531 F.Supp.3d 802
S.D.N.Y.2021Background
- Thor Owns commercial real estate and bought a Property Insurance Policy (coverage began March 15, 2020) that includes broad property and time‑element (business interruption) coverages.
- COVID‑19 caused government stay‑at‑home orders and tenant closures; Thor alleges over $20M in lost rental income and other interruption losses.
- The Policy contains a $1 million aggregate sublimit for Communicable Disease coverages; it also contains a Contamination Exclusion (which expressly defines “contamination” to include “virus”) and a separate Loss of Market or Loss of Use Exclusion.
- Thor gave notice of its claim; FM acknowledged the communicable‑disease sublimit and the parties brought cross‑motions for judgment on the pleadings limited to the scope/applicability of the two exclusions.
- The court applied New York law and Rule 12(c) standards and limited its decision to whether those exclusions bar Thor’s claimed losses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of Contamination Exclusion to COVID‑19 business interruption losses | Exclusion only bars “costs due to contamination”; does not bar loss of rental income or other business interruption losses | Inclusion of “inability to use or occupy property” and definition including “virus” unambiguously excludes COVID‑19‑related losses | Court found the exclusion ambiguous; denied judgment on the pleadings as to this exclusion |
| Scope of Loss of Market / Loss of Use Exclusion for government shutdown losses | Exclusion should not be read to categorically bar losses from government‑ordered restrictions that caused interruptions | Exclusion covers "loss of use" (including loss of access), thus bars such interruption losses | Court declined to decide on pleadings—insufficient developed factual record; motion denied |
| Whether terms are to be interpreted under New York contract principles | Thor: ordinary meaning favors recovery; ambiguity supports construing in insured’s favor | FM: plain language excludes losses; no ambiguity | Court applied New York contract law, found ambiguity as to contamination clause and required factual development for the other exclusion |
| Whether resolution on Rule 12(c) is proper given the record | Thor: pleadings + policy suffice to decide exclusions | FM: policy language resolves issues now | Court held that for contamination exclusion ambiguity precludes judgment; for loss of use exclusion factual record is lacking, so resolution is inappropriate; both motions denied |
Key Cases Cited
- Sheppard v. Beerman, 18 F.3d 147 (2d Cir. 1994) (Rule 12(c) standard parallels Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility pleading standard)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state a plausible claim)
- Chambers v. Time Warner, Inc., 282 F.3d 147 (2d Cir. 2002) (documents the court may consider on a motion to dismiss/12(c))
- Greenfield v. Philles Records, 780 N.E.2d 166 (N.Y. 2002) (contracts construed to give effect to parties’ intent; plain‑meaning rule)
- Metro. Life Ins. Co. v. RJR Nabisco, Inc., 906 F.2d 884 (2d Cir. 1990) (definition of ambiguity standard)
- Morgan Stanley Grp. Inc. v. N. England Ins. Co., 225 F.3d 270 (2d Cir. 2000) (insured bears burden to show coverage; insurer bears burden to prove exclusions)