.” The “suspension” must be caused by direct physical loss of or
damage to property at premises which are described in the Declarations and
for which a Business Income Limit Of Insurance is shown in the
Declarations. The loss or damage must be caused by or result from a Covered
Cause of Loss.
Docs. #75-1 at 50; 75-2 at 53; 76-1 at 89; 76-2 at 117.1 “Covered Causes of Loss means
direct physical loss unless the loss is excluded or limited in this policy.” Docs. #75-1 at
64; 75-2 at 67; 76-1 at 101; 76-2 at 129.
Plaintiffs also claim Extra Expense Coverage: “Extra Expense means necessary
expenses you incur during the ‘period of restoration’ that you would not have incurred if
there had been no direct physical loss or damage to property caused by or resulting from a

Because some of plaintiffs’ exhibit stamps are obscured, the Court’s citations to page numbers in the insurance
policies refer to the pagination in the file stamp at the top of the page.
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Covered Cause of Loss.” Docs. #75-1 at 50; 75-2 at 53; 76-1 at 89; 76-2 at 117. The
“Period of Restoration” for business income and extra expense coverage begins after the
direct physical damage or loss and ends on the earlier of: “(1) The date when the property
at the described 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; or
(3) 12 consecutive months after the date of direct physical loss or damage.” Docs. #75-1
at 74-75; 75-2 at 77-78; 76-1 at 36-37; 76-2 at 61-62.
In addition to arguing plaintiffs have not alleged “direct physical loss of or damage
to property,” defendants claim two exclusions apply. First, they argue the policies’
“Exclusion of Loss Due to Virus or Bacteria” endorsement (the “Virus Exclusion”)
excludes coverage because plaintiffs’ alleged damages were caused by a virus. The Virus
Exclusion reads: “We will not pay for loss or damage caused by or resulting from any virus,
bacterium or other microorganism that induces or is capable of inducing physical distress,
illness or disease.” Docs. #75-1 at 62; 75-2 at 65; 76-1 at 100; 76-2 at 128. Second,
defendants point to a loss-of-use exclusion in the policies, which states: “We will not pay
for loss or damage caused by or resulting from any of the following . . . b. Delay, loss of
use or loss of market.” Docs. #75-1 at 66; 75-2 at 69; 76-1 at 103; 76-2 at 131.
ANALYSIS
Plaintiffs’ amended complaints do not plausibly allege a “direct physical loss of or
damage to property” resulting from a “Covered Cause of Loss.” Even if plaintiffs had
alleged a claim for coverage, the policies’ Virus Exclusion applies.

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1. Plaintiffs have not alleged a “direct physical loss of or damage to property.”
To make a claim for lost business income and extra expenses under their commercial
property policies, plaintiffs must show a “direct physical loss of or damage to property at
premises” covered by their policies, caused by or resulting from a Covered Cause of Loss.
The parties disagree about the meaning of “direct physical loss of or damage to property”
and whether the phrase includes plaintiffs’ claimed losses. The policies do not define the
phrase, so the Court must apply its ordinary meaning. See Schmitz, 337 S.W.3d at 708.
While plaintiffs alleged the policies cover intangible “damage” to property, plaintiffs do
not advance this argument in their briefing, instead conceding that “damage to property” is
something that “occurs ‘to’ the property.” See Doc. #45 at 13, No. 4:20 CV 767; Doc. #36
at 14, No. 4:20 CV 1015. Plaintiffs do not allege any “damage to” their property. They
focus on “loss of” property.
Plaintiffs define loss as “the act of losing possession” and “deprivation.” See Studio
417, Inc. v. Cincinnati Ins. Co., 478 F.Supp.3d 794, 800 (W.D. Mo. 2020). Plaintiffs do
not allege they ever lost possession of their property. Plaintiff Monday claims it was
“deprived of” its dining rooms because the pandemic and government shutdown orders
denied it “the ability to physically access and use the property in the normal fashion in its
business” and denied “customers the ability to physically access and use the property for
dining.” Doc. #25 ¶ 86. Plaintiff Dill argues it was “deprived of” its offices “for the
purpose of providing dental care,” as it alleged the pandemic caused it to lose “the direct
ability to physically access and use the property in the normal fashion in their business.”

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Docs. #22 ¶¶ 107-08 and #36 at 15, No. 4:20 CV 1015. Plaintiffs allege their losses were
“physical” because their inability to use their dining rooms and offices in their normal
course and allow customers and patients to access them had “material existence.” Doc.
#45 at 14, No. 4:20 CV 767; Doc. #36 at 15, No. 4:20 CV 1015. Plaintiffs do not allege
COVID-19 was ever physically present on their premises or anything physical happened
to their covered property.
Plaintiffs’ allegations do not fall within the ordinary meaning of “direct physical
loss of property.” A plain reading of this phrase requires plaintiffs to allege some physical
element impacting their property, not just loss of intended use without any physical impact
on the property. See Ballas Nails & Spa, LLC v. Travelers Casualty Ins. Co., -- F.Supp.3d
--, 2021 WL 37984 at *3-4 (Jan. 5, 2021). Other terms in the policies, including the “loss
of use” exclusion and the definition of the “period of restoration,” support this conclusion.
See id.; cf. Secura, 670 F.3d at 861. The weight of authority interpreting similar or identical
provisions under Missouri law further shows plaintiffs must allege some physical event or
physical injury to their property to state a claim for a “direct physical loss.”2 And, as other
decisions have explained, Eighth Circuit case law also supports this conclusion. See, e.g.,
Ballas, 2021 WL 37984 at *3-4; Promotional Headwear Int’l v. Cincinnati Ins. Co., -- F.
Supp. 3d --, 2020 WL 7078735 at *6 (D. Kan. Dec. 3, 2020). Plaintiffs have not plausibly

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See MMMMM DP, LLC v. The Cincinnati Ins. Co., 2021 WL 2075565 at *3-4 (E.D. Mo. May 24, 2021) (slip copy);
Seoul Taco Holdings, LLC v. Cincinnati Ins. Co, 2021 WL 1889866 at *5-6 (E.D. Mo. May 11, 2021) (slip copy);
Robert E. Levy, D.M.D., LLC v. Hartford Fin. Servs. Gp. Inc., -- F. Supp. 3d --, 2021 WL 598818 at *9 (E.D. Mo.
Feb. 16, 2021); Ballas, -- F. Supp. 3d --, 2021 WL 37984 at *3-4; Zwillo V, Corp. v. Lexington Ins. Co., -- F. Supp.
3d --, 2020 WL 7137110 at *4 (W.D. Mo. Dec. 2, 2020); BBMS, LLC v. Cont’l Cas. Co., -- F. Supp. 3d --, 2020 WL
7260035 at *6 (W.D. Mo. Nov. 30, 2020).

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alleged they were entitled to coverage under their policies, which means they have failed
to state claims for defendants’ refusal to pay their claims.
2. Even if plaintiffs had alleged a covered loss, the policies’ Virus Exclusion
applies to exclude coverage.
Even if plaintiffs had alleged a claim for coverage, defendants argue the policies’
Virus Exclusion excludes coverage because plaintiffs’ losses were caused by a virus—the
coronavirus that causes the disease COVID-19. The Virus Exclusion unambiguously
excludes coverage for losses caused by disease-inducing viruses. Plaintiffs’ amended
complaints allege losses caused by the coronavirus that induces the disease COVID-19.
Contrary to plaintiffs’ arguments, that the virus was widespread enough to be
classified as a pandemic does not change the fact that the virus caused their losses. The
Court also rejects the argument that the virus was only an “indirect” cause of plaintiffs’
losses or that the pandemic and the government action meant to slow the virus’s spread
were separate, covered causes of loss. See Ballas, 2021 WL 37984 at *6. Plaintiffs do not
provide relevant support for their regulatory estoppel argument or allege any inconsistency
between the statements insurance industry groups made to regulators and the position
defendants take here. See Levy, 2021 WL 598818 at *7. Even if plaintiffs had alleged
plausible claims for coverage, the Virus Exclusion would exclude coverage.
Accordingly,
IT IS HEREBY ORDERED that defendant Intrepid Insurance Company’s motion
to dismiss [Doc. #77] is GRANTED.

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IT IS FURTHER ORDERED that plaintiff Monday Restaurant LLC’s second
amended complaint [Doc. #75] is DISMISSED with prejudice.
IT IS FURTHER ORDERED that defendant Tri-State Insurance Company of
Minnesota’s motion to dismiss [Doc. #78] is GRANTED.
IT IS FURTHER ORDERED that plaintiff Andrew Dill, DMD, Amy Varble, DMD
and Michael Wong, DMD, P.C.’s second amended complaint [Doc. #76] is DISMISSED
with prejudice.
IT IS FINALLY ORDERED that defendants’ prior motions to dismiss plaintiffs’
first amended complaints [Doc. #34, No. 4:20 CV 767, and Doc. #29, No. 4:20 CV 1015]
are DENIED as moot.
A separate order of dismissal will issue.
Dated this 2nd day of June, 2021.

STEPHEN N. LIMBAUGH, JR.
SENIOR UNITED STATES DISTRICT JUDGE

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