488 F.Supp.3d 867
W.D. Mo.2020Background:
- Plaintiffs: four Missouri dental clinics bought materially identical Owners Insurance businessowners policies and sued after Owners denied COVID-19-related claims.
- Policies cover "direct physical loss of or damage to Covered Property"; they contain no virus/pandemic exclusion and define "period of restoration" and "operations."
- Plaintiffs allege COVID-19 contaminated their premises and that state, county, and city stay‑home orders (and related CDC/ADA guidance) forced full or partial suspension of clinic operations beginning mid‑March 2020.
- Plaintiffs filed claims (May 2020) and alleged eight counts (business income, extra expense, civil authority, "sue and labor," each as declaratory/injunctive and breach), and sought class treatment under CAFA.
- Owners moved to dismiss under Rule 12(b)(6) and to strike class allegations; the court denied both motions, finding plaintiffs plausibly pleaded coverage facts and leaving factual disputes for discovery.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complaint pleads a "direct physical loss" | COVID‑19 contaminated premises, depriving use and causing loss | Allegations are conclusory; no physical damage shown | Plaintiffs plausibly alleged direct physical loss; claim survives dismissal |
| Business Income: whether plaintiffs "suspended operations" | "Suspension" includes partial/limited operations (emergency services) | "Necessary suspension" requires total cessation | Court: "suspension" need not be total; allegations suffice to survive 12(b)(6) |
| Business Income: "period of restoration" & causation | Alleged suspension began ~Mar 17, 2020 and was ongoing; COVID/orders caused suspension | No repairs/replacement alleged; closures voluntary or due to orders exempting "essential" businesses | Court: period and causation sufficiently pleaded for now; factual questions reserved for discovery |
| Extra Expense coverage | Extra expenses incurred to avoid/minimize suspension are covered | Plaintiffs fail to identify specific extra expenses; no direct physical loss | Court: Extra Expense claims derivative of Business Income; survive pleading stage |
| Civil Authority coverage | Stay‑home orders (and incorporated guidance) prohibited access, triggering coverage | Orders were general, plaintiffs were "essential," and Civil Authority requires adjacent property damage | Court: Policy does not require order directed at premises; plaintiffs plausibly alleged access was prohibited; factual scope unresolved; claim survives |
| "Sue and Labor" provision | Plaintiffs performed duties and incurred losses/expenses covered by provision | No itemized expenses or imminent loss shown; provision is mitigation duty not standalone coverage | Court: claim survives; possible overlap with other coverages reserved for later |
| Motion to strike class allegations | Class discovery may show Rule 23 elements satisfied | Class allegations should be struck now | Court: Denied as premature; striking before discovery is disfavored |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility pleading standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must state plausible claim)
- Vogt v. State Farm Life Ins. Co., 963 F.3d 753 (8th Cir. 2020) (ordinary meaning and ambiguity rules for policy terms under Missouri law)
- Data Mfg., Inc. v. United Parcel Serv., Inc., 557 F.3d 849 (treat complaint allegations as true on Rule 12(b)(6))
- J.E. Jones Constr. Co. v. Chubb & Sons, Inc., 486 F.3d 337 (state law governs insurance policy construction)
- Altru Health Sys. v. Am. Prot. Ins. Co., 238 F.3d 961 (civil authority coverage framework)
- Doe Run Res. Corp. v. Am. Guarantee & Liab. Ins., 531 S.W.3d 508 (Mo. banc 2017) (use dictionary for undefined policy terms)
- Hampton Foods, Inc. v. Aetna Cas. & Sur. Co., 787 F.2d 349 (8th Cir. 1986) (coverage can extend to danger/threat of physical loss)
- Creative Walking, Inc. v. American States Ins. Co., 16 F. Supp. 2d 1062 (E.D. Mo. 1998) (interpreting "necessary suspension" as total cessation; distinguished)